Economics

   This Week’s Data

    Weekly mortgage applications fell 2.9%.

    Here are a couple of economic indicators few talk about:
    http://www.calculatedriskblog.com/2009/01/architecture-billings-index-as-leading.html
    http://www.calculatedriskblog.com/2009/01/truck-tonnage-index-cliff-diving.html

    Baltic Dry Index up seven days in a row:
    http://bespokeinvest.typepad.com/bespoke/2009/01/baltic-dry-index-up-seven-days-in-a-row.html

    December durable goods orders fell 2.6% versus expectations of a 1.5% decrease; that is the fifth decline in a row.
    http://econompicdata.blogspot.com/2009/01/durable-goods-december.html
   
   Other

    I am not going to let go of the critical analysis of the stimulus plan:
    http://corner.nationalreview.com/post/?q=NDBiYjY3OWJjOWMyMWFjYmZjMjU2MTAwNDg1OGExNTA=

    What the Fed can do to limit the risk of future inflation:
    http://www.american.com/archive/2009/preemptive-strikes-against-inflation

    What happened to the money in the last infrastructure bill?
    http://volokh.com/posts/1233088443.shtml

One of the virtues of capitalism is economic growth:
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Politics

  Domestic

  International War Against Radical Islam

The Market
    
    Technical

    A reverse head and shoulders formation?
    http://www.ritholtz.com/blog/2009/01/sp-500-forming-a-head-shoulder-pattern/

    The S&P trades above its 50 day moving average:
    http://bespokeinvest.typepad.com/bespoke/2009/01/sp-500-back-above-50day-moving-average.html

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    Great day in stock land.  For the moment it appears that the bulls have won the directional battle that has been the focus of my attention the last two weeks.  The indices (DJIA 8375, S&P 874) closed not only well above that 8133/839 old support level but well over the upper boundary of the very tight trading range that had defined this most recent investor standoff.  Importantly though, in my opinion, stocks remain in a trading range, they have simply redefined the boundaries.  In my simplistic way of looking at the Market, I see a possible narrow trading range defined by DJIA 7853/9004, S&P 804/942 and a broader range bordered by DJIA 7437/9659, S&P 766/1004.  Whichever is the case, stocks are getting close to a level where our Portfolios will need to start moving towards a higher cash position than their current 17%.

   Fundamental
    
The new ‘bad’ bank plan seems to have worked its magic.  The only thing new to add to yesterday’s narrative was a statement late in the day (yesterday) by Geithner that it was the administration’s intent to come out of this mess with a banking system made up of private institutions and owned by shareholders.  That should add to the ebullient mood of investors.  My bottom line is that (1) quoting myself from yesterday--‘The point is that there are more questions now than answers; and until we get those answers, it is tough to make a value judgment about the worth of this plan.’ (2) but in the end the structure of the plan matters less than the increased certainty in brings to the credit/banking crisis, (3) meaning that based on what we know now, it will add visibility to the downside in stock prices, i.e. make it more likely that the November 2008 lows marked the bottom of this Market cycle, but will probably add little to the upside.

Barry Ridholtz’ thoughts:
http://www.ritholtz.com/blog/2009/01/who-is-the-treasury-secretarys-boss/


    The House voted on the stimulus plan late in the day; and while it passed, it did so with a much smaller margin of victory than had been anticipated.  It carried not one republican vote.  That probably means that there are some serious changes that need to be made before this monstrosity is enacted and most of those will be for the good.  That should give stock prices an additional kick of adrenaline.

    Finally, the FOMC met and its statement released after the meeting contained little of investment import.