A rise in existing home sales last month shows things are getting better in the U.S. housing market, but the still-dire unemployment situation and the looming possibility of a jobless recovery may halt the rally by the end of the year. That makes the extension of an $8,000 tax credit for first-time homebuyers imperative.

Existing home sales rose 7.2% to a 5.24 million annual rate in July, the most since August 2007 and the fourth straight month the figure increased, the National Association of Realtors (NAR) said Friday. Year-over-year sales grew 5%, the increase since September 2007, just before the markets came crashing down the following month.

“The housing market has decisively turned for the better,” said NAR chief economist Lawrence Yun. “A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.”

Rising sales numbers

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The week started off on a strong note as the major indexes were all up significantly, as the Dow closed up 2.85%.  The NASDAQ and the S&P also had strong days, finishing up 3.11% and 3.04% respectively.  Gold and oil headed in different directions today, as oil was up settling at $59.03, while oil declined to $921.70.  The 10-year treasury saw prices rise finishing with a yield of 3.237%. 

State Street Corp. [STT: 41.79, +3.28 (+8.52%)] announced today that it has already started selling $1.5 billion worth of common stock and in an additional offering it will sell senior notes, not backed by the FDIC’s Temporary Liquidity Guarantee Program.  Both of these actions were taken as the company plans to use the proceeds to buy back preferred stock and warrants from the Treasury Department.  The buyback has not been approved by the government, but many feel that given the fact that

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Notes from the Investment Underground

Thursday, April 23, 2009

Palermo Viejo, Buenos Aires, Argentina

The greatest economic disaster in recorded history (and how to profit from it)… Your market ”script”… Lessons on guerrilla investing… Banks switch sides… The best communications company in the world… 3 sectors you should own now… Your key to “permanent wealth”… A massive glitch in the administration’s matrix… Notes subscribers beat up on your editor… 1,159% gains as stocks go bust… And more!

*** “The current administration’s economic strategy could create the greatest economic disaster in recorded history,” says Porter Stansberry in today’s DailyWealth.

Not only is the administration planning on enormous deficit spending this year, but the current plan calls for increasing deficit spending for the next decade – spending that will more than double ...

Notes from the Investment Underground

April 14, 2009

Palermo Viejo, Buenos Aires, Argentina

Richard Russell: Why this is a bear market correction… That latest outbreak of investor credulity… 25 biggest earnings-per-share movers and shakers heading into earnings season… Banks to be allowed to screw up indefinitely… The great “too big to fail” fraud… Bailouts costing $42,105 for each U.S. citizen… Bush-Obama tag team piles on debt at the rate of $60,000 a second… Bob Higgs on C-SPAN… China wises up… And more!

*** This Richard Russell quote is a must-read for investors thinking about buying back into stocks. Russell, now in his 50th year of publishing the excellent Dow Theory Letter, believes we are now witnessing a bear market correction.

The essence of Dow Theory has to do with VALUES. At the March low the price/earnings ratio for the Dow was 25.79 and the dividend ...

The markets were up for the first time this week, with the S&P up 1.18%.  The Dow was up 0.61% closing at 7837.11, while the NASDAQ was up 29.05 to close at 1590.66.  Prices of the 10-year were up with yields ending the day at 2.849%.  Oil was up today settling at $49.38 while June gold contracts were down settling at $885.90. 

Homebuilders rose today because of the morning announcement that Pulte Homes [PHM: 9.64, -1.13 (-10.49%)] would acquire Centex Corp. [CTX: 9.06, +1.44 (+18.90%)] in a stock-for-stock deal.  Pulte’s acquisition of Centex will make it the largest home builder if the $1.3 billion deal goes through.  The merger looks like a sure thing as directors of both companies supported the move with a unanimous vote of approval.  Shareholders of Centex will get 0.975 common shares of Pulte for each share that they own of Centex, giving Centex shareholders

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New home construction fell in November by the largest amount in a quarter-century, as builders slashed production while facing the worst economic conditions since the Great Depression.

However, a new blizzard of government money may be coming to your neighborhood, and it promises to be a true bailout for the masses, not just for those in foreclosure or real financial difficulty.

Tight credit and lending markets, rising foreclosures, and surging unemployment figures have homebuyers on the sidelines, pummeling the fortunes of homebuilders such as D.R. Horton Inc. (DHI), Pulte Homes Inc. (PHM) and Centex Corp. (CTX)

“It is going to be a very cold winter indeed for homebuilders,” Joshua Shapiro, chief U.S. economist for forecasting firm MFR Inc., wrote in a note to clients Monday, MSNBC reported.

And the numbers are grim.

The U.S. Commerce Department yesterday (Tuesday) reported

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