Light at the end of the Tunnel

March 27, 2009
Matt Isleib

 

Could this be the week that is the turning point of the financial mess? A fine week it has been. I am not sitting here yelling “bottom”, we have hit “bottom” just yet but the news flow this week has certainly been positive and the markets have proved it.

 

The Dow Jones Industrial Average started the week out at 7278 and closed yesterday at 7924 rallying nearly 10 percent for the week. A couple surprise earning announcements comingled with some light at the end of the tunnel in the Real Estate world and poof, we have a rally on our hands.

 

On Monday the report came out that existing home sales were better than expected. The figures reversed course of a downward trend and posted a 5.1 percent increase. The market cheered and on Wednesday new home sales data was released for February and that too rose unexpectedly. The Commerce Department said new home sales rose 4.7 percent to a seasonally adjusted annual rate of 337,000. Forecasts were for a 300,000 figure.

 

In historical comparison neither the existing or new home sales figures are great. In fact the new home sales figures were down 40 percent from the same month a year earlier and the adjusted annual rate of 337,00 new home sales is the worst on record dating back to 1963. We know all too well that the economy is in a recession and our equity and real estate markets have been in a never ending downward spiral. It is the positive news that we are looking to build on. Personally I do not think we are at bottom yet, for the sake of my livelihood as well as the rest of the country I hope that I am wrong. There are still too many facets of the economy that are in turmoil. The point that needs to be taken from this is positive, if for nothing else it is a relief from the doom and gloom to get a little positive news. It is also a signal that maybe not this week or next but soon we can start to say that we are in recovery and moving in an upward trend. This week shows us that there is light at the end of the tunnel.

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