Obama doubles down
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The Market
    
    Technical

    Pretty boring day, yesterday.   The Averages (DJIA 10383, S&P 1108) closed  well within their 9645-10725, 1009-1150 trading range.  The S&P closed above the October 2008 to present down trend (1106) for the second day; however, the DJIA remains slightly below its comparable trend line (10400).

    Volume was low, breadth weaker than I would have thought, the dollar down (scoreboard: stocks down, gold down, oil up) and for the third time in a week, the dollar and stocks traded in tandem, the VIX, surprisingly. was down.

    Bottom line: consolidation after last week’s very positive performance is no surprise; however, prices are still in the upper one third of the current trading range, so I am not chasing prices on the buy side. 

    Update from TraderFeed:
    http://traderfeed.blogspot.com/2010/02/morning-briefing-for-february-23rd-few.html

    And Trader Mike:
    http://tradermike.net/2010/02/february_22_2010_stock_market_recap
   
    The performance of various markets following a discount rate cut unaccompanied by a Fed Funds rate cut (like happened last week) (charts):
    http://www.zerohedge.com/article/quantifying-markets-response-discount-rate-changes

   Fundamental
       
    This is a fairly balanced article on the outlook for gold (long):
    http://www.investmentpostcards.com/2010/02/23/gold-and-the-euro-a-new-tango-for-2010/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+wordpress%2FVYxj+%28Investment+Postcards+from+Cape+Town%29&utm_content=Yahoo!+Mail


    This is a very long piece on what hedge funds have been buying and selling:
    http://www.zerohedge.com/article/definitive-hedge-fund-holdings-update

    Five reasons to stay bullish (medium):
    http://pragcap.com/credit-suisse-5-reasons-to-stay-bullish-near-term

    Headlines

    There was not much news on the economic front save some murmurings that somehow Greece would make it through its sovereign debt problem.  In the background, however, the sovereign debt pot continues to be stirred.  Portugal and Spain are favor subjects and yesterday Japan joined their ranks.
    http://www.bloomberg.com/apps/news?pid=20601039&sid=aPBaV.B6hdS4

    Obama doubled down on healthcare.  Over the weekend, the White House posted the newest version of a bill that was notable in three respects: (1) the congressional budget office said that it was too vague to be able to score for costs [while that may be true in aggregate, there were several proposals that would clearly lead to higher costs], (2) the primary feature spotlighted in marketing the new bill was that it gives the federal government the power to deny or roll back any increases in insurance premiums [clearly ignoring the fact that all insurance premiums are already reviewed and approved by state authorities] http://cafehayek.com/2010/02/sure-enough.html [short] and (3) the administration threatened that if republicans attempted to obstruct the passage of this bill, it might be pushed through the reconciliation process, i.e. it would only require 51 senate votes for approval versus the usual 60.  I think that a stupid bluff.  If the Dems tried to muscle through a bill that a majority of the electorate opposes by means of a legislative gimmick, it would cause such a blow back that the November elections would probably be much, much worse for them than it likely already will be.
http://gregmankiw.blogspot.com/2010/02/financing-healthcare-reform.html  (short)

    Bottom line: while the domestic political environment is improving, in my opinion, Obama appears ready to go down with the ship and that will likely mean a few more disconcerting headlines that will keep investors on edge.  The time to buy is when we get those headlines and stocks take it in the snoot.   

  
Economics

   This Week’s Data

   Other

    Banks still aren’t lending (chart):
    http://www.businessinsider.com/chart-of-the-day-commercial-and-industrial-loans-at-all-commercial-banks-2010-2?utm_source=Triggermail&utm_medium=email&utm_campaign=CS_COTD_022210

    Here is the same data but from a completely different perspective (short):
    http://scottgrannis.blogspot.com/2010/02/bank-credit-update.html

    Signs of a bottom in the commercial real estate market (short):
    http://scottgrannis.blogspot.com/2010/02/commercial-real-estate-update-signs-of.html

    More on the sovereign debt problem  (medium):
    http://www.nakedcapitalism.com/2010/02/rogoff-foresees-a-wave-of-sovereign-debt-defaults.html

    And this on the US sovereign debt issue (medium) (today’s must read):   
    http://www.zerohedge.com/article/republican-push-count-gse-debt-toward-statutory-debt-limit-implies-americas-real-debt-gdp-13










Posted 02-23-2010 8:32 AM by Steve Cook