David A. Rosenberg
March 8, 2010
Chief Economist & Strategist
Economic Commentary
drosenberg@gluskinsheff.com
+ 1 416 681 8919
MARKET MUSINGS & DATA DECIPHERING
Breakfast with Dave
WHILE YOU WERE SLEEPING
Equity markets are broadly higher, especially in Asia. It is more mixed in Europe
despite further pledges to aid Greece — though CDS spreads have tightened to
six-week lows. Paul Volcker is on the wires saying that the Euro should have no
trouble surviving the Greek debt dilemma. Bonds are trading defensively pretty
well everywhere in the world to start off the week (we also have $74 billion in 3-,
10- and 30-year bond issuance coming). In further confirmation that risk
appetite is back, the U.S. dollar and the Yen are both softer this morning.
The commodity complex is receiving a lift from the oil price as WTI tops $82/bbl for
the first time in two months. German industrial production rose 0.6% in January,
which was less than the 1% consensus estimates (and all in energy production)
but for Mr. Market all it needs to see is the plus sign in front of the digit.
It is amazing that the major equity indices are in the process of retesting their
January highs and the lesser more speculative barometers have already done so,
given the sharp weakness we have seen in the housing data of late — starts, sales
and prices. It was housing that got the economy into this mess and one would
think that housing will have to lead the way out. After all, it is the quintessential
leading indicator — we can only assume that the Conference Board would agree
seeing as building permits is one of the 10 components of the leading economic
indicator. However, the problems in the housing market are so intense that the
government is now contemplating a move to subsidize the short-sale process —
basically going from a strategy of having foreclosed households stay in their home
via modifications to a strategy of paying them to leave. It pays to have a look at
Robert Shiller’s column in yesterday’