After a quick dip in stocks on the latest Treasury auction, markets resumed their ascent on Thursday. The government sold $11 billion of 30-year bonds at a yield of 4.72 percent, lower than where the 30-year was before the auction. At first glance, the auction results sent investors out of stocks and into the relative safety of bonds but after further consideration, investors jumped right back into buying stocks. Read and listen to what the pros had to say…
US Stocks Head for 'Flat' Summer
"We're due for a little bit of a correction—we've come pretty far, pretty fast," said Scott Armiger of Christiana Bank & Trust Company. Although he doesn't plan on shorting the markets, he believes "we're in for a long, flat, dry, hot summer."
We’re sensing a little bit of a bifurcation in the markets, said Alec Young of Standard & Poor’s. “So the markets are climbing, but it’s a tale of two markets—we’ve got some weakness in the U.S. oriented space such as consumer discretionary and retail, while the action seems to be in the 'Chasing China' trade: commodities, materials and energy,” he said.
Problems in the Republican Regulatory Reform
Rep. Ed Royce (R-Calif.) said the Republican regulatory reform plan ends the government bailout and sets up a system where the market will know how bankruptcy will be handled. But he said that in both on the Democratic plan and the Republican plan, “there’s something missing—the issue of insurance regulation.” He pointed to AIG as one of the major problems the U.S. confronted.
How to Fix the Health Care Plan
We’re moving through the legislative process and the contour of what we want is clear, said Peter Orzag, Office of Management and Budget, of Pres. Obama’s health care plan. “We need to address the inefficiencies, reduce cost, improve quality and do it in a deficit neutral way,” he said.
Bond Yield Surge Concerns
We don’t know what’s been driving the bond yields, but the rising will undermine certain aspects of the economy such as the housing market, warned Roger Nightingale of Pointon York. “It is hard to forecast a strong recovery in housing by output or prices unless we get a little bit of relief,” he said.
US Investor Confidence On the Rise
U.S. investor confidence is on the rise, said Clive Hyman of Hyman Capital Services. There’s been a jump in the stock market, and the automotive industry “is in the tank,” he said, "which is why they’re having to increase rates to drive the sales away." He said he is concerned that the U.S. government isn’t moving as quickly as it said it was going to.
Economy 'Pretty Good' in 2010
“Business is getting better [and the economy is] coming back to some normalcy,” said Mario Gabelli of GAMCO Investors. He said the U.S. economy will pick up slowly but surely — and 2010 and 2011 will be “pretty good.”
Short-Oil and Energy in Long Term
The world is short-oil and energy in the long term, said Malcolm Graham-Wood of Hanson Westhouse. “The IEA have a poor record for forecasting,” and said OPEC is consistently more accurate predicting where oil prices will go, he said.