The Pulte bid for Centex appeared to show that the housing industry has a pulse after all; there's been strong speculation about what the minutes from the Fed's last momentous meeting will say; and Alcoa's earnings, though dismal, failed to send Wall Street into a tailspin. The pros generally agreed about the effects of all those things, but there was no consensus at all about how soon things will look better overall.
Housing M&A No Surprise; 3 Months to Turnaround
Pulte's bid to buy Centex, with the housing sector still very weak, is not a surprise, according to BNY Mellon Wealth Management's Christopher Sheldon. Companies use times like these to re-position themselves for recovery.
Nariman Behravesh of IHS Global Insight said the economy has not reached bottom, although it's approaching it. Two indicators, including the infamous "second derivative," have turned positive, and others are bouncing around between plus and minus. Behravesh's best guess is that the turning point is about three months away.
We'll Be 'Cautiously Optimistic' For a While Yet
Mutual fund managers don't want to have their assets parked in cash, said Michael Gurka of First Street Capital Partners. The only way this market is going to work is more outlays into some of the sectors that have been beaten up. Stocks appear to be stuck in a hundred-point range around 800. Technology will lead the recovery, but he's not surprised by signs of profit-taking in the Nasdaq. "Cautiously optimistic" is a phrase that's going to be around for a while.
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The Rally is on Hold — And That's Okay
LotusBrokerage.com's Bob Iaccino said it's time to re-educate the investor about what really constitutes a "respectable return." The market was up 8 percent in March; that's not going to happen every month, and so he's not disheartened by this weak week. Low volumes in the middle of a shortened trading week don't bother him. Neither do Alcoa's downbeat numbers. He's encouraged by the Pulte-Centex deal; although it's small, it will be an accumulation of such deals that helps recovery.
Investors Appear to Be Buying on the Rumors
Art Cashin of UBS Financial Services said investors are encouraged about the housing sector merger as a sign of a bottom, but he feels "that's a bit of a reach." They're also heartened by rumors about the Fed lengthening the terms of some of the loans from three years to five years. The afternoon release of the minutes of the last Fed meeting will also bear watching. This week's pullbacks have helped correct the "over-bought" situation.
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