Of course, the AP lead over on Yahoo Finance is "Stocks surged Tuesday on signs of resilience in the housing market and consumer spending, ...", because month-over-month seasonally adjusted existing home pending sales for February were up a whole 0.7% over January (though down 8+% YOY).
This dismal auto news should be causing the DOW to drop sharply and not rise. Such abnormal activity just substantiates the existence of the plunge protection team (PPT) and their nefarious activities. I would hate to be owning any DOW stocks when the PPT falters.
Nah fireworks, you don't need a PPT when you still have immense numbers of dollars flowing out of the retirement shearing machine and into the market on a paycheck basis. Add in the insanity of hedgefunds seeking alpha under every single rock and you get an outright casino. Which is what we have- risk is bottomed out because a hedge fund actively seeks it out and embraces it- if they blow up they say oh well- start another and find some more gamblers to put up the money.
No skin in the game, people play for free- that is essentailly the lesson of the nodoc market- let me take a flyer on insane house appreciation and I will make a two year stop in the house for some free spec dollars.
Bust- oh well in seven I am good to go again. Hedge funds do the round trip in seven months though.
The house always wins in gambling, unless you can take them down quick and get out of dodge.
"because month-over-month seasonally adjusted existing home pending sales for February were up a whole 0.7% over January (though down 8+% YOY)."
Well, JM, since people had forecasted they'd be down instead of up, that was an important difference. And the NAR revised their January numbers downward by only 0.1%, so that pretty much blows the conspiracy theory of the NAR doing some big downard January revision to bolster the Feb numbers.
Let's face it, the news today was mostly bullish, and this a bearish blog, so that news didn't get posted.
Pending sales up by 0.7% in February over January levels - anyone got any data going back 20 years or so? This increase probably falls somewhere in the middle of the range for February over January sales. But still, they were down over 8% YoY and that can't be good.
In the past we could figure that something like 95+% of those pending sales (I'm guessing) would be completed. However, as most of the tightening began in late February wouldn't it be safe to assume that a larger percentage than normal of those pending sales will fall through? Having your lender go under prior to closing can't be good. And those problems just move on up the chain as people buy contingent on their current home selling. Imagine the nightmares being created as people who thought their house had sold find out a day or two before closing that the deal has fallen through because they buyer's lender went BK.
Tis strange, when Ford March U.S. sales drop 9%, GM, DaimlerChrysler post 4% declines and housing according to an industry group makes a tiny recovery this is perceived in bubbleville as good news?
Keith I sure would like to understand the details behind the NAR report, bullish or bearish. How does the subprime meltdown play into the NAR report? Is it still to early to tell?
Let's face it, the news today was mostly bullish, and this a bearish blog, so that news didn't get posted.
You think?
Silly boys, look at the difference. The bulls are reacting to short term nothings. OK consumers spent a little more, and going into spring house sales are a teeny bit better. Housing in a depression is the bear in the cave that's going to come out and bite your ass off.
Credit card borrowing is returning to pre-housing bubble levels. It only looks like it's shooting up because it was unusually low these past few years because of the MEW effect.
Credit card borrowing is returning to pre-housing bubble levels. It only looks like it's shooting up because it was unusually low these past few years because of the MEW effect.
The mkt is so quick to call a turn for the better in housing when all I can think is: BFD....it's one month.
We experienced one of the biggest property bubbles this country has every seen. It went on for many years and at the end was fueled by funny money. So, do people really think the hangover has already passed? Come on, the bubble is just in the middle of deflating.
The Big Three posted big gains in sales, Honda was up 7.4%m Nissan up 7.8% and Toyota up 11.7%. If you have the right product mix the consumer is buying.
Chain store sales were up 4.9% last week, the biggest gain in two months, boosted by warmer weather and an early Easter. In other words, the consumer is still spending. Even with a weak March we would have had 3-3.5% real PCE, with the news today, we should be on the high side of that.
And existing home sales seem to be doing slightly less terrible than what everyone here seems to think.
Those of you who have to invoke some mythical plunge protection team to explain an up market on a positive news day don't even warrant serious consideration.
Any numbers on total car sales? Sales of US cars were definitely down, but imports registered some hefty gains ( in the 40% range for Mitsubishi and Mazda). It would seem that we're seeing a move to smaller, more fuel efficient cars and the US automakers just don't have 'em. It's pretty safe to say that it's a recession for the US automakers, but I don't know if it's an auto recession overall.
3) While I was busy taking profits on a synthetic index strangle today, and while I am substantially more cautious than the growth-is-back bulls, I have to think that right now the data indicate the Fed is right. The risks are that the data changes, not that the Fed is misinterpreting the data they have.
Will you be reviewing this post at some point in time?
I get the sense that you still feel a recession is coming, but it seems to me that it's time or will be time soon to check off #2 on your list in the aforementioned post.
Are the NAR's numbers seasonally adjusted? Is it typical to see a rise from Jan. to Feb.? If so, what is the typical rise? Also, the NAR report didn't say what the margin of error is for this index. Does anyone have any idea what the margin of error is? Finally, according to the NAR statement, YOY changes are more important than MOM changes.
I'm not trying to spin data here, just trying to get a better idea on how this data should be interpreted.
Funny....this blog is mainly quite bearish and suddenly there are a bus load of bulls arriving.
According to these jokers the stock market is going up because:
the big three japanese car firms have increased sales?
evidence of continued spending is good, even if it could be just a statistical spike created by Easter being early and it only being due to one weeks data and the likelyhood that credit card debt is being used for purchases when refi is no longer an option
Ford crysler and GM tanking can be ignored
Housing is down 8 percent year on year but showed a small recovery this particular month.
With so many ready to call the Fed wrong, it is worth thinking about the possibility that they are right.
I wouldn't say the Fed is 'right' so much as 'constrained'... and fully aware of just how pinched they are.
They know the economy is slowing... that it is only held up by debt growth (both fiscal & private)... yet inflation risks just won't go away... that even with the PBoC & BoJ intervening in the FOREX there is no guarantee the dollar holds to an acceptable range (a private panic would overwhelm all CBs, the Fed included). So the Fed holds its cards tight, bluffs & postures and hopes the 'problems' all fold.
The 'problems' - I believe - are holding pretty damn good cards and are patiently waiting for the pot to get really juicy before calling. IMHO anyway.
If you're in the n.e. or the west, your area went DOWN in sale pendings.
Also, there is a mass exodus out of FL to the Carolinas due to escalating property insurance rates and property tax rates. Real problem down there. Could high #s in the south been due partially to that?
Steve, Keith, et al., I would score today's news as neutral, not bullish. The 4.9% YoY increase in retail sales was attributed to Easter being two weeks earlier this year, and a good YoY comparison of sales growth cannot be made until we get sales data for the two weeks after Easter. Even so, 4.9% is a decent increase. The 0.7% increase in pending home sales reflects sales contracts signed in February, before the subprime credit crunch began, so the extent to which the buyers are able to obtain financing needed to close the sales remains to be seen. The NAR included some cautionary language about future sales in its press release today, so I would not be optimistic. Finally, the March auto sales (16.3 million SAAR) were below the expected rate of 16.5 million and the prior year figure of 16.6 million. Steve, this tells me that the jury is still out on consumer spending. By mid-April, when we get the March retail sales numbers and a couple more weeks of sales data, we'll have a better idea.
There's no doubt that sales are influenced by the early Easter, but this was known going into the month that this was the case and numbers are still looking better than expected.
I want to see the Jan to Feb pending sales data for the last few years. Unfortunately, the link to the NAR site only gives Feb 06 to the current Feb 07 and aggregates the earlie data by years. So, we can't answer the question of whether pending sales usually go up in Feb from Jan or how good the seasonal adjustments are.
I was watching the market when the US car data came out and neither GM or F even budged. This was because the numbers were just about as expected. Since the Street is a discounting mechanism, what matters is how results compare to expectations, not whether they seem good or bad in a absolute sense. Of course,sometimes there is relief when results come in as expected, if there was of worse. And don't forget the whisper numbers.
Excellent point. Too often people are shocked when numbers look bad/good and the market rallies/falls. They don't realize that the market has often already priced in the weakness.
Ah, but the market is often tragically wrong. Recent activity has that feel to me, especially the big rally when the Fed hinted that they realize the economy is in bad shape...
True, one could say that the market is sometimes wrong. But that doesn't really contradict the view that markets won't move on data that are inline with expectations.
We will get another data point in Best Buy's quarterly earnings tomorrow morning for the period ending 2/07. I am really interested in their guidance and how March sales progressed. It should be a good indicator of how much spending the consumer is doing. I am also interested in how their consumer contracts are holding up with all the "buy today and no payments for 12 months" they ran.
I would also like to thank NAR for issuing that data point today that confirmed the bottom was in on housing. The little runup allowed me to get a better price on my BBY puts.
The market moved before the data, so the move today had nothing to do with the data (the move started near the close tomorrow, and it was gaping up overnight before any data was released).
For instance, the German DAX gapped up 0.8% before any datapoints (including crude falling/Iran/UK). It was already part of the move (which, as I said, started before the close yesterday), together with a US gap up of around 0.4% at that stage.
Steve... "They don't realize that the market has often already priced in the weakness"
That is never the case. The market has everything priced to perfection and then some. Any bad news only barely dents shares on the prayer that it's a temporary setback and the shares are already pre-rallying for the next surge. That's the market.
Look at NEW. They were a dead man walking from $55 to $20 and then to $1. A rally was priced in until the last day it traded on the NYSE.
Today was noise on a chart, and, a gift. A day to add puts as they went on a 1-day sale...
Tis strange, when Ford March U.S. sales drop 9%, GM, DaimlerChrysler post 4% declines ... and Or did i miss the good news?
But Toyota's sales are up, and many Toyotas are made in the U.S. ... not in the rust belt for sure, but U.S.-made nonetheless. It means more jobs for Kentuckians, fewer for Michiganders.
Yes, there was a jump there (with what looks artificial volume in the futures), but the move was on well before that. The reason for the move was NOT the datapoint, it was simply an excuse to push it higher.
DaisyColorado,
How does today's news square with your particular location? I live in the Springs, and today's headline in our local rag said,"housing in the basement", home permits lowest in ten years, and foreclosures the worst in 20 years. Hmmm...I thought housing bottomed last fall?
Or as folks at minyanville tried to interpret David Lereah's comments, "today's data suggests housing is seeing atypical rebleakening buildup, which translates into a great time to buy or sell a home."
I don't see how the market is a discounting mechanism in today's environment. As one example, earlier this year when Apple announced they would produce an i-phone, the stock rallied. Yet, that was already widely known by most market participants. Seems lately that the market is reacting to news, rather than discounting it.
The excess liquidity chasing everything is making it impossible for the market to properly discount anything.
This market will only fall because of forced liquidation, which will happen once debt creation falls below what is needed to service the already existing debt.
"suddenly there are a bus load of bulls arriving..." Check the IP addresses, there may only be one bull. I'd be delighted if the Fed is correct. I've never had more income nor less debt than at the moment. But my personal planning assumes a recession.
One more point that moves the market is time of month bullishness. The last few days of the month and the first few days of the next month are bullish because of all the retirement money coming into the market. Especially since last week was down and Monday was flat, it doesn't take much to start a rally during the first week of the month. I'm looking to buy back some short puts on a home builder debit spread if the home builders rally a bit more.
I think that there is a good chance that the "spring sales season" which is mainly Feb-April for new homes, will be a bust.
Thanks for joining us Jed.
What to say? How many readers here realize that top 1% own nearly 2/3 of the stock market? I don't think PPT ideas add much, you know?
The auto news is in the volumes as noted above, not the declining domestics unless you want to say something about GMAC's tighter lending standards. We are expecting a weaker consumer with declining house prices and this report confirms that. More evidence might come from looking at hi end vs low end auto sales.
The pending house sales are exactly that and likely to be revised down given tighter lending standards. In addition, having just looked at OC's 13.2% rise in inventory last month, I am reminded that there is great pressure to sell now before prices fall further. It is not only early reporting with pending sales, but also grossly incomplete without prices and inventory stats.
So there was a disconnect between economic news and stock market direction. This does not persist indefinitely.
Didn't you get your giant inflatable bunny yet for the front yard?
Don't you mean his bed?..Sorry had to ..
Folks are using credit cards for sure...stand in-line at the Grocery store nothing but plastic...But then again I would rather walk away from a credit card bill than to loose my home...Sacrifices,Sacrifices
Consumer borrowing has leveled off since the end of 2004. For data through the week ended 3/21 the annual growth rate in consumer loans is 2.5%. Over the past four weeks the quarterly growth rate annualized in NEGATVE 6.73%, back to about the midrange of the 2.5% growth channel. That's consistent with inflation and indicates ZERO new spending. In fact, when you consider accumulating interest charges, it probably indicates a negative spending rate.
In contrast the annual growth rate at the end of 2004 was 9%, and at the end of 2003 was nearly 12%.
Yes there was a spurt in at the end of they year that was just like the one the year before and the year before that, and the year before that. True this one overflowed into January, probably because everyone was tapped out and couldn't tap their home ATM to pay down the credit cards, so the debt built up. But that's all been reversed and then some since the end of January.
What horseshit reporting. Don't believe anything you read in the mainstream infomercial media. It's pure crap.
Ron, not only is the reporting bad, but the headlines are even worse. I have no faith in any mainstream news outlet....financial or otherwise. (Well, sports journalism is not so bad.)
I don't know if reporting has always been this bad or if I just notice it more these days. Just imagine if there weren't any other sources for news....thank goodness for alternatives like this site and a handful of others.
Of course, the AP lead over on Yahoo Finance is "Stocks surged Tuesday on signs of resilience in the housing market and consumer spending, ...", because month-over-month seasonally adjusted existing home pending sales for February were up a whole 0.7% over January (though down 8+% YOY).
jm, the last time the NAR sales report came out, a lot of posters predicted the next report would show a nice little increase in sales...
I'm sure y'all love being right. In a "wow those cars are going to crash" kind of way.
This dismal auto news should be causing the DOW to drop sharply and not rise. Such abnormal activity just substantiates the existence of the plunge protection team (PPT) and their nefarious activities. I would hate to be owning any DOW stocks when the PPT falters.
With so many ready to call the Fed wrong, it is worth thinking about the possibility that they are right.
Nahhhhhh.
Nah fireworks, you don't need a PPT when you still have immense numbers of dollars flowing out of the retirement shearing machine and into the market on a paycheck basis. Add in the insanity of hedgefunds seeking alpha under every single rock and you get an outright casino. Which is what we have- risk is bottomed out because a hedge fund actively seeks it out and embraces it- if they blow up they say oh well- start another and find some more gamblers to put up the money.
No skin in the game, people play for free- that is essentailly the lesson of the nodoc market- let me take a flyer on insane house appreciation and I will make a two year stop in the house for some free spec dollars.
Bust- oh well in seven I am good to go again. Hedge funds do the round trip in seven months though.
The house always wins in gambling, unless you can take them down quick and get out of dodge.
"because month-over-month seasonally adjusted existing home pending sales for February were up a whole 0.7% over January (though down 8+% YOY)."
Well, JM, since people had forecasted they'd be down instead of up, that was an important difference. And the NAR revised their January numbers downward by only 0.1%, so that pretty much blows the conspiracy theory of the NAR doing some big downard January revision to bolster the Feb numbers.
Let's face it, the news today was mostly bullish, and this a bearish blog, so that news didn't get posted.
Today's news almost always slants bullish. I'd rather have the real numbers and the context -- the stuff of a CR chart.
Pending sales up by 0.7% in February over January levels - anyone got any data going back 20 years or so? This increase probably falls somewhere in the middle of the range for February over January sales. But still, they were down over 8% YoY and that can't be good.
In the past we could figure that something like 95+% of those pending sales (I'm guessing) would be completed. However, as most of the tightening began in late February wouldn't it be safe to assume that a larger percentage than normal of those pending sales will fall through? Having your lender go under prior to closing can't be good. And those problems just move on up the chain as people buy contingent on their current home selling. Imagine the nightmares being created as people who thought their house had sold find out a day or two before closing that the deal has fallen through because they buyer's lender went BK.
Tis strange, when Ford March U.S. sales drop 9%, GM, DaimlerChrysler post 4% declines and housing according to an industry group makes a tiny recovery this is perceived in bubbleville as good news?
Or did i miss the good news?
Keith I sure would like to understand the details behind the NAR report, bullish or bearish. How does the subprime meltdown play into the NAR report? Is it still to early to tell?
Let's face it, the news today was mostly bullish, and this a bearish blog, so that news didn't get posted.
You think?
Is the U.S. consumer borrowing more (via credit cards or other)?
I would expect so, but are there any figures to support that claim?
Let's face it, the news today was mostly bullish, and this a bearish blog, so that news didn't get posted.
You think?
Silly boys, look at the difference. The bulls are reacting to short term nothings. OK consumers spent a little more, and going into spring house sales are a teeny bit better. Housing in a depression is the bear in the cave that's going to come out and bite your ass off.
Quiddity,
Credit card borrowing is returning to pre-housing bubble levels. It only looks like it's shooting up because it was unusually low these past few years because of the MEW effect.
Haha! so it is shooting up!
The mkt is so quick to call a turn for the better in housing when all I can think is: BFD....it's one month.
We experienced one of the biggest property bubbles this country has every seen. It went on for many years and at the end was fueled by funny money. So, do people really think the hangover has already passed? Come on, the bubble is just in the middle of deflating.
It was a bullish news day
The Big Three posted big gains in sales, Honda was up 7.4%m Nissan up 7.8% and Toyota up 11.7%. If you have the right product mix the consumer is buying.
Chain store sales were up 4.9% last week, the biggest gain in two months, boosted by warmer weather and an early Easter. In other words, the consumer is still spending. Even with a weak March we would have had 3-3.5% real PCE, with the news today, we should be on the high side of that.
And existing home sales seem to be doing slightly less terrible than what everyone here seems to think.
Those of you who have to invoke some mythical plunge protection team to explain an up market on a positive news day don't even warrant serious consideration.
Any numbers on total car sales? Sales of US cars were definitely down, but imports registered some hefty gains ( in the 40% range for Mitsubishi and Mazda). It would seem that we're seeing a move to smaller, more fuel efficient cars and the US automakers just don't have 'em. It's pretty safe to say that it's a recession for the US automakers, but I don't know if it's an auto recession overall.
1) While a very noisy series, the very latest CFNAI pointed at around trend growth. I think that's overoptimistic, but that one does attempt to roll up all the numbers, and not just your grannie's favorite indicator. Viz Chicago Fed National Activity Index (CFNAI) - Economic Research and Data, Federal Reserve Bank of Chicago
2) Pending sales don't go back 20 years because the reference year is 2001. Here's a chart of the last five years: http://www.bignose.org/blog/index.php?/archives/219-Pending-home-sales.html
3) While I was busy taking profits on a synthetic index strangle today, and while I am substantially more cautious than the growth-is-back bulls, I have to think that right now the data indicate the Fed is right. The risks are that the data changes, not that the Fed is misinterpreting the data they have.
CR,
Will you be reviewing this post
at some point in time?
I get the sense that you still feel a recession is coming, but it seems to me that it's time or will be time soon to check off #2 on your list in the aforementioned post.
In other words, the consumer is still spending.
Whether the US consumer should still be spending is another question. It would seem that the consumers are digging themselves deeper into debt.
Are the NAR's numbers seasonally adjusted? Is it typical to see a rise from Jan. to Feb.? If so, what is the typical rise? Also, the NAR report didn't say what the margin of error is for this index. Does anyone have any idea what the margin of error is? Finally, according to the NAR statement, YOY changes are more important than MOM changes.
I'm not trying to spin data here, just trying to get a better idea on how this data should be interpreted.
The NAR releases both NSA and SAAR numbers. Viz Pending Home Sales Index
Funny....this blog is mainly quite bearish and suddenly there are a bus load of bulls arriving.
According to these jokers the stock market is going up because:
the big three japanese car firms have increased sales?
evidence of continued spending is good, even if it could be just a statistical spike created by Easter being early and it only being due to one weeks data and the likelyhood that credit card debt is being used for purchases when refi is no longer an option
Ford crysler and GM tanking can be ignored
Housing is down 8 percent year on year but showed a small recovery this particular month.
Did i miss anything?
With so many ready to call the Fed wrong, it is worth thinking about the possibility that they are right.
I wouldn't say the Fed is 'right' so much as 'constrained'... and fully aware of just how pinched they are.
They know the economy is slowing... that it is only held up by debt growth (both fiscal & private)... yet inflation risks just won't go away... that even with the PBoC & BoJ intervening in the FOREX there is no guarantee the dollar holds to an acceptable range (a private panic would overwhelm all CBs, the Fed included). So the Fed holds its cards tight, bluffs & postures and hopes the 'problems' all fold.
The 'problems' - I believe - are holding pretty damn good cards and are patiently waiting for the pot to get really juicy before calling. IMHO anyway.
Gobsmacked
"Did i miss anything?"
Yes, some dumb arse thinks the PPT is a myth.
NAR #s:
south: increase 4.5%
midwest: increase 2.9%
west: decrease 6%
n.e.: decrease 1.3%
If you're in the n.e. or the west, your area went DOWN in sale pendings.
Also, there is a mass exodus out of FL to the Carolinas due to escalating property insurance rates and property tax rates. Real problem down there. Could high #s in the south been due partially to that?
Steve, Keith, et al., I would score today's news as neutral, not bullish. The 4.9% YoY increase in retail sales was attributed to Easter being two weeks earlier this year, and a good YoY comparison of sales growth cannot be made until we get sales data for the two weeks after Easter. Even so, 4.9% is a decent increase. The 0.7% increase in pending home sales reflects sales contracts signed in February, before the subprime credit crunch began, so the extent to which the buyers are able to obtain financing needed to close the sales remains to be seen. The NAR included some cautionary language about future sales in its press release today, so I would not be optimistic. Finally, the March auto sales (16.3 million SAAR) were below the expected rate of 16.5 million and the prior year figure of 16.6 million. Steve, this tells me that the jury is still out on consumer spending. By mid-April, when we get the March retail sales numbers and a couple more weeks of sales data, we'll have a better idea.
Total auto sales were up .8% YOY...
Jed,
There's no doubt that sales are influenced by the early Easter, but this was known going into the month that this was the case and numbers are still looking better than expected.
Gobsmacked- I said you don't need- not that they don't exist. Understand the difference with respect to what I said.
Otherwise you should buy your gold and shut off your television and cancel you newspaper subscription.
If enough people did that, then you might need the PPT. Otherwise silly folks trade the news cycle- big deal.
Steve,
I agree, but IMHO the good news on chain store sales was offset by the weak auto sales. If I were CR, I would not check off # 2 just yet.
Who goes shopping for Easter?
bofiz,
Didn't you get your giant inflatable bunny yet for the front yard?
I want to see the Jan to Feb pending sales data for the last few years. Unfortunately, the link to the NAR site only gives Feb 06 to the current Feb 07 and aggregates the earlie data by years. So, we can't answer the question of whether pending sales usually go up in Feb from Jan or how good the seasonal adjustments are.
I was watching the market when the US car data came out and neither GM or F even budged. This was because the numbers were just about as expected. Since the Street is a discounting mechanism, what matters is how results compare to expectations, not whether they seem good or bad in a absolute sense. Of course,sometimes there is relief when results come in as expected, if there was of worse. And don't forget the whisper numbers.
Bill,
Excellent point. Too often people are shocked when numbers look bad/good and the market rallies/falls. They don't realize that the market has often already priced in the weakness.
Ah, but the market is often tragically wrong. Recent activity has that feel to me, especially the big rally when the Fed hinted that they realize the economy is in bad shape...
Detroit Dan,
True, one could say that the market is sometimes wrong. But that doesn't really contradict the view that markets won't move on data that are inline with expectations.
What do you think is moving the market these days, Steve?
We will get another data point in Best Buy's quarterly earnings tomorrow morning for the period ending 2/07. I am really interested in their guidance and how March sales progressed. It should be a good indicator of how much spending the consumer is doing. I am also interested in how their consumer contracts are holding up with all the "buy today and no payments for 12 months" they ran.
I would also like to thank NAR for issuing that data point today that confirmed the bottom was in on housing. The little runup allowed me to get a better price on my BBY puts.
The market moved before the data, so the move today had nothing to do with the data (the move started near the close tomorrow, and it was gaping up overnight before any data was released).
(I meant near the close yesterday)
What do you think is moving the market these days, Steve?
If you mean today, I think it was three things (in no particular order):
-Oil is down on signs that the Iran/UK situation may be cooling
-The chain store sales information
-The pending home sales report
The Iran/UK part sounds convincing.
Thanks...
Steve, the move got going well before any of those datapoints. They all served as excuses.
Indeed, judging from the way some other markets behaved, this move was designed days ago.
For instance, the German DAX gapped up 0.8% before any datapoints (including crude falling/Iran/UK). It was already part of the move (which, as I said, started before the close yesterday), together with a US gap up of around 0.4% at that stage.
Steve... "They don't realize that the market has often already priced in the weakness"
That is never the case. The market has everything priced to perfection and then some. Any bad news only barely dents shares on the prayer that it's a temporary setback and the shares are already pre-rallying for the next surge. That's the market.
Look at NEW. They were a dead man walking from $55 to $20 and then to $1. A rally was priced in until the last day it traded on the NYSE.
Today was noise on a chart, and, a gift. A day to add puts as they went on a 1-day sale...
Tis strange, when Ford March U.S. sales drop 9%, GM, DaimlerChrysler post 4% declines ... and Or did i miss the good news?
But Toyota's sales are up, and many Toyotas are made in the U.S. ... not in the rust belt for sure, but U.S.-made nonetheless. It means more jobs for Kentuckians, fewer for Michiganders.
Steve, the move got going well before any of those datapoints. They all served as excuses.
That's not true. Look at the market jump at 10:00 AM. That's when the NAR report was released.
Look, you can argue that the report is flawed or that it shouldn't mean much, but the market DID move on it.
Sorry, that first link is broken. Try here.
Yes, there was a jump there (with what looks artificial volume in the futures), but the move was on well before that. The reason for the move was NOT the datapoint, it was simply an excuse to push it higher.
DaisyColorado,
How does today's news square with your particular location? I live in the Springs, and today's headline in our local rag said,"housing in the basement", home permits lowest in ten years, and foreclosures the worst in 20 years. Hmmm...I thought housing bottomed last fall?
Or as folks at minyanville tried to interpret David Lereah's comments, "today's data suggests housing is seeing atypical rebleakening buildup, which translates into a great time to buy or sell a home."
And... I don't trust the NAR.
I don't see how the market is a discounting mechanism in today's environment. As one example, earlier this year when Apple announced they would produce an i-phone, the stock rallied. Yet, that was already widely known by most market participants. Seems lately that the market is reacting to news, rather than discounting it.
The excess liquidity chasing everything is making it impossible for the market to properly discount anything.
This market will only fall because of forced liquidation, which will happen once debt creation falls below what is needed to service the already existing debt.
"suddenly there are a bus load of bulls arriving..." Check the IP addresses, there may only be one bull. I'd be delighted if the Fed is correct. I've never had more income nor less debt than at the moment. But my personal planning assumes a recession.
One more point that moves the market is time of month bullishness. The last few days of the month and the first few days of the next month are bullish because of all the retirement money coming into the market. Especially since last week was down and Monday was flat, it doesn't take much to start a rally during the first week of the month. I'm looking to buy back some short puts on a home builder debit spread if the home builders rally a bit more.
I think that there is a good chance that the "spring sales season" which is mainly Feb-April for new homes, will be a bust.
Thanks for joining us Jed.
What to say? How many readers here realize that top 1% own nearly 2/3 of the stock market? I don't think PPT ideas add much, you know?
The auto news is in the volumes as noted above, not the declining domestics unless you want to say something about GMAC's tighter lending standards. We are expecting a weaker consumer with declining house prices and this report confirms that. More evidence might come from looking at hi end vs low end auto sales.
The pending house sales are exactly that and likely to be revised down given tighter lending standards. In addition, having just looked at OC's 13.2% rise in inventory last month, I am reminded that there is great pressure to sell now before prices fall further. It is not only early reporting with pending sales, but also grossly incomplete without prices and inventory stats.
So there was a disconnect between economic news and stock market direction. This does not persist indefinitely.
because month-over-month seasonally adjusted existing home pending sales for February were up a whole 0.7% over January (though down 8+% YOY).
Ehh!! Must have been the Weather!
bofiz,
Didn't you get your giant inflatable bunny yet for the front yard?
Don't you mean his bed?..Sorry had to
..
Folks are using credit cards for sure...stand in-line at the Grocery store nothing but plastic...But then again I would rather walk away from a credit card bill than to loose my home...Sacrifices,Sacrifices
I've pretty much stopped using cash. Credit card for everything (I pay off in full each month)...
P.S. Good one on the inflatable bunny, bfatz (-: (-:
Unfortunately, the link to the NAR site only gives Feb 06 to the current Feb 07 and aggregates the earlier data by years.
Go to http://www.realtor.org/Research.nsf/files/PHS0604.xls/$FILE/PHS0604.xls
From Doc at Capitalstool.com
Consumer borrowing has leveled off since the end of 2004. For data through the week ended 3/21 the annual growth rate in consumer loans is 2.5%. Over the past four weeks the quarterly growth rate annualized in NEGATVE 6.73%, back to about the midrange of the 2.5% growth channel. That's consistent with inflation and indicates ZERO new spending. In fact, when you consider accumulating interest charges, it probably indicates a negative spending rate.
In contrast the annual growth rate at the end of 2004 was 9%, and at the end of 2003 was nearly 12%.
Yes there was a spurt in at the end of they year that was just like the one the year before and the year before that, and the year before that. True this one overflowed into January, probably because everyone was tapped out and couldn't tap their home ATM to pay down the credit cards, so the debt built up. But that's all been reversed and then some since the end of January.
What horseshit reporting. Don't believe anything you read in the mainstream infomercial media. It's pure crap.
Ron, not only is the reporting bad, but the headlines are even worse. I have no faith in any mainstream news outlet....financial or otherwise. (Well, sports journalism is not so bad.)
I don't know if reporting has always been this bad or if I just notice it more these days. Just imagine if there weren't any other sources for news....thank goodness for alternatives like this site and a handful of others.