As an update to our post earlier on items we are watching, we thought it a good time to review our key items from our Jan 6, 2009 post. http://street-cents.com/2009/01/06/2009-key-market-items-to-watch/
1. Very short term treasury rates need to rise. Currently the 1,3, and 6 month treasuries are yielding almost zero, we need to see those rates rise. Rates have smartly moved up across the short end of the yield curve, off their near zero yield when we originally posted this report, and appropriately higher for each extension of time.
2. Company buy outs need to commence. Valuations are low, brave/smart companies need to step up to the plate and begin buying out smaller companies at great prices. Buyouts have been announced, and while cancellations have continued by a few old pipeline mergers, we are beginning to see “Merger Mondays” again, as several Monday’s in January were marked with merger announcements.
3. Residential housing prices need to stabilize. Home prices continue to fall, although at a slower pace, but we need stabilization. A second way to review this is to watch inventory. We are currently at almost one year’s inventory; we need this to fall substantially. Unfortunately we have seen little help as of yet in home prices. The Case/Shiller index was down in January, not at an extreme pace, but no major slowing in the collapse of residential prices as of this time!
4. Investor sentiment needs to become more positive. In Q 4 2008 investor sentiment fell to all time lows, we need this to trend more positive. We feel money flows are hampering investor sentiment at this time (watch for more on this later) but broadly investor sentiment remains negative, remember often times this sentiment changes at a very rapid pace!!
We will continue to update you on our country’s progress! JK