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Market Insider: The Week Ahead
Econorama
Housing data is released Tuesday with both existing and new home sales, reported at 10 a.m. Consumer sentiment is also released that day as is the final read on third quarter GDP. On Wednesday, durable goods data is released as is personal income and weekly jobless claims.
"Our sense is that existing home sales are probably holding up better than one might have expected. There's been a big move in prices," said Stephen Stanley, chief economist at RBS Greenwich Capital. But he said the new home sales could be worse.
"Builders don't have quite as much flexibility on price," he said. "The key thing at this s point is obviously we have this tremendous inventory overhang..I think it's good to see big drops in construction because obviously the more that's going on the the more of an inventory problem we'll have down the line."
"We've gotten to such low levels in housing starts that that number could bottom in the next three or four months..In general, you're looking at maybe next spring for home sales to bottom if the credit situation starts to improve," he said.
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In the past two weeks, mortgage rates offered from some institutions have fallen significantly, to levels not seen in 50 years as the Fed participates in he market. But Stanley said that movement is not going to cause much change in the housing market as yet. "If you believe the mortgage application data.. It looks like it's doing much more on the refinancing side than on the purchase side. That's not all that surprising," he said.
Stanley said the other important data in the coming week is the durable goods data and the personal income and spending data Wednesday.
Currency Craziness
The dollar lost nearly 4 percent against the euro in the past week and 2 percent against the yen in a week of high volatility.
"We'll probably have a very short reflex rally in the euro," said Boris Schlossberg, director of currency research at GFT Forex.
The dollar tumbled after the Fed cut rates to a range of zero to 0.25 percent and announced a series of aggressive moves to help the economy. Then the European Central Bank Thursday said it would lower deposit rates, reversing the move. "The primary driver of the long euro trade was yield. By taking away the incentive, that took the euro from $1.47 to $1.38 in two days," said Schlossberg.
"You could attribute the volatility to illiquidity, which is probably a large percentage of why we are having such large moves. But I think underlying it is a very worrying trend. I think there's a lot of uncertainty in the market about direction of the global economy. This kind of volatility tells me we have some very troubling months ahead," said Schlossberg.
Traders say currency trading could be quieter over the holiday period as many traders are heading for vacations. For the dollar, the next big economic news is the December employment report on Jan. 9.
Oil Drill
Crude oil in the past week fell 26 .8 percent to $33.87 per barrel, the largest decline since January, 1991. The January crude contract on NYMEX expired Friday, and the February contract is at a level of $42.50. So on Monday, crude's front contract will be trading in the low $40s. John Kilduff, senior vice president at M.F. Global, says he thinks crude will stay in the $40s and that the drop in January's contract was the result of a combination of trends. "I think it represents to a large degree the liquidation by hedge funds because of all the redemptions that came in," said Kilduff.
He also said some of the selling has to do with a lack of storage capacity at the industry's delivery point in Oklahoma, and as a result, traders were forced to sell as the January contract expired.
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Data is a real-time snapshot *Data is delayed at least 15 minutes
