Financials AXP, JPM, WFC, C All Lose Steam in Trading

Russia is grumbling. Seems they are not happy that rising debt, slow growth and record Treasury bond sales are dragging the U.S. dollar down. In fact, Russian president Medvedev is calling for some kind of global currency to replace the U.S dollar as the world’s reserve currency. (Sound familiar? Like he’s taking a page from the Chinese?) 
In an interview with CNBC on Monday he said, "We need some kind of universal means of payment, which could create the basis of a future international financial system…"

Travelers (TRV) replaces Citigroup (C) on Dow

Perhaps you’ve heard the phrase "the sins of the father shall be visited on the son." Well, here’s a case where that’s definitely not true:  
Yesterday, The Travelers (NYSE:TRV) insurance took the place of its parent Citigroup (NYSE:C) on the Dow Industrials Average.  
Reuters reports that in 2002, when Citigroup spun off The Travelers, former Citigroup CEO and founder Sandy Weil said he wanted to focus on "…important opportunities to invest our capital really on a global basis, in much more high-growth businesses."

DJIA, Nasdaq, S&P 500 Up in Morning Trading

Both the Nasdaq and the S&P 500 are hitting new recovery rally highs today. Part of the reason for today’s strength is the better than expected construction numbers released this morning. 
The 0.8% gain in construction spending for April was the biggest gain in nearly a year. And it was far better than economists’ expectations of a 1.5% drop.

Indices Heading for New Highs or a Pull Back?

The high close for the Nasdaq since the rally began was 1,763. Yesterday’s close was 1,751. For the S&P 500, the high close was 929 and it closed at 906 yesterday. 
I mention these levels because they are what traders are watching. Some believe that, since the indices haven’t taken out prior highs, the recovery rally is overdone and that a sharp sell-off is coming. Others say the recession is ending, the economy is improving, and there’s more upside coming. To them, any weakness in stock prices is consolidation for the next move higher. 
It should be remembered that the Nasdaq is still around 800 points, or 32% of its 2008 highs. The S&P 500 is 660 points, or 42% off its 2008 highs. So it’s not like the indices are anywhere near prior levels. Who’s to say what should be a decent target for a recovering stock market?

Housing Bottom and 19% Gain on BlackRock (BLK)

Yesterday, it was reported that median home prices fell to $209,700 from $246,400 in April 2008. That’s a steep year-over-year correction, even though prices were up from March 2009. 
Today, we hear that that new home sales posted a gain, though not as big as expected. 
The housing market is bottoming. How long will the bottoming process take? Common sense would say it will take a while, probably a couple years, to work off the inventory and get current delinquent loans back on track.

Oil Tops $63: Continuing Profits for Small E&P Stocks

So I heard a radio ad this morning from a mortgage company. It might have been PNC, but don’t hold me to it. It was typical mortgage ad fodder: rates are as low as they will go, the housing market is heating up, prices will rise, oil is headed to $80 a barrel this summer… 
Yeah, I did a double-take, too. What’s a mortgage company doing discussing oil prices? And more importantly, where are they getting their numbers from?

North Korea Missile Test Dampens Asian Markets

I hope every one had a fun and relaxing Memorial Day weekend. Pools are open, school is winding down, and summer is almost here. 
There were some fireworks over the weekend, but the not the fun kind. North Korea’s Kim Jong Il staged a nuclear bomb test and fired a couple short-range missiles. It’s reported that stocks in Asia were lower after the tests, but I think we need to be more clear about the risk that North Korea poses to the financial markets.

Greenspan and China Both Need to Be Quiet

One of the architect’s of the financial crisis issued a warning that banks still have unfunded liabilities that were not properly accounted for by the Treasury Department’s "stress tests."
Yesterday evening, Alan Greenspan also said that "…until the price of homes flattens out we still have a very serious potential mortgage crisis."

Housing Bottom: TOL Reports Tomorrow

Stocks are down this morning after a "surprise" drop in new housing starts and a fall in new building permit applications. This shouldn’t really be a surprise. After all, we are in a recovering economy, and that means progress will come in fits and starts. And since housing was the underlying cause of the last run-up and a major contributor to the market slide, there should be no question that we’ll see "surprises" like this going forward.