Monday, June 9, 2008

Market Points

A couple of various points:

I was in Austin on Sunday and was talking to a store manager at one of the outlets stores in San Marcos. I asked about sales and she said it has been abysmal. She said on Saturday they were 4,000 under on a goal of 14,000 for the day or 29%. She said they have been consistently fallen short by 2,000 for several weeks now. She said after 5:00 on Saturday she never seen the outlet mall so empty.

The story in the market today was not the equity market (though I will get to that later). It was the credit markets. You had a 2 or 3 standard deviation event in treasuries. The 2 year climbed substantially and the yield on the 10 year fell essentially creating a flattening of the yield curve. The violence of both these moves is very rarely seen. What is this signaling? Possibility of future Fed interest rate hikes and a very negative environment for equity indexes.

Which brings me to the equity markets. In my opinion a very bearish day on the street though you would not necessarily notice it at first glance. The financials continued to get slaughtered. The XLF was off 1.37%. This was after being up .5% early in the day. You take out Alcoa and McDonalds and I do not think the Dow would have finished up. If you also take out Wal Mart and Exxon and the Dow would have been down alot. You had the S&P 500 touch 1369.98 twice and sell off sharply (why do these technical points matter so much? Does not make sense). We may muddle around for a couple of days and consolidate after Friday's plunge but with what the treasury markets are signaling and the financials are signaling it does not look pretty for the markets.

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