February’s new home sales were an utter disaster, falling to a record low. Mizuho USA economist Steve Ricchiuto may’ve put it best: “Nothing good can be said about the February report on new home sales.” Nothing good should be said of these abysmal numbers, but that didn’t stop some economists from straining to find the silver lining.
RBS economists accurately noted no sign of recovery, but suggested other data, like a slight uptick in the monthly home-builders’ sentiment index, showed the picture wasn’t “nearly so dire,” so “we are hesitant to read too much into this one report.”
Huh? Don’t want to “read too much” into a record low? Yeah, wouldn’t want to misread the fewest number of new homes ever sold in a month. Credit Suisse economist Jonathan Basile points out that the number of new homes for sale — 186,000, not annualized — was the lowest level since November 1967. Maybe we shouldn’t read too much into that either.
Kidding aside, the small number for sale isn’t a bad sign, as it shows builders being disciplined enough to just try to sell what’s on hand before they ramp up more new construction.
RBS wasn’t alone in reaching for a positive spin. RDQ Economics also cites NAHB’s sentiment index (which rose to 17 from 16; it hit 72 in June ’05 and recently as high as 22 last May). Firm says survey suggests “underlying conditions are improving slightly,” and the firm expects a bounce “over the next two months.” Not exactly a heroic call, expecting a “bounce” off an all-time low.
Mizuho’s Ricchiuto doesn’t sound as optimistic. “The sharp decline in prices also suggests that consumer wealth may be taking another hit even though equity valuations have risen,” he writes. “This report and the existing home sales data released yesterday confirm that the housing market is still in free fall.”
Investors may or may not be looking for a silver lining, but they apparently see home-builders as a sort of “why not?” proposition. One of the best sectors on the day was consumer discretionary, which includes the home builders. PulteGroup (3.6%) and Lennar (1.2%) rose, although DR Horton (0.5%) fell.
Posted by John Shipmanon March 23, 2011 Markets, Stocks /
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Hard not to marvel at the US stock market’s ongoing ability to rally amid an array of potential setbacks.
Oil above $105/barrel and record low monthly new-home sales were just a couple obstacles easily hurdled by bulls today. Concerns about Portugal’s debt problems also proved no match for rallying stocks, though the “no” vote on austerity measures came out just as the market was closing (it did weigh on the euro, which slipped under $1.40.)
Materials sector leads stocks higher, followed by consumer discretionary (again, shrugging off oil’s run-up) and tech stocks.
DJIA rises 67 to 12086, and Nasdaq Comp adds 14 to 2698. S&P 500 ends almost 4 points higher at 1297. NYSE volume was just about on the daily average around 4.2 billion shares traded; until the late surge in the last hour, the pace was weaker.
That makes the Dow a winner in four of the last five sessions, taking it to its highest close since March 9, before the Japanese earthquake. The S&P and Nasdaq are also up four of the past five sessions.
Stocks and oil weren’t the only gainers. Gold rose for a sixth consecutive session, to a fresh record high of $1.437 an ounce. Silver, too, was up sharply, finishing over $37 an ounce, its highest close since February 1980 (think the Hunt Brothers.)
“Now the DJIA’s peeking above the 50-day moving average (12053), which has capped the index’s rally the previous two sessions,” Dow Jones’ Tomi Kilgore writes:
Meanwhile, the DJIA is still below the extension of an uptrend line starting at the August lows, which currently comes in around 12200. Since it was the break of this trendline that contributed to last week’s mini-market tumble, it would take a close back above the line to clear the negative technical overhang.
For the S&P 500, the uptrend line resumes around 1340.
The bulls will be gunning for that 12000 level, you can count on that.
Our colleague and Dow Jones Newswires columnist Tomi Kilgore penned the following today:
The bank sector has given up its dividend boost, and then some. The SPDR KBW Bank ETF (KBE) gained 0.6% last Friday, after the many of the biggest banks got the Fed’s approval to increase dividends. The KBE has lost 1.9% since then, and is now 1.3% below last Thursday’s close. In addition, most of the banks that raised payouts are also now trading below their respective Thursday closes. The first to raise its dividend, BB&T (BBT), is now down 1.6% since then. Meanwhile, JPMorgan (JPM) has slid 2.3% in the last three sessions, but it still up 0.7% since Thursday.
Of course, the sector is also being dragged down by the likes of Bank of America, down another 2.5% today, which saw its bid to raise its dividend squelched by the Fed.
Posted by Paul Vignaon March 23, 2011 Markets /
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Crude prices are back over $105 a barrel, something that until the Japanese calamity was a major story, given the wide implications. There is not a single aspect of the global economy that isn’t touched by oil prices, and some participants, think small truckers, say, or your average consumer, are touched more.
But even large companies have to deal with higher oil prices, and for some industries it’s an undeniable millstone. I’m thinking airlines, which weeks ago already said they to see their profits cut in half this year just on oil prices alone.
How many body blows can the global economy absorb, and the American economy in particular? I’d guess it isn’t many more, and given the confusion that seems to cover this entire Libyan intervention, it’s a good bet oil prices will climb higher, putting more pressure on small truckers, consumers, airlines and everybody else.
Dennis Gartman, who edits and publishes The Gartman Letter, sums it up well in his morning missive:
Energy prices are quite a good deal higher as the markets try to make sense of the situation in Libya…a senseless situation if there ever was one. We have a madman on one hand, and a Constitutional “crisis” on the other, and no one truly understands what the end-game shall be. In most instances, confusion breeds contempt and lower prices, but in the energy world confusion breeds stronger, higher prices.
The only people who benefit from the confusion, it seems, are oil traders.
Ahead of the open, US stock futures generally flat, with an eye on oil percolating higher again as crude futures are now comfortably above $105/barrel amid the fighting in Libya and general unrest in the Mideast.
Should be more than a casual interest in events in Europe today as legislators in Portugal vote on austerity measures which, if voted down, could lead to the prime minister’s resignation, and possibly hasten the nation’s lurch toward a bailout.
February new-home sales due at 10:00 a.m. Bernanke scheduled to speak to community bankers around noon EDT. BofA says the Fed objects to its 2H dividend plans, BAC down 1.3% premarket.
Generally quiet on the earnings front, with the exception of packaged-foods giant General Mills. Inflation impacts will be a key focus there.
S&P futures down 1.90, Dow futures down 17. Ten-year higher, yield at 3.30%. Yen pegged right around Y81.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
