News from ARA MELKONIANS, week of July 19, 2009, #1

Good Morning Everyone and Happy Monday! Stock markets are flailing today trying to find some direction after a less than stellar showing last week. The Dow lost about 100 points last week, ending its streak of consecutive weekly gains. It doesn't appear positive corporate earnings are going to create the rally for which bullish traders are looking this time around. Earnings season kicks into high gear this week, so put your seatbelts on, it proves to be a wild ride for the next couple weeks.

The Wall Street Journal has an interesting article in Section C, page 2 about the future of mortgage rates and in particular Treasury yields. The article quotes several economists who suggest that the economy is going to suffer for a couple more years yet… Very interesting read.
The economic news that knocked the stock markets off their early morning rally comes from the National Homebuilders Association Index which came in at a weaker-than-expected 14, as analysts were looking for a reading of 16. This news comes on top of the disappointing Michigan Consumer Sentiment from last week. Apparently, we as a nation of optimists are getting less so as this recession wears on.

For now . . . have a terrific Monday and a very productive and prosperous week! As always, I welcome your insight and your feedback.

News from Ara Melkonians/ Thursday/ Week of July 5, 2010

Good Afternoon Everyone and Happy Thursday! Bullish equity traders finally got their wish yesterday with a solid triple-digit rally for the Dow. Yesterday's strong run was led by financial stocks, especially big banks, as the Dow finished the day up 174 points! This encouraging close for the US stock markets helped the Asian markets post healthy gains overnight, too. Hence, the rally continues today, not nearly the scope of yesterday's gains, but those sizeable gains from yesterday seem to have been pocketed for now.
The big question of the day today is . . . Where will LeBron go? My personal feeling is that he will end up with the Chicago Bulls. What greater stage can he play on than Chicago? Seriously . . . I know you Clippers fans are hopeful, too, but the former playhouse for MJ could only suit the talent of the present King of basketball.

Anyway, moving on . . . the stock market rally this morning is spurred along by the release of the Initial Jobless Claims for the week ending July 3rd. This report showed a significant drop from the previous week. This week's total claims came in at 454,000 --very close, but better than analyst’s expectations of 460K. This number is down 21K from the previous week and represents the lowest reading since the beginning of May. Even better, Continuing Claims dropped a whopping 224K w-o-w to 4.41M -- the lowest reading in 8 months! No news moves the markets like job news and housing news, and this report is finally a positive one.

Hence, with a positive stock market, we typically see a sympathetic credit market, and such is the case today. Rates are up just a bit from yesterday as credit managers wait and watch what happens on Wall Street. The trading is pretty choppy at the NYSE, so don't look for a substantial run up again today. I think bullish traders will be happy to hold onto yesterday's gains if they can.

Have a terrific Thursday!