Interest Rate Roundup

Tuesday, January 02, 2007

Things I'm wondering about this week ...

Happy New Year everyone. It's always tough to get back in the swing of things after a long holiday weekend. That's especially true this morning, which is more sedate than usual due to the funeral for former President Gerald Ford. Most capital markets are closed in his honor.

I'm going to try something new here in 2007. I'll try to start each week off by asking a few key questions about the financial markets -- let's call it "things I'm wondering about this week." Here's the 1/2/07 edition ...

- The Dow, Nasdaq, and other U.S. stock markets finished the year with nice, double-digit gains (almost 14% on the S&P, more than 16% on the Dow). But foreign stock markets crushed ours, with Asian stocks leading the way. Will this outperformance continue?

- The U.S. dollar bounced of its low at the end of 2006. Is that bounce ending now? Will the Dollar Index break 82.24 on its way to new lows?

- Treasuries got whacked for a couple points last month. Will the selling continue? Just how strong will this week's reports on manufacturing (December ISM) and jobs (December nonfarm payrolls) be?

- Then of course, there's housing. We keep hearing from the "experts" how the bottom is in. But don't tell that to Lennar. The home builder just warned it'll lose a boatload of money in the fiscal quarter ended November 30. The reason: Charges of as much as $500 million related to the write-down in value of land investments and land options.

Home builders are walking away from land all over the country due to the housing slump. Another builder, Hovnanian, recently took write-offs totaling more than $300 million.

When will it end? Will the key 2007 spring selling season save everyone's bacon? (Here's a hint: My thoughts have been well-chronicled on this blog!)


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