Because you always mention the correlation of gold with the dollar (which is not unimportant but there are other more important factors), you might want to check out Bob Hoye. He is quite an authority on gold price behavior.
HOYE: During certain inflationary periods of time, you can make money in gold. When gold went to $850, it certainly went up faster than costs. But the point is that when you are in a stock bubble, the real price of gold goes down; and after the bubble, the real price of gold goes up. And then you start to see improved operating results for producers, and that ultimately enhances the value of the stock. One of the ways Mother Nature works is that during the post-bubble credit contraction, there is a huge vacuum where real liquidity is needed. And the only way Mother Nature increases that liquidity is through an increase in the real price of gold so that people go out and find more of it and produce more of it. Despite this, the gold establishment, during the last 20 years, predicted the gold price would go up because mine production was going down. Another point was that gold should have increased with falling real interest rates. But such rates always decline with gold during a financial bubble. Then, to continue the confusion to orthodoxy is that following a bubble, real long rates and gold have increased together.
I often find it difficult to fully comprehend that I am witnessing history-making events. Thanks CR (and all here) for assisting this nonfinancial type to understanding what is happening in our country today.
So much bad news and market rallies.
It'll take a few days to digest, nothing has fundamentally changed, hard to think that a 11 buck pullback in oil caused this or that the so called bubble in commodities burst.
Outlier writes:
"I often find it difficult to fully comprehend that I am witnessing history-making events."
I concur. What especially perks my ears up is when analysts, pundits, etc., start making comparisons to the Great Depression. I am a history teacher and to see this what is unfolding today makes me wonder. . . .
Thanks for the article. Merely stating that we are in a cycle that gold closely follows the dollar strength right now.
Till it shows otherwise that shall be my indicator, the best is still ahead.
We should have some sort of a ceremony when you officially remove the "probable" from these.
We had some bank sale properties sell for $100 this week in my city. Subprime speculation will do much more damage to our already depressed inner city neighborhoods. Thanks, Mr. Greenspan et all! You should be proud.
Apparently, NAHB found the bar where the pessimists were hanging.
Traffic disappeared starting about 2 weeks ago. Market still hot for REOs with average market time in the 40 day range, but these are priced well below what a builder can deliver, even with "$0" land basis.
Ben might notice several industries destructing under his watch....home building, autos, lending.....
MiTurn
I recall the president of our university wisely pointing out that history is more evolutionary than revolutionary. Thus, I tend to discount some of the more over the top hyperbole about comparisons to the the GD. But one can't ignore the data as exemplified in this graph.
"worsening housing slump and the near-meltdown in financial markets"
"Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months"
The HMI fell below its previous record low of 18 in June to a new record low of 16 in July, with each of its three component indexes also hitting record lows.
The SEC better watch what rules they impose if they want people actually trading in the US markets. Right now it is easy to more to a more transparent and unbiased exchange outside of the US. I am fairly sure that will change as the USG tries to keep money from flowing out of the US.
Congress better hurry and pass the Wealth Now Act, declaring all Americans rich beyond their wildest fantasies. For, if they fail to take action, surely we are doomed!
Thank you so much for adding the "SimplyMarry.com" ad in your blog. After 35 years of misery, I finally could find a dream wife with whom I could share my toothbrush and living space in my auntie's basement.
OT--did anyone listen to NPR radio yesterday--the Tom Ashbrook "On Point" segment featuring Martin Feldstein discussing the topic, "Where is the economy headed?". He sounded worried.
OT--did anyone listen to NPR radio yesterday--the Tom Ashbrook "On Point" segment featuring Martin Feldstein discussing the topic, "Where is the economy headed?". He sounded worried.
Silly Feldstein. He hasn't discovered the Wright Model B yet.
Outlier, I agree, everything has to be held in context and, historically speaking, understanding most often comes in hindsight. But it is interesting that a lot of the data being examined in various market-related sources can only make references to the GD to provide a contrast. Prior recessions don't compare. Very interesting indeed, but I make no predictions. I'll assess a decade from now!
The best values in index strength during
these times can be found in the activity of short covering or PPT
manipulation. Any real reason to buy
stocks now? Hell No !
Theres not enough lipstick to put on this pig, Richard Moody, an economist at Mission Residential, wrote in a note to clients. No matter how one slices and dices, he added, the bottom line is that U.S. workers are falling farther and farther behind.
My son and I were hiking in the Adirondacks yesterday and saw one of you guys very close up (big and black). He ran away into the bushes when he saw us coming. Me thinks it was an omen...
Aheadofthecurve writes:
My son and I were hiking in the Adirondacks yesterday and saw one of you guys very close up (big and black). He ran away into the bushes when he saw us coming. Me thinks it was an omen...
LOL. You sure whom you saw wasn't just calling his friends to some snacks? Count your son and yourself lucky you got away today.
This will certainly be an L shaped curve. Most of these builders holdings are out in exurbia. Between the cost of gas, insufficient infrastructure, etc, market is sending them a signal, we dont want your McMansions any more!!!
By contrast, condos in my city (DC) are being moved - sales (while slow) are high enough to absorb the new home inventory. Out in the sticks, even with massive price declines, inventory keeps piling up and piling up with no end in sight.
Once, some years ago, one of my brothers took me to visit this old ghost town near the Sierras, or at least along the border area between California and Nevada. I think it was called "Bodie". Back then people were trying to preserve it as a park or national monument. Little did anyone anticipate how many more ghost towns we'd be generating before long ...
"LOL. You sure whom you saw wasn't just calling his friends to some snacks? Count your son and yourself lucky you got away today.
Anonymous | 07.16.08 - 2:15 pm | # "
Naw, when I shouted "SEC!" he ran into the bushes and crawled into his den. Some of the people from here tried to tempt him out with delicious berries, but he kept mumbling something about "failure to deliver"...
"...makes it even more urgent for Congress to complete action on the housing bill now, a move that will help stabilize and restore confidence in housing and the U.S. economy." -- NAHB
Amusing how fast Bushies turn into socialists.
Just yesterday it was arbeit macht frei for the poor.
What a different tune they sing when the bottom falls out of their irresponsible culture of waste and fraud.
well recovery this, recovery that, recovery by the end of the year...
I don't see much difference between Japan in 90's and Cali today, when it comes to RE.
The mess will be here for a while, don't get al delusional. I would rather fasten my seatbelt.
F^%$$ scumbag builders took full advantage of buyers just a few years ago gouging them for as much as they could. Now, let them sink into oblivion. New builders will pop up again. Noone will miss these wH(*&s!
There is an old saying that when you have a hammer, everything looks like a nail. The NAHB has a hammer...
Residential and commercial construction do not make an economy; they consume materials and labor, but ultimately do not contribute to GDP. So there's a problem for the American economy.
Another problem (for the housing market) is that when there is a recovery, it will in no way resemble the housing markets we've seen in the last 10-15 years. What this 'new recovered housing market' will look like is wwide open to debate.
wurst
All, blogger has a problem today, so I can't upload the smaller graphics (and the pop-up window).
Wow. What a collapse!
Best to all.
Well that's a buy signal if I've ever seen one.
Cliff diving...the weather here in Alcapulco is nice
No Spring rally
No Summer rally
Long winter and fall coming
OT
BB,
Because you always mention the correlation of gold with the dollar (which is not unimportant but there are other more important factors), you might want to check out Bob Hoye. He is quite an authority on gold price behavior.
This is an article from 2005:
Safe Haven | Why You Should Own Gold & Dollars
HOYE: During certain inflationary periods of time, you can make money in gold. When gold went to $850, it certainly went up faster than costs. But the point is that when you are in a stock bubble, the real price of gold goes down; and after the bubble, the real price of gold goes up. And then you start to see improved operating results for producers, and that ultimately enhances the value of the stock. One of the ways Mother Nature works is that during the post-bubble credit contraction, there is a huge vacuum where real liquidity is needed. And the only way Mother Nature increases that liquidity is through an increase in the real price of gold so that people go out and find more of it and produce more of it. Despite this, the gold establishment, during the last 20 years, predicted the gold price would go up because mine production was going down. Another point was that gold should have increased with falling real interest rates. But such rates always decline with gold during a financial bubble. Then, to continue the confusion to orthodoxy is that following a bubble, real long rates and gold have increased together.
"Planet of the Apes" is on AMC right now.
I often find it difficult to fully comprehend that I am witnessing history-making events. Thanks CR (and all here) for assisting this nonfinancial type to understanding what is happening in our country today.
So much bad news and market rallies.
It'll take a few days to digest, nothing has fundamentally changed, hard to think that a 11 buck pullback in oil caused this or that the so called bubble in commodities burst.
Thanks for the word on hiding places in the Sieras, CR. I think I best pack a very large overnight bag.
Outlier writes:
"I often find it difficult to fully comprehend that I am witnessing history-making events."
I concur. What especially perks my ears up is when analysts, pundits, etc., start making comparisons to the Great Depression. I am a history teacher and to see this what is unfolding today makes me wonder. . . .
I still see hope arriving...
... only after NAHB announces "we have reached a permanent valley".
16? The index isn't even legal at this point.
Market is in rally mode so no reaction from the stocks.
RE:
Thanks for the article. Merely stating that we are in a cycle that gold closely follows the dollar strength right now.
Till it shows otherwise that shall be my indicator, the best is still ahead.
We should have some sort of a ceremony when you officially remove the "probable" from these.
We had some bank sale properties sell for $100 this week in my city. Subprime speculation will do much more damage to our already depressed inner city neighborhoods. Thanks, Mr. Greenspan et all! You should be proud.
crispy&cole writes:
No Spring rally
No Summer rally
Don't worry, we will get a spike around superbowl time (superbowl 2012 that is).
That graph looks like Siula Grande!
VIX down 8%. Buy downside protection while it's on sale.
skf @ 175? wtf?! how can the market rally on this news?
Those 12 prospective buyers sure are idiots!!!
Today is NOT shorts covering
Intraday Futures Prices - Markets Data Center - WSJ.com
Buying the SPX hand over fist is what is happening.
Ciao
MS
Price the market in oil, it makes more sense....
PPT prints? Thanks, MS.
Is that fear I smell? I hope so, because this is what we need. The herd needs to move to fear.
In case you addressed this to me, Ipodius, no, there is no fear just added information for a fellow traveller.
Today is NOT shorts covering...
Buying the SPX hand over fist is what is happening.
Well the idea is to buy SPX hand over fist to force the shorts to cover and trigger a short-covering rally.
It's ironic though that the SEC investigates manipulation involving short positions, but not upside manipulation.
crispy,
"fall coming"
Can't fall much further. I think you meant splat coming.
Cheers,
Apparently, NAHB found the bar where the pessimists were hanging.
Traffic disappeared starting about 2 weeks ago. Market still hot for REOs with average market time in the 40 day range, but these are priced well below what a builder can deliver, even with "$0" land basis.
Ben might notice several industries destructing under his watch....home building, autos, lending.....
@It's ironic though that the SEC investigates manipulation involving short positions, but not upside manipulation.
LOL. Where's the outrage!
Again they are creating more of a cushion for the coming day's financial "earnings" report....
or what they call earnings...I wonder how much reduced liability will be booked as a profit??
Seems to be standard practice these days...
Clarify:..."some" of this is shorts covering however the bulk of it is not
Ciao
MS
ac, PPT can't win without unfair rules. They won't win in the end, anyway.
MiTurn
I recall the president of our university wisely pointing out that history is more evolutionary than revolutionary. Thus, I tend to discount some of the more over the top hyperbole about comparisons to the the GD. But one can't ignore the data as exemplified in this graph.
The NAHB quotes are amazing:
"worsening housing slump and the near-meltdown in financial markets"
"Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months"
The HMI fell below its previous record low of 18 in June to a new record low of 16 in July, with each of its three component indexes also hitting record lows.
Grim. Grim. Grim.
Best to all.
@Grim. Grim. Grim.
The Grinch is gonna steal Christmas this year.
The SEC better watch what rules they impose if they want people actually trading in the US markets. Right now it is easy to more to a more transparent and unbiased exchange outside of the US. I am fairly sure that will change as the USG tries to keep money from flowing out of the US.
Man-Moth,
The Grinch is gonna find there ain't much to steal.
Cheers,
Congress better hurry and pass the Wealth Now Act, declaring all Americans rich beyond their wildest fantasies. For, if they fail to take action, surely we are doomed!
@The Grinch is gonna find there ain't much to steal.
Coke on computer. LOL!
Thanks for the word on hiding places in the Sieras, CR. I think I best pack a very large overnight bag
Watch out for the bears! They've REALLY got attitudes up there!
I need another stimulus check so I can buy a pitchfork and torch like everyone else. Should be the new fashion statement for the Fall.
The grinch is gonna steal copper from those unsold new homes. Better haul than X-mas this year, that's fer sho'.
Good evening CR,
Thank you so much for adding the "SimplyMarry.com" ad in your blog. After 35 years of misery, I finally could find a dream wife with whom I could share my toothbrush and living space in my auntie's basement.
OT--did anyone listen to NPR radio yesterday--the Tom Ashbrook "On Point" segment featuring Martin Feldstein discussing the topic, "Where is the economy headed?". He sounded worried.
OT--did anyone listen to NPR radio yesterday--the Tom Ashbrook "On Point" segment featuring Martin Feldstein discussing the topic, "Where is the economy headed?". He sounded worried.
Silly Feldstein. He hasn't discovered the Wright Model B yet.
When is the SEC going to institute the downtick rule, where you can only buy a stock on a downtick ?
Ruh! Roh!
Just reported on the news radio:
CA prices down 29%yoy.
GAH!
Is it beer:30 yet?
Cheers,
barely,
"When is the SEC going to institute the downtick rule, where you can only buy a stock on a downtick ?"
If they'd just institute the "No Sell Rule", then we'd never have a down tick.
This whole regulatin' thing is easy. They should gimme one of them jobs.
Cheers,
All in SRS? The slow, stupid market will respond by Friday.
Troy writes:
Thanks for the word on hiding places in the Sieras, CR. I think I best pack a very large overnight bag
Watch out for the bears! They've REALLY got attitudes up there!
I'll load up on IndyMac paper to throw off my scent!
The HMI fell below its previous record low of 18 in June to a new record low of 16 in July,
On the plus side, when it hits 20 next year, the Yunster will be able to crow about a 25% increase.
Speed writes:
All in SRS? The slow, stupid market will respond by Friday.
But in just a few minutes the Fed's Beige Book Report comes out.
headline of the day:
CPI Report Offset by Wells Fargo Earnings
Strangely it is no longer available at Yahoo.
As if ONE banks fake earnings can offset 12% inflation.......at least that is with food and fuel..you know the stuff that none of us use.
Ciao
MS
Outlier, I agree, everything has to be held in context and, historically speaking, understanding most often comes in hindsight. But it is interesting that a lot of the data being examined in various market-related sources can only make references to the GD to provide a contrast. Prior recessions don't compare. Very interesting indeed, but I make no predictions. I'll assess a decade from now!
Oh Glod! This is just too much.
"Buy Now, Don't Regret Later...
For just a few minutes, though, let's think about the times we become too frugal for our own good."
Yeah, that's been the case round these parts...back in 1933.
http://finance.yahoo.com/banking-budgeting/article/105403/Buy-Now,-Don%27t-Regret-Later;ylt=AhONRMFIBg3yYEgZzWfTj.7YWsA
The article is revolting. But I share.
Cheers,
skf @ 175? wtf?! how can the market rally on this news?
I just put in a limit order to pick up a few shares of SKF @ 85. Should get it filled by the end of the session.
The best values in index strength during
these times can be found in the activity of short covering or PPT
manipulation. Any real reason to buy
stocks now? Hell No !
"Kwan Zang"
Ha, faker! We in the PPT know there are no Chinese people named Zang.
Theres not enough lipstick to put on this pig, Richard Moody, an economist at Mission Residential, wrote in a note to clients. No matter how one slices and dices, he added, the bottom line is that U.S. workers are falling farther and farther behind.
Economic Fears Slice Oil Prices For Second Day - NY Times
I wonder if the NY Times needs a graphic to go with the story?
"It was stupidity that got us into this mess. Why can't it get us out?" -- Will Rogers
Well I guess this should put those second half recovery types into their graves.
I see a recovery, in 2012.
The simply amazing part is that there are still homebuilders out there in business, tossing up houses, with bank credit lines.
MAC clauses going to be invoked soon.
But hey, first we have volatile markets.
I like 'em when their hot,
I like 'em when their not,
As long as I beat that 14% inflation,
I really care naught.
Someday this war's gonna end...
My son and I were hiking in the Adirondacks yesterday and saw one of you guys very close up (big and black). He ran away into the bushes when he saw us coming. Me thinks it was an omen...
Aheadofthecurve writes:
My son and I were hiking in the Adirondacks yesterday and saw one of you guys very close up (big and black). He ran away into the bushes when he saw us coming. Me thinks it was an omen...
LOL. You sure whom you saw wasn't just calling his friends to some snacks? Count your son and yourself lucky you got away today.
This will certainly be an L shaped curve. Most of these builders holdings are out in exurbia. Between the cost of gas, insufficient infrastructure, etc, market is sending them a signal, we dont want your McMansions any more!!!
By contrast, condos in my city (DC) are being moved - sales (while slow) are high enough to absorb the new home inventory. Out in the sticks, even with massive price declines, inventory keeps piling up and piling up with no end in sight.
Time for some chants to reflect our true
feelings for the Dow index :
SUB-10-K
SUB-10-K
Govt Policies Don't Work
Ben is a Jerk
SUB-10-K
SUB-10-K
The twelve Mexicans to which they refer were just passing through on their way south where the jobs are.
If inflation is 12% and the dollar index is down to 71 isn't the stock market really down about 40% from it's high?
Once, some years ago, one of my brothers took me to visit this old ghost town near the Sierras, or at least along the border area between California and Nevada. I think it was called "Bodie". Back then people were trying to preserve it as a park or national monument. Little did anyone anticipate how many more ghost towns we'd be generating before long ...
"LOL. You sure whom you saw wasn't just calling his friends to some snacks? Count your son and yourself lucky you got away today.
Anonymous | 07.16.08 - 2:15 pm | # "
Naw, when I shouted "SEC!" he ran into the bushes and crawled into his den. Some of the people from here tried to tempt him out with delicious berries, but he kept mumbling something about "failure to deliver"...
"...makes it even more urgent for Congress to complete action on the housing bill now, a move that will help stabilize and restore confidence in housing and the U.S. economy." -- NAHB
Amusing how fast Bushies turn into socialists.
Just yesterday it was arbeit macht frei for the poor.
What a different tune they sing when the bottom falls out of their irresponsible culture of waste and fraud.
well recovery this, recovery that, recovery by the end of the year...
I don't see much difference between Japan in 90's and Cali today, when it comes to RE.
The mess will be here for a while, don't get al delusional. I would rather fasten my seatbelt.
F^%$$ scumbag builders took full advantage of buyers just a few years ago gouging them for as much as they could. Now, let them sink into oblivion. New builders will pop up again. Noone will miss these wH(*&s!
There is an old saying that when you have a hammer, everything looks like a nail. The NAHB has a hammer...
Residential and commercial construction do not make an economy; they consume materials and labor, but ultimately do not contribute to GDP. So there's a problem for the American economy.
Another problem (for the housing market) is that when there is a recovery, it will in no way resemble the housing markets we've seen in the last 10-15 years. What this 'new recovered housing market' will look like is wwide open to debate.