February Housing Starts was lower by 5.9% due to the winter snowstorms compared to last month’s rebound of 6.6%. Housing starts is registered construction of newly single-family homes, condos, and apartment buildings. Equities to watch on these numbers include: Home builders, mortgage lenders, and home furnishings companies.
Some stocks to watch within the housing sector include: Lowes and Home Depot. Lowes (LOW) was positively mentioned in Barrons as homeowners are resuming fix-up and repairs. Both Lowes (LOW) and Home Deport (HD) are currently hitting their 52 week highs of 25.01 and 32.50, respectively.
The FOMC is the policy-making arm of the Federal Reserve. They decide whether the Fed should add or subtract liquidity from the markets. The FOMC is currently maintaining the target range for the federal funds rate between 0 and 0.25% as economic activity strengthen and labor market is stabilizing. The federal funds rate is the interest rate that banks charge each other for loans.
The Federal Reserve will lower the federal funds rate during recessions or periods of extended slow growth. Interest payments on debts will fall and liquidity would be added to the markets to encourage spending to stimulate the economy. The dollar is expected to fall as foreign traders and investors can get higher interest payments from other countries. As the dollar falls, commodities such as metal mining, gold, natural gas, and oil will all increase.
The purpose of increasing the federal funds rate would be to slow economic growth to curb inflation. Interest payments on debts will rise and liquidity would be subtracted from the markets to increase savings. The Fed has stated that it has no intention to raise the interest rates until the economy has recovered.
The next FOMC announcement will be released on April 28th 2010.
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