Tuesday, April 25, 2006


An interesting day in the markets

It is not often that you get a day when both the bond market and the stock market have a big drop in price on the same day. It happened today. Consumer confidence hit a four year high, no surprise here. Also, existing homes sales rose which was a slight surprise but they were down from last year and home inventories rose.

Inventories soared 7 percent in March, leaving a record 3.19 million existing homes available for sale at the end of the month. That equates to 5.5 months' supply at the current sales pace, the largest inventory since July 1998, when supply equaled 5.6 months' worth.

The answer is that the news doesn't explain what the markets do on a particular day. What this does say is that the stock market's recent rally is probably over and that we should look for lower prices. Interest rates have been rising relentlessly and they show no sign of stopping. Only G_d knows when higher interest rates will affect stocks but I would not want to own stocks right now. Too much like 1987 right now.


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