Good news coupled with a bad news.. But since the good should always triumph over bad, the market ralied well over 50 points in market action today.

The good signs came from the housing front - existing home sales. Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.4% to a seasonally adjusted annual rate of 6.54 million units in November from 6.09 million in October, and are 44.1 % higher than the 4.54 million-unit pace in November 2008. Current sales remain at the highest level since February 2007 when they hit 6.55 million. Though much of the data is fabricated by weak seasonality in '08, housing credit and extra low interest rates.

On the bad news front - According to the third estimate of GDP growth in the second quarter, the real GDP growth is revised down to 2.2% from a prevoious estimate of 2.8% which inturn was revised from 3.5%. Analyst estimates were at 2.8%. THis simply implies that the US economy is not growing as much as it was/is expected to grow. Weak consumer spending, Unemployemtn is going to make the challenage even worse in Q4 and forward.. I guesss.

Its almost an anniversary of ZIRP( Zero Interest Rate Policy), and today FED has decided to keep the interest rates at the same 0-0.25% level, for the foreseeable future. In the policy statement today, there were some subtle remarks that the economy has stablized in many fronts esp in housing and consumer spending, yet the labour and credit markets continue to be strained. Well, the statement in itself would bode well for the future direction of the economy, and Dollar would some part gain some of its lost value over the last two months - and that woudl be why gold be a shortterm sell.

Another reason why C is a good long term buy.. Fed, Treasury, tax payer have always been backing C, as it was and still is (after cutting its business to nearhalf, and diluting its share holders by an additional 17Bn issue) too big to fail.. IRS followed the suit in support of bolstering the 'finances' of C.. The IRS today "quietly" agreed not to collect billions of dollars in potential taxes from Citigroup Inc as part of its deal to allow the bank to repay its taxpayer bailout. Lst q, C had about $38 Bn in past losses and going forward if C was profitable, this provision by the IRS would enable C to skip taxes on the next 38Bn in profits.. Thats about 0.35*38 Bn in earnings, potentially over the next 10-20 years!!

Headlines:

GS had changed its compensation 'provisions' preemptively, inlight of 50% tax on the walst bonuses slapped by UK govt... Now much of the executive bonus compensation would be in the form of stock, that cannot be exercised for the next 5 years.

Its long been spoken about CMBS taht it is going to be the next shoe. Todays Moody's published the delnquency rates of CMBS, and yes, nothing to cheer about. the aggregate rate of delinquencies among US CMBS loans stood at 4.47 per cent as at the end of November, an increase of 46 basis points compared with the prior month. Just to give a notion to compare - the same figure stood at 0.22% in Jul 2007. However to purport this view on CMBS, offlate, a couple of CMBS issues were over subscribed in US. In my opinion, the current price on a CMBS does reflect the elevated delinquencies.. the question is whether the banks had marked their assets to these market prices or not.

Again.. back.. after a long long long heitus.. I do not want to talk about the shit that spread over the last 8 or so months. Well,, I am still in deep pile of it. though, now I see signs I can swim out of it!! :)

Anyways, The market over the last 4-6 months has been stable trying to break both ways. Economic data has both been supporting and negating the investor sentiment. All the while, Fed, US Govt has been on its toes to prop up the sentiment on the smallest sign of weakness.. So far so good. But the real question is - Would the same plot be the game saver over the next year!!

Gold - has been my single best investment over the last 6 months.. (I got out of it when it is at 1200 ). I think Gold is poised for a breather or a correction here.. The bull story for gold has been that the sovereign nations are piling on gold as part of re-balancing their reserves, for the fact that dollar has lost its lusture as a safe haven. However, India, Russia are two countries which are shifting their reserves to Gold.. and China doing the same is a mere expectation. Infact CHinese Central Bank personnel did mention that they would not BUY any gold at these elevated prices. Next.. Dollar I guess will never lose its sheen as a reserve currency, and thus a safe haven.. It will simply not.. not in my lifetime!! I guess!!

No.. I am not contending that Gold is not poised for a rally here.. But, over the shortterm it might as well headed for a correction.. May be $1000..

A double dip recession in sight.. May be.. Investors are concerned about the deluge of dollars into the economy.. and thats the primary reason for the dollar being on the fall (in addition to high budget deficit, low interest rates).. and typically a flood of dollars shoudl lead to inflation, and yes, in that environ gold is the best hedge. However.. look at ydays KR earnings. a miss of 10 cents and a lowering of guidance of about 30 cents.. the reason being - defaltionary pricing pressure.

Next, Mexico, a commodity producer and sixth largest producer of Oil, has sought insurance policy (1 Bn) against oil price falling below $57 next year. A sign that the consumer demand for commodities would generally be weak, and the dollar might as well turn its trend here!!