Spring Brings 'Green Shoots' For Stocks

March 25, 2009 4:33 PM EDT

Today equity markets were wobbly due to some concerns of a failed government bond auction in the U.K. and a subpar auction of 5-year treasuries in the U.S. this afternoon. But despite these concerns, and many others, there have been a number of "green shoots", a phrase Fed Chairman Ben Bernanke coined in a recent TV interview describing signs of an economic recovery.

Here is a list of the "green shoots" we've noticed over the past few weeks:

Housing:

• February Existing Homes Sales Up 5.1% To 4.72 Million. This was above the consensus of 4.45 Million.
  
• U.S. home prices rose 1.7 percent on a seasonally-adjusted basis from December to January, according to the Federal Housing Finance Agency's monthly House Price Index.
  3/25. MORE
  
• New Home Sales Rise to 337,000, Versus The Consensus of 300,000. Prior reading revised up to 322,000. MORE
  
• The Associated Press-RE/MAX Monthly Housing Report, a survey of 55 metro areas across the country found that February sales of residential properties were up an average of 8.1% from January, and up fractionally, 0.9%, from February, 2008. MORE
  
• Housing Starts Comes in at 583,000, versus the consensus of 450,000

Economic Data:

• Durable Good Orders Up 3.4%, Versus the Consensus of Down 2.5%. Durable Goods-ex trans Up 3.9%, Versus the Consensus of Down 2%. Last month was revised on the headlines to down 7.3%, versus prior reading of down 5.2%. On Ex-Trans was revised to down 5.9%, versus prior reading of down 2.5%. MORE
  
• MBA Mortgage applications rose 21.1% and 32.2%, respectively, the past two weeks
  
• Philadelphia Fed Down 35, Versus The Consensus of Down 39

Corporate:

• Indicating signs of stability in the LCD glass business, Corning (NYSE: GLW) said it now believes total glass volume for the first quarter could be flat to down 5% sequentially, versus its original guidance of down 20% to 25%. Corning now believes it will have positive net income, excluding special items, in the first quarter. MORE

Takeover Activity:

• Merck & Co., Inc. (NYSE: MRK) acquires Schering-Plough Corporation (NYSE: SGP). MORE
  
• Roche and Genentech (NYSE: DNA) signed a merger agreement. MORE
  
• Gilead Sciences, Inc. (Nasdaq: GILD) to acquire CV Therapeutics, Inc. (Nasdaq: CVTX). MORE
  
• IBM (NYSE: IBM) is reportedly in talks to buy Sun Microsystems Inc. (Nasdaq: JAVA). MORE

Banks:

• Citigroup (NYSE: C), JP Morgan (NYSE: JPM) and Bank of America (NYSE: BAC) made positive comments about being profitable on an operating basis for the current quarter.
  

Trading Activity:

• General Electric Co. (NYSE: GE), Bank of America (NYSE: BAC), Citigroup, Inc. (NYSE: C), Wells Fargo (NYSE: WFC) are up nearly 100% or more from bottoms.
  
• Major Indices Up 20% from bottoms

While these "green shoots" don't necessarily signal a bottom, they are notable. It should also be noted that these positive signs are likely somewhat priced into the market related to this strong rally off the bottom. But, just like negative data feeds into a negative-feedback cycle, positive data can put a halt to the negative-feedback cycle and lead to a positive mood and a return of confidence.

Related Categories

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Stocks Mentioned

Related Entities

• New Home Sales
• MBA Mortgage Applications
• JPMorgan
• Ben S. Bernanke
• Citi
• Banc of America
• Mortgage Applications

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