- Futures indicate a down opening as traders cash-in from four days of higher prices.
- Investors are hyper-sensitive to over-bought or over-sold indicators and take action when either is violated. Few trust this market and most are quick to take any available profits. This strategy is likely to remain in force for the remainder of the year. Getting a sustained, multi-week advance seems unlikely. Until then the modus operandi will be short term trading.
- Studies have repeatedly shown that 60% of an individual stock’s move is dictated by the direction of the overall market. Wall Street is littered with those who felt they could outsmart the market with insightful stock picking.
- Barry Sternlicht is president of Starwood Capital, a private real estate group. This morning, from Davos, he was interviewed about commercial real estate. Most, including me, think of houses, or homes, when considering real estate. Of course, commercial buildings are a huge component; Sternlicht suggests a $3 1/2 trillion number. While he is a buyer of commercial buildings with a 5-10 year window because pricing is well below replacement costs, he paints a very gloomy picture. He believes that without government intervention the commercial side is likely to spiral down dramatically. He goes on to describe the impact to the tax base of states, cities and municipalities. With building shuttered and owners walking away he fears tax income erosion on a grand scale. What this spells for municipalities is not yet played out. But it certainly means commercial real estate REITs, for one, are off limits. And I am now better understanding why muni bonds are sporting such nice yields.
- Obama was rebuked by the House on two bills yesterday; with Republican led votes the House voted not to delay digital TV implementation. Much more importantly, Obama didn’t get a single Republican vote on the stimulus package. Putting the components of the package aside for a moment (and lord knows there is a lot to disagree with) I find it interesting Republicans go back to their roots when not in control. All of sudden its small government, fiscal responsibility and self determination.
- I got a scare with my inverse Treasury ETF; TBT. With the Fed thinking it may buy up the long end bonds, TBT tanked on Monday. As the Fed’s intentions became more obscure TBT rallied and treasuries sank.
- Capitol One (COF) can probably be shorted again.
- From Mish: U.S. Moves to Bail Out Credit Union Network
Make it a great, great day!
