“This housing data is so good, I’m never going to school again”
Dow: 13,578 (+0.10%) S&P 500: 1,461 (+0.12%)
If only today’s market summary could be expressed as a montage to the tune of an upbeat 80′s pop song. There weren’t any sexy headlines, but there was an upbeat attitude, a lot of rhythmic hip swinging, and positive sentiment all around trading floors like they were arcades: the market drivers were housing and econ news from Japan. Investors were showered with casa-related news today and they saw big improvements in existing home sales and new construction of single family houses. The Bank of Japan announced an expansion to their own quantitative easing program and global markets welcomed the Far East headline with open arms (even if they showed up a bit late to the stimulus party). The Dow climbed 13 points on the pretty quiet day.
Existing Home Sales and Single-Family Home Construction both increase
Homes mean a lot to college students (laundry and fridge raids). Home data mean a lot to economists (a key area of the economy). The National Association of Realtors reported that sales of previously owned homes (“Existing Home Sales”) rose much more than expected in August. Although “Housing Starts” overall didn’t climb as much as forecasted last month, construction of single family homes specifically (the bread-n-butter unit of American housing data) reached their highest level in 2 years. Purchases of new homes & construction of single family homes are solid evidence of a strengthening housing market that economists noticed was bottoming-out this summer as it recovered from its ’08 crash. Unshockingly, shares of housing construction companies, like Lennar (LEN) and the Home Depot (HD) increased.
Bank Of Japan increases stimulates its economy – increases bond-buying program to 1.8 trillion yen per month
A textbook case of peer pressure is sweeping the central banks. First it was the ECB’s bond buying program to keep struggling government borrowing rates down, then QE3 here in the United States will buy $40 billion of bonds every month to lower long-term interest rates. Japan laughs at theses billions and anted-up today, promising trillions of bond purchases a month…Trillions of Yen (killer exchange rate). Still a respectable $23 billion/month, though, that the Bank of Japan is injecting into its economy to increase the money supply and encourage more lending. The prescription for slowing economies is the same all over the world right now: Print money and spend it on long-term bonds to keep interest rates low and don’t worry about inflation. The Nikkei 225 stock index in Tokyo shot up 1.2% today and the world was happy to see another country enact growth measures.
Tomorrow:
- Your weekly helping of Jobless Claims and the Federal Reserve survey of manufacturing in the Philadelphia region
© 2012 MarketSnacks
