The 100pt gain yesterday was mainly due to GM coming to an agreement with the UAW and speculation that Bear Stearns is going to have someone come in and take a big stake in the company. The market is poised to open up again today, but I think we end down big. Reasons revolving around housing issues again. New home sales are expected to be be down 5.2% but there is a lot more downside risk and KB Homes, who reported this morning only confirms that. See below:
*KB SEES RISING FORECLOSURE RATES CAUSING MORE HOME PRICE CUTS
*KB HOME SEES HOUSING INDUSTRY CONDITIONS WORSENING INTO '08
*KB HOME SEES HOUSING INDUSTRY CONDITIONS CONTINUING TO WORSEN
*KB HOME BELIEVES IT WILL BE 'SOME TIME' BEFORE RECOVERY BEGINS
*KB HOME 3Q HOUSING GROSS MARGIN FALLING TO A NEGATIVE 28.0%
*KB HOME 3Q CANCELLATION RATE 50% VS 34%
*KB HOME SEES NO SIGN THAT HOUSING MKT IS STABILIZING
The treasury market is already up a good amount which signals that investors are picking up safer investments. I have been raising my cash positions going into all of this strength. I am actually hoping we have a nice pull back so that I can start layering into CLNE again.
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