Tuesday, March 17, 2009
2009-3-17: The markets
climbed smartly today. The NASDAQ
to end the day at 778.
to reach $916.80.
Perhaps the biggest single piece of news tonight is in
an article that appeared yesterday, Foreign
debt purchases fall sharply in January.
What this article explains is that foreign purchases of U. S. debt fell
from +$35 billion in net purchases in December, 2008, to -$43 billion in
net sales in January, 2009. Coupled with last week's warning by the
Premier of China, this suggests that foreign interests may not be willing
to buy our $2 trillion in debt issuance that's shaping up for 2009. Of
course, other factors might also enter in. Last October saw a panicky
flight to U. S. Treasuries. This tide might now be going out again. In the
meantime, the government is talking about buying Treasury bonds to keep
their prices high.
Today's other news item was an unexpected rise in new
housing starts, fueled by new apartment buildings.
Todd Harrison is suggesting that 800 might be a
turnaround level for the S&P 500. However, the indices should retest
their March 9th lows even if this were the start of cyclical bull market.
(As I mentioned last week, investors are sufficiently convinced that this
is just a bear market rally that the market will have to rise, with
performance anxiety triggering a buying stampede, until the bears
capitulate.) If the retest of the March lows is successful, there should
be time and opportunity to buy into the market.
Michael Ashbaugh: Rally effort on firm footing.
The IMF cut the forecast for 2009 Chinese growth to
6.5% today. That's a lot better than what the rest of the world is
anticipating. China may be the next stop for investors.