In an about face from Tuesday, the markets managed to climb uphill on Wednesday, and the major market exchange Traded Funds (ETFs) posted modest gains. Gold (GLD) was the big winner by making a new high of $1,438/ounce.
Interest rates were higher, pulling bonds down, but the major asset classes all ended up to the plus side. The day did not start out on a positive as military action in Libya, and continued struggles in Japan, to deal with the aftermath of the earthquake and tsunami, kept markets at bay.
Slowly but surely, the rebound gathered steam, even in the face of headwinds like Portugal’s rejection of its austerity plan, and on the domestic side, a horrific new-home sales report.
For about 2 years now, I have been posting on and off about the futility of stimulus packages, especially for the real estate area. With no real demand to drive this market, new-home sales plunged 16.9% from January to an annual rate of 250,000 units, which is the lowest since record keeping stared in 1963.
The median price of a new home dropped almost 14% to $202,100, the lowest since the end of 2003. If you’re hoping for a real estate rebound to the glory days of 2008, think again, because it won’t happen. If this subject interests you, be sure to read “Debt Built Society.”