NEW YORK, NY
The market seems content with being able to coast the rest of today's session and perhaps the next two as well given the big news coming on Friday. What's really interesting is that the jobs report was a major bust last time around and yet the market found a way to rally off so-so earnings reports that maybe weren't as impressive as the 1Q09 reports. I'm not sure if the rationalization hype holds up under a disappointing jobs report, however. This time, there is more than concealed hope; investors are wearing the need for a big positive surprise on their sleeves. There's good reason for investors to be hyped; "green shoots" are growing into something more impressive. It's not the stuff of Jack and the Beanstalk yet, but it can be seen without a magnifying glass. Today, a couple additional economic reports added to the beanstalk list.
Pending home says increased 3.6%; consensus was for an increase of 0.7%. All regions of the country enjoyed month over month increases during the month of June. The news has put a serious spark under homebuilder stocks which began the day under pressure from subpar earnings results. Although banks have been hoarding money and government programs have been largely ineffective, it seems like housing has at the very least hit bottom. This means that many would-be buyers will feel compelled to jump on board. Just like the cash for clunkers program brought out all those waiting for better deals, a sudden surge in demand could trigger a spike in home prices. While it would be like the proverbial rabbit jumping in front of a footrace and fading quickly to a more normal pace, the lingering result would be optimism (a critical component of any economic recovery).
Personal income stumbled much more than expected, and yet spending came in ahead of consensus. It seemed weird on the face of it, and indeed the reason this occurred is because people began to tap into those fresh savings. I personally feel that it's too early for households to spend their replenished savings but the Street loves it.
The market is peppy, but is hoping to become outright giddy on Friday morning. I must say that I'm a little peppy myself.
No comments:
Post a Comment