Daily Market Commentary for September 26, 2011
U.S. markets were nicely higher during the session, with the Dow Jones Industrial Average hosting a high triple digit gain into early afternoon on Wall Street. (read more at Millennium-Traders.Com) http://www.millennium-traders.com/news/newscommentary.aspx
Window-dressing is likely into this, the final week of the quarter. Lack of core data could result in a continuance of choppy trading until we strike the new month of October.
Per reports from Commerce Department, the sale of new U.S. homes fell 2.3% during August to an annual rate of 295,000, marking the fourth straight decline - indicating that the depressed U.S. housing market shows no signs of recovery. Sales during the month of August dropped to the lowest level since February. The sale of new U.S. homes in July were revised up to 302,000 from 298,000 on a seasonally adjusted basis. After peaking in April 2011 at 316,000, new-home sales have gradually declined. The average selling price tumbled 8.7% from July to $246,000, the lowest level since early 2009. Unsold new homes on the market represent a 6.6 month supply at current sales rates. The actual number of new homes available decreased to 162,00 to set yet another record low. Sales fell the steepest in the Northeast, down 13.6%; in the West sales declined 6.3%; in the South sales declined 2.4% however, in the Midwest, sales rose 8.2%. Even though total new U.S. homes sales are 6.1% higher compared to one year ago, they remain near historically low levels. Fewer families can afford to buy a home or they are too concerned about the security of their own jobs to take the plunge of buying a new home and as a result, the number of unsold new homes on the market fell last month to 162,000, setting yet another record low. The supply remained unchanged from previous month at 6.6, based on sales pace in August. The average sales price of a new home plummeted to the lowest level seen since January 2009, at 8.7% to $246,000. Over the past year, the sale of new homes has clung to a narrow range of 275,000 to 331,000 a month which indicates an imminent turnaround is nowhere to be seen. During 2006, new home sales averaged 1.05 million a month - before the housing bubble burst and the housing market collapsed.
Berkshire Hathaway Inc (NYSE: BRK-B) announced a stock-buyback plan that promised a premium of up to 10% over book value at the time of purchase. Berkshire said it is repurchasing shares as â€œthe underlying businesses of Berkshire are worth considerably more than this amount, though any such estimate is necessarily imprecise.â€ Omaha-based Berkshire reported they will fund the buyback with cash on hand. â€œRepurchases will not be made if they would reduce Berkshireâ€™s consolidated cash equivalent holdings below $20 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire,â€ the company said.
For the fourth consecutive session, Oil futures traded lower. Crude-oil Futures settled 0.7% lower last Friday as investors rushed for cash on fears the European debt crisis would intensify and provoke a liquidity crunch setting the tone for lower growth in the U.S. On a positive note, the result should provide lower prices as the pump and no one will dispute this fact.
A hawkish member of the European Central Bank's Governing Council Yves Mersch said he does not rule out interest rate cuts if the euro-zone's economy worsens considerably. "Interest rate cuts aren't completely ruled out," Mersch, who is also the head of Luxembourg's central bank, is quoted as saying by German newspaper Boersen-Zeitung. "We have leeway if the euro-zone's economic dynamics worsen considerably, which would go against current data." The ECB has noted the 'distinct weakening' of the economy, however this "has been in our forecasts for a long time," he said. Mersch added that the likelihood of a recession in the euro-zone is small.
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