Safety seems to be foremost on investors’ minds as the Treasury was able to sell $30 billion worth of 4-week T-Bills at 0% for the first time since 2001. Translation: investors are willing to accept no return for having their money parked safely.
Pending home sales are declining, which sends a clear signal that the housing debacle is far from being over. Even modified mortgages ended up back in default within six months. An amazing 53% of borrowers, whose loans were modified in the first quarter of 2008 to help them stay in their homes, were more than 30 days overdue by the third quarter. So much for the idea of trying to keep people in overpriced houses they were not qualified to buy to begin with.
To me, all of these tidbits are signs of a continuously weakening economy, with the cheer leading stock market clearly running on nothing but fumes and hope. It will not take much to pull the plug on the current rebound. One major event, such as not bailing out the auto industry, will send the current bulls heading for cover.