Let's see, economists, analysts, and oh yeah, me, called for this week to be a quiet week in the markets given the fact there were so few economic reports due out and none of them were really game changers. Well....simply put, we were all wrong. Me personally, I blame all the analysts and economists because they are supposed to know more than me.
In a week absent of economic data, there were plenty of other market movers, such as little things like, the European debt crisis has come back to light and the second round of stimulus has begun on a sour note. The stock market got an unexpected beating this week dropping over 200 points as of the time of this report.
Fed Chairman Bernake has been taking a verbal beating by almost every financial person you can think of both in the U.S. and elsewhere in the world. There are many concerns about the latest round of stimulus hurting the value of the dollar in other parts of the world. Additionally, realists are all saying that there is no way the U.S. government can continue to sustain the ever growing deficit. Oh yeah, one more little concern that is being voiced: "most experts believe that the plan simply will not work." (We have to all remember that there are still lingering questions about the effectiveness of the first stimulus program and how much it really helped in the economy and here we are doing it again.)
The G-20 Meeting of Global Leaders finished their meeting this week in Seoul, South Korea. The statement from the meeting stated that they do not have any type of comprehensive plan to combat global economic woes. (Just want to make sure you are paying attention. The G-20 announced that they don't have any type of "comprehensive plan". Simply put, they don't have a clue on what to do and the only thing they agreed on is that they don't have a clue what to do)
In another blow to housing, it was reported that housing starts dropped 25% in the 3rd quarter ending September 30th. This drop indicates that the tax credit did in fact play a major role in the housing market earlier in the year. Hope remains that with the focus of the new stimulus program on purchasing 900 billion dollars in government bonds, we will see the recent rise in the 10YR treasury reverse direction. (I know we are in our first week of the launch of the new stimulus program so there is no telling if it will work and although I am usually very quick to throw the government under the bus, I will refrain from doing so for the time being.)
The Mortgage Bankers Association reported that for the past week purchase and refinance applications increased 5.5% and 6.0% respectively. Many are hopeful that this will be the beginning signs of a housing recovery. However if you have been reading my Weekender's on a regular basis, you will note that every time there is an increase in activity, we all try to grab on to the hope that this is the beginning of a housing market turnaround. Mortgage rates increased this week so we have to wait and see what impact it will have on applications next week.
Lastly, the U.S. Postal Service reported an 8.5 billion dollar loss for the fiscal year ending on September 30th. The post office is pushing to have Saturday delivery terminated in an attempt to close the gap on the growing losses. The prior year the post office lost 3.8 billion.
Significant market reports due out for next week are:
• Monday November 15th - Retail Sales
• Tuesday November 16th - Producer Price Index & Industrial Production
• Wednesday November 17th - Consumer Price Index, Housing Starts & MBA
Applications
• Thursday November 18th - First Time Jobless Claims
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