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Global Outlook


May 28, 2014, Wednesday, 11:20 GMT | 07:20 EST | 15:50 IST | 18:20 SGT
Contributed by eResearch

Wednesday's market opened and quickly started rallying with a rash of buying. Where did it come from? Was a lot more? Nobody knew. It exploded with massive short covering that made everyone scratch their heads and ask: Was there news I didn't know about? No sir, there was no news - none at all.

The market rallied, as I have written many times before, because the USD/JPY cross was rallying. So, uhh, you know - the US stock should follow...sure. Duhh. Although I have written extensively why this correlation exists, it still seems odd.

The rally wasn't because of new housing data, although that may change Thursday.

On Wednesday we received MBA purchase applications, which had been +3.6% last month. This month, however, it was only +0.9%. That's quite a slow-down wouldn't you say?

The Purchases Index was supposed to be a bad -1.0% but was worse at -3.0%. Bloomberg said the following: The purchase index fell 3.0 percent in the May 16 week with the year-on-year at a very steep minus 12.0 percent. Looking back at April, the purchase index trended sideways and is not pointing to strength for tomorrow's existing home sales report or Friday's report on new home sales.

We shall see if the existing home sales data agrees Thursday morning. If so, perhaps all is *cough* well.