Bulls didn’t have good news going for them, except for the NAR’s Pending Home Sales (up 7.3%). The NAR’s recent flub and readjustment of previous home sales data leaves the organization’s reliability questionable. Nevertheless, it was enough to energize the animal spirits despite a worse than expected Jobless Claims (381K versus 372K expected) from a shortened week. The Chicago PMI came in just slightly lower (62.5 vs 62.6 previously) and the Bloomberg Consumer Comfort Index declined (-47.5 vs -45 previous). Oddly enough, the Pending Home Sales data got Homebuilders ETFs (NYSEARCA:XHB) to lead the rally higher even though they’re only indirectly involved in the data.
The spin on Jobless Claims data is borderline hilarious – USA Today declaring the cause of the current stock rally is an “upbeat jobs report”. Seriously.
More sobering news from ICI (Investment Company Institute) 2011 saw $145 billion redeemed from U.S. equity mutual funds in 34 of 35 consecutive weeks. This didn’t transfer to growing ETF equity assets either. No, most of this went to bonds or to the sidelines. This is mostly retail money and it won’t be coming back anytime soon. This repeats a pattern last seen since the “flash crash” of 2010. Of course, let’s remember, investors (retail as well) have short memories. But I digress.
Anyway, bulls got major indexes back to green for the year which is how things are programmed it seems. Gold and silver continued their sharp declines; the euro was steady and even bond yields fell.
Worries over Spain persist as Spanish 10-year bonds still hover near 7%. Meanwhile Italy has over 500 billion in euros it needs to raise in 2012. But for now bulls seem unworried.