Posted on 10/20/2009 9:31:43 PM PDT by blam
Market Movers That Aren't Housing
by: Wall Strategies October 20, 2009
The market is fixated on the less than desirable housing-related reports out Tuesday morning. Such below-consensus readings on starts and permits are a shot across the bow for regulators to cut the smooth talk and extend the housing tax credit. Whether the tax credit has had a huge impact on overall housing demand in recent months is not very supported in the statistics (low mortgage rates arguably a bigger component). But, much could be said about bolstering market psychology, in this case that of homebuilders. Maybe it is time to expand the program to not just first time buyers making less than $75,000.
The recent rally in the price of crude oil is faltering Tuesday. The dollar actually started to rally in value versus a basket of other international currencies, and this is causing a shift out of the commodity asset class of which crude oil is included.
Also causing some of the selling pressure Tuesday was the fact that it closed in on the $80 per barrel level. Oil and other commodities have an inverse relationship with the value of the dollar. As it stands, oil traders and investors have been taking their cue from the rally in the broader equities market and allocating more capital to the oil trade.
The fact that the Dow Jones Industrial Average recently hit, and surpassed, the psychologically important 10,000 mark served as a source of encouragement to investors that the economy is on the mend. As such, the logic goes that this portends an eventual increase in activity which will ultimately lead to a ramp in the demand for energy.
However, the caveat to this outlook is that there is currently a surplus of crude oil, much of which is sitting in tankers offshore. Once the market improves, the bet is that these stocks will be released onto the market, and this can be problematic for future pricing gains.
[snip]
Tough to take advantage of the credit if you don’t have a job...and aren’t in a favored socio-economic grouping.
Yes...maybe even a favored racial group...
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