The core CPI and housing starts defy the gloom and doom theories – when can Dow reach 15000?
Kirsten Riegel
Oct. 18, 2006

The core CPI was up 0.2% as expected by the market. The hosing start was a real stunner. In India Daily we wrote yesterday that the hosing start will be real strong because of lower mortgage prices. The building permits were lackluster though. It just showed that the builders have turned pessimistic while demand is good.

That is the best that can happen for the residential real estate market. You need bearish sentiment and good fundamentals for the resumption of bull market in housing.

The net effect on the economy is interesting. Manufacturing and service sectors are showing moderate but steady growth. That is real bullish for stocks. If Fed is correct and economy has a soft landing, Dow can easily go to 15,000. The question really is when?

Quantitative models say with the current ‘wall of worry’, the Dow can gain close to 15% every year. After building a solid base between 10,000 and 11,400 Dow is in a position to accelerate upwards. The wild card is oil price. If oil price falls below $40 in the next six months, Dow can surprise all accelerating towards 15,000.

The core CPI and housing starts defy the gloom and doom theories – when can Dow reach 15000?
Kirsten Riegel
After building a solid base between 10,000 and 11,400 Dow is in a position to accelerate upwards. The wild card is oil price. If oil price falls below $40 in the next six months, Dow can surprise all accelerating towards 15,000.
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With oil price down, the airlines stocks in a rebound mode - AMR swung to a third-quarter profit of $15 million
Peter Oberois
The airlines stocks are in the middle of a solid rebound. The lower oil price and worldwide growth is working for them.
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Crude inventories at 5020K from 2408K last report – is it slack in demand or excess supply?
Sam Adelton
The crude inventory report was very interesting. The Crude inventories came at 5020K from 2408K last reports. The oil market along with other energy derivatives went down.
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The lower consumer price index with steady increase in core CPI will signify that the economy is quietly tilting towards recession
Peter Oberois
The data is due at 8.30 AM. The market expects a 0.3% drop compared to a previous month’s 0.2% increase. The core CPI excluding energy and food should actually rise 0.2%. This translates into a scenario where the economy is going south.
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Lowered mortgage rates boosted the building permits – it can be a real surprise
Joesph Weinman
The building permit data closely inversely correlates (nonlinear) the acceleration of mortgage rate rise or fall over time with a little lag.
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Housing starts will surprise and manifest strength in US economy
Kirsten Riegel
Demand for residential units is a function of demographic growth. The prices are a function of demand and partly on supply.
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Asian stocks weak on US growth prospects – a recession in America can devastate them
Karen Robson
The stock markets all across Asia are weak today. The prospect lower economic growth is pulling these stocks down. The prospect of lower export is hurting the Toyota, Sony and others.
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