Main events in the last two weeks:

  • New home sales fell, as I predicted before, but against consensus
  • The subprime CDO machine stopped – consumer is denied the cheap credit
  • Home sales deteriorated further in March
  • ISM manufacturing index came below consensus (and service one too)
  • Mish proves that we are (almost or already) in recession
  • Corporate bankruptcies are up 60% Y/Y
  • California foreclosures are up 264% over 6 months
  • The employment report was exceptionally strong

What to watch next week:

  • The unexpectedly strong job report will disappoint those waiting for rate cuts, expect some weakness
  • Carry trade will stay alive and kicking
  • Stock market correction should continue, we are not done yet
  • None of the news from economic calendar will surprise
  • Watch if CDO repricing/downgrade activity increases
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