Update #1/ Week of 11/29/2010 ARA MELKONIANS

Good Morning Everyone and Happy Monday! I hope all of you had a wonderful Thanksgiving holiday and are looking forward to a very busy and joyful Christmas season! We have a nice start to the week with credit markets in rally mode as equities struggle early this morning. The Dow had a losing week in last week's holiday-shortened trading -- losing 63 points. The NASDAQ actually gained 16 points. However, both are down almost 1.5% so far today.

Credit markets assumed the safety posture as usual around the holidays, but are settling down today and hopefully will continue to improve throughout the week. It appears to be global news that weighs on US stock markets this morning. First in the news is the $113 bail out extended to Ireland by the European Union. This would appear to be good news, but it simply highlights the problems in Europe and this news is bringing the euro down to its lowest level since mid September. European bourses are down anywhere from 1.5% to 2% as they head toward the close.

Tensions continue on the Korean Peninsula as South Korea rejected China's proposal for six-party talks and has pushed forward with joint naval exercises with the U.S. Retail stocks, like Amazon which is among today's top performing stocks, are reporting sales from Black Friday, and many are showing an increase in sales compared to the same day last year. It is estimated that up to 33% of holiday sales will occur online.

Home prices in the U.S. continued to fall in the 3rd qtr, with declines in most parts of the country, according to the Federal Housing Finance Agency. FHFA's purchase-only house price index is calculated from mortgages acquired by Fannie Mae and Freddie Mac. It showed a 1.6% drop in the third quarter when compared to the second. Analysts warn that we may be entering a double dip in home prices; however, this dip will be less severe than the first one.

A bright spot in today's mortgage related news comes from the Mortgage Bankers Association which reported Wednesday that its index of purchase applications soared 14.4% for the week ending November 19th. MBA says the increase suggests growing consumer confidence. It offset a 1.0% decline in applications for mortgage refinancing, which in contrast, hit their lowest mark since the end of June. Mortgage applications for home purchases jumped during the third week of November to their highest level since May.

I hope all of you have a terrific Monday and a very profitable and productive week!

ARA MELKONIANS

Update #3/ Week of 11/22/2010 News FROM ARA MELKONIANS

Good Morning Everyone and Happy Wednesday! We caught a little break yesterday with credit markets improving one extra day for the week. All bets were on credit markets moving well into a safe place ahead of the holiday, but with the help of some sabre-rattling in Korea, equities sold off yesterday and credit markets actually improved. Today, we're on the typical day-before-a-holiday program with credit markets way off into a safe place and back-East traders leaving the office to get a head start on the commute.

Helping stock markets make up the losses from yesterday is the Initial jobless claims report for the week ending Nov 20 which totaled 407K. This figure is down 34K week-over-week and less than the 442K initial claims that had been widely expected. Continuing claims came down to 4.18 million from 4.32 million. Both reports mark a 2 year low for this economic bell weather.

Separately, personal income increased 0.5% in October, besting expectations of an increase of 0.4% after no change was recorded for the prior month. Spending for October increased 0.4%, which is weaker than the 0.6% increase that had been expected to follow a 0.3% increase for the prior month. Core personal consumption expenditures were flat for October.

The final Consumer Sentiment Survey for November from the University of Michigan improved to 71.6 after a preliminary reading of 69.3. New home sales, however, for October fell 8.1% month-over-month to an annualized rate of 283K units, quite a miss from the rate of 314K units that had been expected. This housing news may have brought the early rally to a stop, but equity markets have pretty much made up the losses from yesterday, so they should be happy to take the gains and get out of town.

I hope all of you have a terrific Thanksgiving tomorrow with your family and friends!

Ara Melkonians

Update #3/ Week of 11/22/2010 NEWS FROM ARA MELKONIANS

Good Morning Everyone...We wrote last Friday about the stock market needing to generate even a small rally to finish the week in positive territory, and such was the case! The Dow rallied 22 points on Friday to end the week with an 11 point gain for the 5 day trading session . . . almost seems like a plot there somehow. However, on a happy note, credit markets did settle down a bit on Friday and we have a little rally going on this morning in Treasuries. Let's hope that continues!

The relative calm in commodities and credit markets may be a byproduct of news out of Ireland over the weekend which announced that it has applied for financial aid from the European Union. Specifics of the plan have yet to be hammered out, but the news initially spurred the euro higher and cut down the dollar. However, that trend has reversed itself now with the realization that the EU is still in financial instability. As such, the dollar has regained strength and has sent stocks into an opening slide downward.

We learned from CoreLogic over the weekend that their market index for home prices in the US has declined for two months in a row. This comes after a 7 month string of increases in the first 7 months of the year. The latest CoreLongic HPI shows that national home prices declined 2.79% in Sept 2010 compared to Sept 2009. This follows a 1.08% drop year-over-year in August. All but 7 states saw a decline in residential property in September. This is obviously the result of a languishing job market, the cessation of the gov't tax incentive and the foreclosure mess in which we find ourselves. This trend is not likely to improve any time soon.

There are no corporate reports due out today, and no economic news releases are expected. However, data will pick up in the next couple days as revisions to tQ3 GDP are released, data on existing home sales, durable goods orders, personal income and spending, weekly jobless claims, and new home sales are posted. Look for lots of action in the next couple days before markets close on Thursday for the holiday.

I hope all of you have terrific Monday and a very profitable and productive week!