I had a late night last night attending the Giants blowout of the Packers at Giants Stadium, so I will keep it short today, not unlike last week's short trading week. Another Turkey day has come and gone along with a successful Black Friday (which actually started on Thursday). The markets had a great week following its usual tradition of rising during Thanksgiving week with the S&P 500 bouncing back from oversold levels and rising 3.6% with markets all over the world following. With Congress in recess, there was a void of news coming from Washington so the market was able to continue its move higher and also reacted positively to consumers out shopping in force. Interestingly, after today's Cyber Monday shopping spree, it is estimated that 44% of the US population will have shopped by the end of today. I'll even admit to doing some shopping on Friday -- though I did it midday and still found a good deal.
Last week I gave you several random thoughts mostly pertaining to the "fiscal cliff" and also asked for some alternate names. Well I didn't get any responses so either nobody cares or you didn't have the time to come up with something. So, I decided to do a little research and would like to offer some new terms. As our new term for the overused "fiscal cliff" I offer the following:
- Budgetary Bluff - after all, this is a big game of bluff by politicians on both side of the aisle.
- Monetary Crag - I just like the term "crag"
- Pecuniary Precipice - my front-runner. It really flows off the tongue.
Look for the markets to give back some gains this week as talks resume in DC. The markets could be volatile depending on the soundbite of the day. Don't expect much movement on issues immediately. I would be shocked to see a deal anytime soon. But look for some sort of bone to be thrown to investors to indicate that there maybe is some progress. And then let's hope the politicians and the President take care of the Pecuniary Precipice and not continue with their Budgetary Bluff so we don't have a real Monetary Crag! That's all for today folks.
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The week's economic data show a housing market that appears to be in recovery mode. Housing starts rose 3.6% in October to 894,000 units at an annual rate, easily beating the consensus expected 840,000 pace. Starts are up 41.9% versus a year ago. New building permits fell 2.7% in October to an 866,000 annual rate, slightly beating the consensus expected pace of 864,000. Compared to a year ago, permits for single-unit homes are up 26.6% while permits for multi-family units are up 36.3%. Existing home sales rose 2.1% in October to an annual rate of 4.79 million units, coming in slightly higher than consensus expectations. Sales are up 10.9% versus a year ago. The months' supply of existing homes (how long it would take to sell the entire inventory at the current sales rate) fell to 5.4 in October from 5.6 in September. The inventory of existing homes fell to 2.14 million in October from 2.17 million in September, the lowest level since December 2002. Inventories are down 22% from a year ago.Overseas, French sovereign debt was downgraded one notch by Moody's and the Greek debt package was negotiated. The market shrugged off both of these issues as well as the Israel/Hamas war and eventual ceasefire.
The US Market continued on a tradition of rallying during the Thanksgiving week. The Dow gained 421 points or 3.4% to 13009 while the S&P 500 jumped 3.6% to 1409. The NASDAQ rose 3.99% led by a rally in Apple shares. After reaching an intraday low of $505 the prior Friday, Apple rallied 13% to 571.50 from the low, including 8.3% last week. Small and mid-cap stocks also joined the party with various indexes rising close to 4% on the shortened trading week. Investors reacted positively to the perception that DC politicians might be willing to work together to reach a fiscal compromise. European stocks shook off a downgrade of France's sovereign rating and Greek debt negotiations to climb higher. EU followed US markets with the Euro Stoxx 600 up 3.98% for the week. Markets were up across the board led by France up 5.6% and Germany up 5.16%. Germany is now up 23.6% on the year. Asia/Pac stocks climbed with the Dow A-P index up 2.34%. Hong Kong rallied 3.57% and Japan continued its rise climbing another 3.8%.
Bob Centrella, CFA, President/Managing Partner, Forza Investment Advisory LLC, a Registered Investment Advisor.
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Bob Centrella, CFA, is President/Managing Partner of Forza Investment Advisory, LLC, a Registered Investment Advisor based in Westfield, NJ. More information on Bob and Forza Investment Advisory can be obtained from www.ForzaInvestment.com. You can call at 908-344-9790
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