US Equity Markets Muster a Rally, For Now

US markets were higher Monday morning, despite sharp declines in virtually every single foreign stock market.  A smattering of good news may have been cause for the return of equity investors, although volumes are still relatively light and recent history proves that the market could wipe out all of its gains before I even get a chance to finish this post.  First the good news:

• New home-sales were better than expected, although still pretty weak.  Sales were up 2.7% to a seasonally adjusted annual rate of 464,000, down 33% from September of last year.  Inventories fell to 394,000, representing a 10.4 months' worth supply of sales.  The median sales price fell to $218,400 down 9.1% in the past year.   
  
• Verizon posted a 31% rise in earnings on a 4.1% increase in revenues, handily beating earnings estimates.  
• CenturyTel announced a plan to buy Embarq in a $5.8 billion stock swap.  Why is this good news?  Because the local telecom industry is due for consolidation.  Investment bankers will tell you that the smaller players must merge due to the decline of the traditionally lucrative landline business.  The truth is, the telecom industry has to consolidate so it can do a bunch of spin-offs in a few years.  Why?  Because the telecom industry exists not for customers who need telecommunications services but for the investment banks, who need to do consolidations and spin-offs every few years to keep churning out those fees.  I have no idea why this is the case.  All I know is that telecom firms are the biggest contributors to the investment banking spin of "synergies" vs. "extracting value."  I can only offer you copies of my phone bill as evidence.  I get the same crappy service year after year but my telecom provider changes annually due solely to mergers.  As much as I try to avoid it, somehow I'm always doing business with AT & T.  But I digress...
• The Fed began buying commercial paper directly from issuers today.  Although credit conditions are still extremely tight, at least regular issuers of commercial paper have access to financing and there is less of a concern about a solvent company going bankrupt because of the money market panic.

It is interesting that the US markets have held it together today.  I can only speculate why this is case.  Once again, although our economic and financial problems are very scary and very serious, we are still viewed as some sort of a safe-haven.  Furthermore, the media's attention has shifted from pundits who kept unsuccessfully calling the bottom over and over again, to those who are incredibly bearish and are calling for all sorts of enormous market crashes.  If listening to Roubini and Taleb doesn't scare you half to death, then maybe the fact that they are all over the news these days could be some sort of indicator that sentiment is really bearish enough to expect a bounce.  Although it is too soon to know if their bleak forecasts will bear out, we can at least hope that this time they are wrong.