On the third to last day of 2004, lethargy reigned in the markets, volume was

de minimus

and the news flow was thin. Though China's decision to stop ordering more airplanes for delivery next year and an apparent car bombing in Saudi Arabia weighed on shares, the major averages finished just about unchanged.

The

Dow Jones Industrial Average

lost 25 points, or 0.2%, to 10,829.19.

Boeing

(BA) - Get Report

slumped 2.2% to $52.07. The

S&P 500

was virtually unchanged at 1213.45. The

Nasdaq Composite

lost just fractions of a point and so, like the other indices but one day later, failed to follow through after setting a new year-high the previous session. Oil prices jumped on the Saudi explosions, gaining almost 5% to $43.75.

That left plenty of time to debate the economic releases of the day, including the puzzlement over the November increase in sales of existing homes. The National Association of Realtors said sales reached an all-time record annualized rate of 6.94 million last month. This was a surprise to some who expected that the downturn in November new-home sales -- which declined the most in 25 years -- would be echoed in the existing-home sales report.

It doesn't exactly take a brain surgeon to figure this one out. The Census Bureau counts new-home sales from the moment a contract is signed. The realtors' data are collected from sale closings, typically 30 to 60 days after a contract is signed. Thus, sales trends in the realtors' data lag trends seen in the census data by a month or two.

November's existing-home sales correspond to September and October's new sales. Back then, new sales were expanding at a blistering pace and hit a record annualized pace of 1.278 million in October. Same deal on prices -- the average new home price hit an all-time record in October before dropping in November. Existing-home prices rose in November. One month does not a trend make,

but as noted here many times, the real estate market looks overheated and ready for a fall as rates rise.

Most of the homebuilders, among the top performers in the postelection rally, lost on the seeming good news and despite an uptick in weekly mortgage applications for purchases.

Pulte Homes

(PHM) - Get Report

was down 0.9% and

Ryland

(RYL)

lost 1%, although

Lennar

(LEN) - Get Report

gained 1.2%.

Over in the currency markets, the dollar posted slight gains against the yen and euro on Wednesday. With the dollar's decline now at 7% vs. the euro and 3% against the yen for the year, there's a rising chorus that sees an end to the slides, including bond fund giant

Pimco

, where some bets against the dollar are coming off. Manager Bill Powers says the firm has exited most euro positions and could close its yen positions as well.

"The euro is not a slam-dunk, particularly with the vulnerability of the euro to a surprise currency revaluation by China," Powers wrote in an article posted this week. "If the yen also becomes more expensive, we would look to reduce those positions. If the dollar appreciates within this bear trend, we might move back into the euro or slightly increase our yen concentrations, but currency will remain a very modest part of the risks in our portfolios going forward."

However, the firm has doubled its exposure, moving up to 1% of assets, a basket of emerging-market currencies that includes Brazil, India, Mexico, Russia and South Korea.

Warren Buffett, the Oracle of Omaha, has $20 billion riding against the dollar, and despite the currency's most recent tumbles here at the end of 2004, he's still letting the position run,

Forbes

is reporting.

The magazine says that Buffett was sounding more bearish than ever in a recent interview. "What we got was more doom and gloom, more than we have ever heard from the man. In other words, he is not about to cover his short position on the dollar," the magazine wrote.

The dollar has taken a steeper fall since George Bush was re-elected, so Berkshire's fourth-quarter gain could be rich indeed. "If we have the same policies, the dollar will go down," Buffett told

Forbes

. How long will he stick to his guns? No short-term trader in the mold of a Soros, he may hold his foreign currencies "for years and years." That may be too long, but as Buffett himself warned in letter to shareholders back in March: "The cemetery for seers has a huge section set aside for macro forecasters."

Pimco's Powers is among those making macro forecasts, of course. The firm expects the U.S. economy to expand only 2% to 2.5% next year, leading to fewer

Federal Reserve

rate hikes than the market currently expects. He's surprised by how clumped most forecasters seem to be around the consensus 3% to 4% rate.

"We also note that the market has become very complacent," Powers writes. "Current expectations for modest GDP growth with modest inflation are now frighteningly universal."

Then again, the consensus is right sometimes. Last year,

Business Week

rounded up 66 market watchers to predict where the Dow would end the year. The median forecast was 10,750 -- a bit short but in the neighborhood. Or as fictional bounty hunter Jack Walsh said in the movie

Midnight Run

: That's a very respectable neighborhood.

In keeping with TSC's editorial policy, Pressman doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send

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