This is The Wall Street Digest Hotline Update for Friday, December 28, 2007, at 6:00 p.m. EST.
Plunging November new home sales pushed the dollar down sharply today. At the close, the Dow gained 6 points, closing at 13,365, while the Nasdaq lost just over 2 points, closing at 2,674. Oil closed down $0.45 at $96.17 per barrel, and gold closed up $11.40 at $843.20 an ounce.
Citigroup, Merrill Lynch and JPMorgan Chase will write-off $18.7 billion, $11.5 billion, and $3.4 billion respectively in the fourth quarter, for a total of $33.6 billion in collateralized debt obligations.
New home sales fell 9 percent in November. In the past year, new home sales are down 34.4 percent nationwide. The Midwest has the worst decline, down 38.7 percent in the past year.
Stay fully invested. In the U.S., I would continue to avoid the following sectors: financials, brokerages, banks, and the insurance companies. No one knows how much in collateralized debt obligations (CDOs) these companies still own, nor do they know what the CDOs are worth. I would also avoid the housing sector. I would not purchase a home or a condo, nor would I bottom-fish the housing stocks. The housing market will not bottom during 2008 in most markets.
Stay fully invested! Stock prices in India, Asia and the emerging markets will outperform the U.S. stock market. Stay close to our telephone/e-mail/website Hotline Updates.
The offices of The Wall Street Digest will be closed on Monday, December 31, and Tuesday, January 1, in observance of New Year's Day. The next Hotline Update will be on Wednesday, January 2, 2008, at 6:00 p.m. EST. Have a safe and joyous holiday weekend!