Markets up mildly

Markets rose despite more negative news on housing & GDP figures (showing the economy shrank in Q3). Dow was up 22 (down from earlier gains), advancers ahead of decliners by about 35% & NAZ was up 8.

Other indices were basically quiet. However, money is flowing into junk bond funds. Lehman High Yield Bond ETF gained 18¢ to 29.39 (up from 27 last week). The VIX pulled back 2 to 42, investors are less nervous.

Oil continues weak staying under 40. However volume is low during this holiday shortened week, these numbers are less meaningful than usual.

CLG09.NYM

..Crude Oil Feb 09

...39.32

... 0.59 .......(1.5%)

Sales of new homes dropped to the lowest level since 1991. Revised GDP figures for Q3 showed the economy shrank at a 0.5% annualized rate, in line with expectations. Next month the preliminary figures for Q4 will be reported. They are expected to show the economy shrank at a greater rate, confirming the US is in a recession.

•New Home Sales in U.S. Decline to 17-Year Low on Credit Crunch, Recession

• GDP shrank 0.5 percent in Q3 as economy chilled- Reuters

In 2008, one of the smartest investments was Treasury bonds. This run can not continue, especially when the Treasury has to finance a record deficit next year. A greater supply of debt can be expected to drive rates up which can interfere with other low rates.