Tuesday, September 25, 2007

Lennars, Lowes, housing, retail... all down. All in line with my expectations. All these all contribute to the downward movements in Housing and eventually bottoms will form sideways trending support opposed to a bounce off support. All this also may point into less inflation from a weaker economy. One argument to a temporary slow down in the economy can be that the higher end consumers are about 30%+ of the consumer make up a considerable amount of GDP drive. Tied close is their net worth and partly in the Stock Markets. This will have short term adverse affects in consumer spending, since the stock markets may continue a downward trend we may see a slow in economic growth, though this will all be lagging in the Economic data coming in. In other words when these reports come in as they do, conditions may be better than they appear, which presents a buying opportunity.

Oil prices starting on a retreat will also definitely contribute to future growth. This may allow lower end consumers to be able to spend house hold income else where.

Looking at interest rates on the 10 year note, support can be found around 108, there appears to be convergence which would lead me to believe a bounce of support thus current yields will start retreating once a slight increase is experienced. As the same can be said for the 5 year note with support at 106, 2 year note at 103. This predicted move in the bond markets can mean short term fears of economic growth and fear of further credit problems, and downward movements in the equity indexes.

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