Day Trading Economic News Analysis: February 24, 2010

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 19, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 8.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7.3 percent compared with the previous week.

“As many East Coast markets were digging out from the blizzard last week, purchase applications fell, another indication that housing demand remains relatively weak,” said Michael Fratantoni, MBA's Vice President of Research and Economics. “With home prices continuing to drift amid an abundant inventory of homes on the market, potential homebuyers do not see any urgency to lock in purchases.” Equities to watch on these numbers include: Home builders, mortgage lenders, and home furnishings companies.

Crude oil inventories had a build of 3.0 million barrels. Equities to watch on these numbers include: Oil Well, refineries and gas operations.

New home sales were difficult due to the winter snowstorms and had a lower-than-expected annual rate of 309k versus 360k consensus in January. New home sales fell 7.6% in December and down 22.9% in 2009. New home sales provide demand for housing of newly constructed homes with a committed sale during the month. Equities to watch on these numbers include: Home builders, mortgage lenders, and home furnishings companies.

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Day Trading Economic News Analysis February 23, 2010

Consumer confidence for February fell to 46.0 from 55.9, which is below the December consumer confidence level of 53.6. Analysts expected this dip due to a lower consumer sentiment index earlier this month. Both the S&P 500 and the Dow Industrials traded lower once the consumer confidence number was released as well as commodities (Gold, Silver, Metals) and energy (Crude, Natural Gas).

Consumer confidence is the level of consumer attitudes towards the overall state of the economy. The level of optimism effects both the stock and bond markets as investors, manufacturers, retailers, banks and government agencies use the consumer confidence number to plan their actions. It gives an indication of new purchases that would be made by the consumer.

If consumer confidence is lower than expected then manufacturers will anticipate consumers reducing purchases and they will cut down on their current inventories than producing new ones. Government will incorporate lower future tax revenues when deciding on future projects. Businesses will adjust operations on anticipation of reduced consumer spending.

If consumer confidence is higher than expected then manufactures will increase production and inventories to accommodate future demand from the consumer. Government will expect improved tax revenues. Businesses will adjust operations to gauge the willingness of consumers to make new purchases and increase hiring rates.

Equities to watch on these numbers include: aerospace and defense, retails, construction, materials, energy stocks, and consumer discretionary items.

Tomorrow expect mortgage applications, new home sales, petroleum report, and Ben Bernanke to move the markets.

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