每日市場點評 --- February 26, 2008

Can all markets go up at the same time? We are pretty close today. Stocks, bonds and commodities all enjoyed a nice rally while the only loser, unfortunately, was again the US dollar. The US dollar hit a record low against the Euro after the German business confidence unexpected rose for the second month, easing the pressure for ECB to cut interest rates in that region. In addition, the dollar index also hit an all time low. Not surprisingly, the CRB commodity index hit another historical high led by energy and food.

The news on the economic front was mostly negative. The Conference Board’s index of consumer confidence in the latest month dropped to 75.0, a 5-year low. The S&P/Case-Shiller home-price index dropped 9.1 percent in December from a year ago, a record decline. Meanwhile, the Producer Price Index jumped 1.0% and took the y-o-y gain to 7.4%, the highest rate of wholesale inflation since October 1981. But despite all the negative news, the stock market simply shrugged them off and instead focused on the positive earning outlook and buyback news from IBM. Separately, Moody’s confirmation of the bond insurers’ credit ratings also gave the market a lift.

Tomorrow the Fed Chairman Bernanke is going to deliver his semi-annual testimony on the economy before Congress. I suspect he will continue to emphasize the risk of slower growth while downplaying the risk of inflation, similar to what the Fed Vice Chairman Kohn indicated today. However, if the CRB keeps hitting new highs, how long it can continue before the Fed changes its tone? We will see.