Eurozone news took markets lower early as Portugal's bond yields rose sharply and there still is no accord on Greek debt with private lenders. News from the eurozone remains gloomy as noted in this report from Davos World Economic Forum.
As far as U.S markets are concerned it's natural to suspect some end-of-month window dressing. U.S. stocks began to rally off triple digit DJIA lows led primarily by technology after Europe closed (funny how that happens). Burlington Northern stated the economy was growing slowly and they were adding employees and railroad cars to meet perceived demand. This helped stimulate stocks overall even though it was little help to the transport sector (IYT) which closed the day down .43%.In housing market news was this eye-opening story that Freddie Mac was betting big time against its own customers. Or, as the story headline goes, " When Homeowners Lose, Freddie Mac Wins". Betting against your own customers isn't anything new on Wall Street, something begun by then Goldman Sachs CEO Robert Rubin in the 90s. But for the government to do so states the obvious conflict. Also in the news was the government has increased loss projections for the auto bailout to $27 billion. It makes you wonder if just letting them go bankrupt would have been a better policy. Would it have been likely foreign auto companies would have taken over these plants and brands on the cheap? Would laid-off workers special unemployment benefits been less costly to the taxpayers? These are questions worth asking even with hindsight. The following chart, even though it measures a different relationship, seems odd since I remember overlaying the gold price over sharply rising single family home prices in 1983. The trends were the same then from that measurement. Other stories of note included a story from the WSJ that MF Global missing funds appear to be gone and that banks were still hesitant to lend. These stories hardly seem bullish. Economic data Monday featured Personal Income & Outlay data which came in near expectations. The negative component was consumer spending was lower. Gold prices were also lower early but saw some steady buying to close half the day's minor losses. The euro also shaved half its early losses against the dollar currently down about .50% on the day. Oil prices fell on both higher supply and a stronger dollar while bond prices continued their upward price movement into ultra-thin air. Volume picked up some although most of it was on the sell-side early. Breadth per the WSJ was mildly negative overall. You can follow our pithy comments on twitter and join the conversation with me on facebook. SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
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