Just a reminder that this will be the last regular edition till 6/1.  If action is required, I’ll be in touch via Subscriber Alert.

Economics

   This Week’s Data

    Weekly mortgage applications fell 4.4%.

    Weekly jobless claims fell 12,000, in line with forecasts:
    http://www.calculatedriskblog.com/2009/05/unemployment-claims-continued-claims-at.html

   Other

    Cap and trade delusions:
    http://reason.com/news/show/133572.html
   
    Update on the Baltic Dry Index:
    http://mjperry.blogspot.com/2009/05/chinese-demand-increases-bdi-hits-7-mo.html

    Bad news for US trading partners:
    http://www.ritholtz.com/blog/2009/05/global-economies-plummet/

    Debt as a percent of GDP, pictorially:
    http://gregmankiw.blogspot.com/2009/05/fiscal-future.html

    Apartment rents continue to fall:
    http://www.calculatedriskblog.com/2009/05/residential-rental-market-and-inflation.html

Politics

  Domestic

An alternative to Obama’s health care plan:   
http://www.realclearpolitics.com/articles/2009/05/20/an_alternative_to_obamacare_96575.html

  International War Against Radical Islam

The Market
    
    Technical

    The indices (DJIA 8422, S&P 903) remained above the 8401, 876 support level but were unable to breach their May 2009 highs (circa DJIA 8574, S&P 929).  That leaves them in far too tight of a trading range for them to stay there for very long.  Above 8574, 929 resistance exists at 9078, 947; below 8401, 876, there is support at 7437, 740.

    One additional note: volume picked up dramatically yesterday, but that volume was weighted to the sell side.  Are the sellers finally stepping in?  You know how I feel about one day trends, but this bears watching.  It could be an early tell.  
    http://tradermike.net/2009/05/may_20_2009_stock_market_recap

    The deflation risk is disappearing from the TIPS valuation:
    http://seekingalpha.com/article/138886-deflation-risk-disappears-from-tips-charts-inflation-on-the-horizon

    Which at least partially explains:   

    The dollar is breaking down and gold is moving up.  This is a positive for our strategy of emphasizing energy and materials and trimming financials and retail.
    http://traderfeed.blogspot.com/2009/05/weak-dollar-strong-commodities.html
    http://bespokeinvest.typepad.com/bespoke/2009/05/gold-breaks-downtrend-and-dollar-breaks-down.html

    And oil is moving up:   
    http://econompicdata.blogspot.com/2009/05/why-oil-spike.html

   Fundamental
   
    Yesterday’s headlines:

(1)    The Fed released the FOMC minutes from their April 28-29 meeting.  Bottom line: the language was somewhat more pessimistic than that from the prior meeting.

(2)    during an appearance before the Senate Banking Committee, in an answer to a question about TARP, Geithner alluded to the potential repayment of ‘less than $25 billion’ by the banks of TARP funds.  If he meant it (and there is some disagreement over whether this was a misstatement), the $25 billion number wouldn’t square with the current talk on the Street regarding bank repayment of funds.  Based on Tuesday’s reports that Goldman Sachs, J P Morgan and Morgan Stanley would exit TARP in a first wave, the total of their repayment would amount to considerably more than $25 billion.  This bit of cognitive dissonance from Geithner gave the Market the willies and was a major factor in the decline in the bank stocks.

(3)    Reuters is reporting that Uncle Sam will buy GM.  As part of the deal, it will forgive the $15 billion in TARP money.  I repeat: ‘How can a major industrial sector run by the government, saddled with  union legacy costs producing cars that consumers can’t afford and don’t want be a stimulant to economic growth?’
http://www.cafehayek.com/hayek/2009/05/how-will-you-spend-your-2800.html
          http://mjperry.blogspot.com/2009/05/arent-regulations-form-of-tax.html
          http://econompicdata.blogspot.com/2009/05/united-states-of-autos.html