- Roginsky: The Botax Whose Time Has Come
- Farrell: Testing Those International Waters Again
- Tamminen: Copenhagen And Beyond
- Dubai is Harsh Reminder of Prolonged Global Recovery
- Farrell: What's Different On This Black Friday
- Crescenzi: Claims Level Suggests End to Job Losses
- Schork Oil Outlook: Gas Bulls Pinning Hopes on Mother Nature
- Busch: The Debt-Interest Rate Paradox
- Busch: Markets Smell a Country Rat
- Schork Oil Outlook: Mission Impossible For The Bears?
MOST SHARED
- Dubai Stocks Shed 7%, Abu Dhabi Tumbles 8%
- Timeless and Time-Tested Warren Buffett Watch Predictions
- Governments Must Take Steps To Avoid More Dubais: El-Erian
- Black Friday Sales Disappoint Investors; Amazon Up
- US Senator Opposes Fed Chief Bernanke Renomination
- Tiger Woods Wants to Protect Family Privacy: Agent
- Dubai's Nakheel Seeks Suspension $5.25 Billion in Bonds
- Dubai is Harsh Reminder of Prolonged Global Recovery
- BofA Aims to Clearly Spell Out Credit Card Terms
- ESPN The Magazine’s Body Issue: A Financial Success
- Cyber Monday: The Last Vestige of Dotcom Hype
- Dubai Fear is 'Noise'—Stay Fully Invested: Strategist
- Tech Comes to Holiday Shopping's Rescue?
- Timeless and Time-Tested Warren Buffett Watch Predictions
- Roginsky: The Botax Whose Time Has Come
- Buy or Hold: Analyst Rates 10 Retail Stocks
- Execs: Tis The Season To Take Control
- November Winners & Losers
- Buffett's Predictions For Next Year—And Every Year
- Governments Must Act to Avoid More Dubais: El-Erian
- Oil Demand Sees Year-Over-Year Rise, First Since 2007
- The World's Biggest Debtor Nations
- Dubai Stocks Shed 7%, Abu Dhabi Tumbles 8%
- Cyber Monday: The Last Vestige of Dotcom Hype
- Goldman Sachs Party Ban: No Gatherings of 12 or More
- Fed Tweaking Plan to Pull Money Back out of Economy
- Scientists Gone Wild: Climate Debate Turns Nasty
RSS FEED
CNBC Guest Blog
Text Size 
"The days of precipitous declines are done and revenues are beginning to look healthier." So said Rupert Murdoch in announcing News Corp.'s [NWS
Loading...
()
] earnings. I have no axe on News Corp., but I like the headline. I wonder if: a) it's accurate; and/or b) if we will be seeing more such announcements in the near future. If you take just today's unemployment claims number as a guide, you would be encouraged.
Initial unemployment claims were down 34,000 from last week to 601,000. That is still a staggering number that represents more personal heartache than should exist, but it is down. And the four-week moving average was also down 15,000 to 623,500. This is the fourth week in a row of declining numbers. It will take a little more to convince anyone the recession is over, as it has been a decline of more like 40-50,000 from the peak that has marked the end of recessions. The auto mess is likely to spike claims up again, but we should be able to factor that into our analysis over the next few weeks.
Other stuff going on this week has been on the positive side as well. The government bond auction the other day for three-year notes was well received, and yesterday's 10-year auction was especially good to see. The government sold a larger-than-usual amount, and it was well-overbid, with a cover of 2.47 times, and the average over the past few years has been 2.3 times. Thursday's 30-year auction was also well-received, with a bid to cover ratio of 2.14 to 1.0, which is above-average for the 30-year. The fact that the demand is so relentlessly large is good news for future funding needs.
Libor is lower than ever at 0.96%, and the three-month Treasury is skewed at 0.19%, but even at that, the TED spread is 77 basis points. If the Treasury reverts to a more normal level — as I think it will after the stress test — then we should approach the long-term TED spread average of 50 basis points. Clearly, the intrabank lending market is healed.
Baa bond yields are down below 8.10%, and it's apparent that the huge hoard of cash sitting in money funds and bank accounts is starting to move to better-yielding vehicles. The spread between Baa and Treasuries is around 480 basis points, which is more than twice the normal, but it is improving, as is the spread between jumbo mortgages (at around 6.5%) and Treasuries. That spread has historically been around 215 basis points and is now a bit north of 300 basis points. But that is almost close enough to plan a holiday dinner together and is an enormous improvement. I think the 30-year jumbo rate is a critical indicator of credit availability. A 30-year jumbo can't be sold to Fannie or Freddie. It can't be securitized since that market doesn't exist. So for a bank to make the loan, it's with the knowledge they will keep it on the books. Lower jumbo rates will be a solid indication of credit availability.
The wonderful run we have had in the market makes me a bit nervous. From an intraday low of 666 on the S&P in early March to 900-plus has been on light volume and poor breadth. Far too many low-priced stocks have been the volume leaders, and I continue to think it would be very healthy if we could correct a bit and take a rest.
The lower 800's would be my target over the next few weeks.
_______________________________________
Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC. 
Data is a real-time snapshot *Data is delayed at least 15 minutes