Chillin' out till it needs to be funded
The last week of the month starts with the Pending Home Sales Index the Case Schiller “Hopi” index and the MBA report on Wednesday in the first three days. Stockton’s bankruptcy may not cause a ripple like Vallejo, municipals having become a great investment by the banks for “rebuilding” America with lower market volumes ensuring a ocused market unlikely to be derailed by Stockton going off the grid in California or the original Vallejo coming back out of bankruptcy, none the wiser for it. Only two muni bankruptcies were reported in testy 2011 incl Jefferson County, Alabama and Central Falls, RI.
Stockton reported planns to halts its bond payments even as Moody’s put them two notches below the Baa3 benchmark regarded as investment grade to Ba2 in response. Over $3 Tln in statee and local debt at stake has been widely suspected to grow the housing crisis with national budgets no longer able to match the dole outs to State and County budgets of the last decade
Earlier in this year the State of Illinois was also downgraded by Moody’s to A2 while state Tax increases were blamed by Caterpillar to move out of the state.
The week still ends with the Construction spending data on Friday. The rest is more interesting as state sponsored China PMI data, the optimistic global services indices and trade data from some start pouring in this week. US GDP report is due Wednesday.
Chicaogo regional PMI reports this week, followed by the ISM index confirming the way on Thursday and Auto Sales this month will be likely back on track after tehe seasonal dullness in January. The JD Power estimates for 2012 sales are up from 13.5 mln in 2011 to 16 mln for 2014, the Feb sales itself expected to touch a seasonally adjusted 14 mln at 1.03 mln this week. According to a Reuters report, lease sales (6 year loans) now account for 23% of the sales.