I wonder how much home improvement is related to repairs of damage occurring after foreclosure? Perhaps that work will keep this portion of "investment" propped up in the next year or two.
How about a Sirius-XM type merger, and call it "Lowe's Depot."
I donate this idea freely, by the way. I would only ask that my Mulit-Million dollar commission as corporate strategist be donated to something worthwhile, like Ronald McDonald House. Or alternatively, a bunch of executives could just line their pockets.
I dunno - I suspect in California home improvement expenditures will continue to rise - so much of the housing stock is getting old (by the standards here, say 50 years) and in need of repair. The coastal town I live in 15 miles from downtown San Diego, could easily spend a couple hundred million in renovations once the octogenarians start dying off.
So from the home improvement graph, it looks like things started dropping off around the end of 2007 - which was what I found to be true, and made me call recession first around here (have I ever mentioned that before?) --
So home improvement looks like it is continuing a steady slide down.
Interesting on the other graph how multi-family investments have not followed with single family? Multi seems to be much more flat. Were people not flipping multis?
Every week it gets worse and worse and worse. Today it was Japan....
THERE HAS NEVER BEEN DATA THIS BAD FOR ANY MAJOR ECONOMY EVEN IN THE GREAT DEPRESSION. December industrial production came in down 9.6%, worse than the METI forecast. It is now down almost 21% year over year. METI forecasts a further 4.7% decline in February. The inventory to production ratio soared again. Maybe METI will be correct. . .
The yen is strengthening massively against currencies all over. On a trade weighted basis, it is by far the strongest currency on the planet. There are long lags between changes in currencies, exchange rates and trade. The recent take off in the yen is not yet fully reflected in Japanese exports. The lags are too long. The weakness we are seeing in Japanese exports today is in large part derived from aggregate demand weakness from its trading partners. . .
When the long lags between the yen exchange rate change and trade and industrial production fully run their course the land of the rising sun may fall off the face of the earth. And with it will fall all the market participants who refuse to look at fundamentals and chase chart witchcraft and ephemeral market dynamics who have been the big bulls engineering that yen exchange rate that will maximally undermine the markets, economy, and social fabric of Japan.
Well, the Super Bowl is over and an east coast rodent told me winter wasn't over yet. Frankly, I"m still a little hung over. Was that Danica Patrick in those weird ads last night? It was? How humiliating for her.
What should we talk about now?
CR Chart pron? Wow. That stuff looks pretty awful. And that's HERE? In the U.S., you say....hmm. Had no idea.
Tell me again, what does this 'tarp' thing all about...that stuff sure is confusing. Oh, it's an acronym and not a real tarp... HA That's funny.
Wait..Holy smokes. March Madness is only a few weeks off ! I gotta get my picks together. I'll talk to you later.
The home improvement line was a lot noisier until about 1987 or so when it smoothed out somewhat. While it generally followed the new construction line, it was no where near as bubbly so maybe, just maybe, home improvements will not take such a big hit. After all, people will still be buying one can of paint for their makeover-before-distress-sale transaction...
joe schmoe,
It isn't so much "shrinkage" as it is "disruption." That's an important distinction. The disruption can be ameliorated before it turns into shrinkage. Unfortunately it will take one of those unique instances of nations working for the greater good over perceived self interests.
You can thank us for helping with the home improvement part since we've been pouring thousands of dollars fixing up our home here in the OC during Dec'08 and Jan'09. Actually, this will probably be a multi-month/quarter/year thing since we have a long ways to go to get our 50+ year old home into updated state (inside and outside need a lot of work). We're doing the kitchen now. Bathroom will be next....
U.S. President Barack Obama on Monday underscored his support for health secretary-designate Tom Daschle, despite tax errors that prompted Daschle to pay $140,000 in back taxes Obama says 'absolutely' stands by Tom Daschle
| Reuters
Not paying taxes must be a job requierment for "O" not that any of these guys really pay them anyway because they are the frigging tax.
Last fall, I went to Home Depot in DC, where I live, to get a couple of things. Literally swarming the parking lot were day workers, presumably many of whom were non-documented. I wonder how that not insignificant sector of home remodeling will be impacted including related spending.
yeah, looks like the 52 week low is the closing low, vs. today's intraday low. so interesting we have hit the 52 week closing low today, but previous comment incorrect. (google finance)
"This would seem to suggest there remains significant downside risk to home improvement spending over the next couple of years."
.
Another way to think about it. Back in the boom, people were playing housing musical chairs on a whim-- a lot of moves were optional, not really necessary. That's certainly true for me, my last move was simply and solely because I wanted to design-build from scratch. What I'm suggesting is, a lot of the "flipping" in the past was due to hobby/semi-pro decorators/flippers like me, fueled partly by house lust and decorating magazine porn. The market seemed to support this frothiness, and for a while we got away with it. I've still got the "urge," I must say. The taste of plaster dust in one's mouth is a difficult addiction to overcome. There's a really cute little Victorian that could be so glam with just a cosmetic makeover...
BTW, if you want to gauge the strength of these "optional moves," go over to city-data forum and look at the real estate sub-forum. Many of the people who are complaining about not being able to sell their homes are "optional movers." IMO, they are keeping their homes on the market on the off-chance someone will buy, artificially inflating the inventory. That's my theory, anyway.
I dunno - I suspect in California home improvement expenditures will continue to rise - so much of the housing stock is getting old (by the standards here, say 50 years) and in need of repair. The coastal town I live in 15 miles from downtown San Diego, could easily spend a couple hundred million in renovations once the octogenarians start dying off. Sinomania! | Homepage | 02.02.09 - 11:47 am | #
I dunno -- maybe there's some nesting , hunker-down instinct at play in the face of a deteriorating economy. People have the feeling they're going to be in the same house for another ten years, so they decide to fix it up? I know we spent about $10K to make our never-very-functional kitchen much more functional (you can actually do serious cooking in there now), and are eating at home more.
Among my acquaintances, other people are also having the kitchen done; the siding repaired or replaced; decks repaired or expanded; new double-paned windows put in throughout the houes. More now than in the last few years. And none of these people are flippers; they're staying in place. The small-time contractors I've talked to lately say that big jobs are dead, but kitchen- and bath- jobs and other small remodels are still quite active.
Why? In the case of my kitchen, this was a sort of batten-down-the-hatches mentality. I wanted it; it would be of practical use come a bleaker future; and I have the money now. I suspect most of my friends are thinking the same way.
Proshares (srs, skf, sds, etc.) are a division of Barclays (and I think formerly Lehman). Am I the only one that thinks these products will fail when TSHTF again? Could be from our market tanking, skyrocketing the ultrashorts, making counterparties unable to afford the losses. Or, Barclays, a division of the U.K. government now, getting hit by the Pound's collapse, causing a quagmire in all products run by Barclays. I'm very skeptical on all the leveraged ETFs at this point.
Does anyone else notice that the Brokers commision line is very much like Shillers composite graph? With the exception that .5% would seem to be the 100 line on the index, and we know houses havent gone below 100......yet
Rob Dawg writes:
joe schmoe,
It isn't so much "shrinkage" as it is "disruption." That's an important distinction. The disruption can be ameliorated before it turns into shrinkage.
Dawg,
Not sure I see the relevance of the distinction to this data. The data looks to me like the collapse of inflated demand.
Demise of fog a mirror cheap credit and collapse of asset values leads to collapse of demand for Japanese exports (also via rising unemployment, of course).
And demise of fog a mirror cheap credit and collapse of asset values leads to search for safe havens that inflates the Yen at the very moment that the Japanese economy is plunging faster than any major industrial economy.
When the Yen bubble pops (and this seems much more a near term certainty to me than a US dollar bubble pop), it will be a hellacious implosion.
How do you write the narrative of this as a disruption, rather than shrinkage?
actually interesting the market apparently pinged off that closing low
the veneroso artical on the yen has some interesting comments on what i think he called the insanity of technical analysis when it is predominant in the market
....many of the improvements might center around changes required for multiple generational increases in the household (kids and their kids are moving back in).
s0mebody writes:
Proshares (srs, skf, sds, etc.) are a division of Barclays (and I think formerly Lehman). Am I the only one that thinks these products will fail when TSHTF again?
Panic first and dump ultras after the last person panics
Home Depot sales should be bifurcated between Remodeling and General Maintenance. In the past decade, or more, Remodeling experienced the greater growth for HD, no doubt, with General Maintenance steady but always trailing, in regards to growth. I surmize that trend will reverse. The net effect will most likely be negative.
REBear(Unrated) writes: Not paying taxes must be a job requierment for "O" not that any of these guys really pay them anyway because they are the frigging tax.
Some Republican said the Democrats like higher taxes because they themselves don't pay them. It seems to make sense that tax cuts have a better chance of staying in the stimulus package because of this.
Hey everybody! Cheer up. The alternative to SFR as share of GDP falling 50% is for GDP to fall 50% and preserve the ratio. See? Best of all possible worlds.
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
There are numerous complex questions going directly to the heart of our frozen financial system: who do we reward, what penalties do we exact, were crimes committed, and when can trust and transparency be restored.
The trend used to be when markets tank, big money would plow money into their homes via major remodelings. This could mean that big money is out of options at this point, want's to avoid bonds, equities, MM, etc., and is going back to major remodeling jobs. I have noticed more remodeling work going on in the $1.5m and up housing market.
I'm baffled by the inclusion of brokers' fees here. It's a service - if not a very helpful one - that is mostly involved in the transfer of existing assets. I suppose the BEA has a rational for it but a search of the site didn't yield much in the way of explication.
Yes, I also liked Veneroso's comments on trading, technical analysis and the turning of markets into casinos.
However, Veneroso refers to the bubble years as the casino time, and I think that appelation better fit us now.
There was a massive misallocation of resources during the bubble, not because the markets ran as a Casino but because they were run as a Ponzi scheme. In a Ponzi Scheme, the marks think they are investing on fundamentals, though that is an illusion or deception.
These days, I think there is much less illusion. The financial stocks trade up and down largely on expectations of bailouts, and guesses as to the effects of the bailouts. Sure, a few people think they are investing long term on the basis of fundamentals, but it seems to me that most of the action is wagering, pure and simple.
Some individuals are better gamblers than others - I don't want to get into an argument about whether individuals here know how to make fortunes off the market gyrations.
Instead, i think Veneroso raise an important question about the social reasons for havind such markets: to relatively optimize the allocation of resources. This is now haywire and, I think, yet another major reason why banks need to be nationalized and cleansed, then privatized under new regulatory structures for all banks.
Our neighbors across the street (two of them right next to each other) just finished two pretty big remodeling/addition jobs on their homes. The home directly next to it finished a complete re-do about a year or two ago. Neighbor next door (has three kids, adopting another) thinking of adding on to his home. The wife and I are sitting tight. Would love to get windows replaced and kitchen and bathroom re-done but now is not the time. Time to sit tight.
Bob Dobbs said: "...Among my acquaintances, other people are also having the kitchen done; the siding repaired or replaced; decks repaired or expanded; new double-paned windows put in throughout the houes. More now than in the last few years. And none of these people are flippers; they're staying in place. The small-time contractors I've talked to lately say that big jobs are dead, but kitchen- and bath- jobs and other small remodels are still quite active...."
This exactly describes what my wife and I are doing, cost-efficient, functional improvements but no over-the-top kitchen and bath remodels.
Something we've noticed about prices, though. At the end of last year we started buying new faucets and light fixtures to replace some of the lower-end "builder's brass" in our home. We could get great prices a couple of months ago, but they've jumped quite a bit since and some of what we bought before isn't available anymore even at higher prices.
My point: Evidently some of that excess inventory is being worked off.
How do you write the narrative of this as a disruption, rather than shrinkage?
Sincere question. I don't see your implied terms. joe shmoe | 02.02.09 - 12:08 pm | #
Disruption is when letters of credit are not honored. Shrinkage is when LOCs are not available.
Disruption is a hurricane. Shrinkage is mothballing cargo aircraft at the Mojave Spaceport.
The Yen is "safe." Being among the least worse alternative economies. The dollar retains value for some of the same reasons as does Germany. We all build stuff people need and have societies that can do with the stuff people want. Canada has stuff people need as well in contrast to Mexico which has needs it cannot supply or effectively trade to get.
What's this got to do with your question? We are seeing global economies reassessing their priorities and relationships. Japan, US, Germany have lots of potential dates for the prom. The BRICs are finding out that while they popular when they were cheap and easy they aren't steady girlfriend material. Heck, they are just now finding out they were the girlfriend. [apologies for the decidedly un-PC tone of the analogy]
Mr. Beach writes:
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
There are numerous complex questions going directly to the heart of our frozen financial system: who do we reward, what penalties do we exact, were crimes committed, and when can trust and transparency be restored.
I am looking forward to seeing the answers.
Mr. Beach | 02.02.09 - 12:14 pm |
I think the delay is intended to build concerns, such as you express, and also to allow the House hearings with the CEO's of the top banks to begin before any plan is announced.
I think (and I hope) that Obama is setting the timing so that his plan comes out while the public scandal around banks is peaking, and while the bank CEO's are themselves in front of televised Congressional hearings.
If this is the plan, and I suspect that it is, it is designed to put rev up public demand for greater punitive and reconstructive action (i.e., something like nationalization) and to simultaneously expose the bank CEOs before the public.
Mr. Beach writes:
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
There are numerous complex questions going directly to the heart of our frozen financial system: who do we reward, what penalties do we exact, were crimes committed, and when can trust and transparency be restored.
I am looking forward to seeing the answers.
Who do we reward?
Everyone will be rewarded, its TARPville. However some people will get a itty-bitty tarp, and it won't cover them completely, so they will suffer the elements.
Penalties?
Well TPTB will sling some poo, call some people out, slap them on the wrist and send them to Maximum Security Madoff.
Were crimes committed?
Seriously is that a question?
When can trust and transparency be restored?
Well trust was never destroyed, before I thought that Banksters and "high finance" were evil, now I know so. Hell I would even go so far as to say that my trust was cemented. Now about transparency, well since I have never known that, not in my lifetime, then I guess you don't really miss that which you never had.
"I wonder how much home improvement is related to repairs of damage occurring after foreclosure?" speed racer | 02.02.09 - 11:40 am | #
I think that will be a major factor going forward - if 1/3 to 1/2 of all sales are foreclosures and they are as bad as some I've looked at lately - the 'improvement' factor will be significant just to bring them up to 'code' for renting. Some places DO still have codes & enforce them.
Will be looking at a foreclosure today - report back later.
Mr. Beach writes:
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
Now that a menu of possible options has been prepared, it's going to take a few days to review campaign contribution records and determine which bank gets assigned to which course on the menu.
The next "rule of thumb" to be demolished will be new vehicle sales versus repair/maintenance expenditures. At the reducto absurdum extreme imagine post revolution Cuba and their auto "industry."
(OT) bearly said: "So either the markets are rigged now or the government thinks it has to rig markets. Free market capitalism is a myth."
I was reading something just this morning in an essay about LTCM's blow-up that bears this out.
Paraphrased: In nature, a hurricane isn't more or less likely to hit based on how much hurricane insurance was written. In financial markets, though, the people who know how much financial insurance you sold have the power to make a disaster happen.
Makes me wonder about the nature of our current disaster. Like would it have happened at all if it had only been a matter of housing prices going through a normal correction, or if it was summoned by people who had the power to bring about disaster.
I agree that the Yen was safe and then has seemed relatively safer (Yves at NC added a smiliar comment to the Veneroso excerpts). But I find Veneroso's argument persuasive that the Yen is now doing a Wile E Coyote routine by running out far beyond the edge of a cliff. Sometime soon it will look down.
Veneroso's argument is that the rising Yen leads to a further fall in exports that leads to more layoffs that leads to shrinking demand within Japan . . . a fast downward spiral . . . or just a drop like a stone.
As you say, Japan and the US and Germany and Canada all make things people need . . . but Japan's drop in exports includes an awful lot of stuff like cars, for which demand is highly elastic, as opposed to, say, US grain exports.
I think we're seeing mothballing of capacity that is becoming more excess by the day.
Free market capitalism is a myth. bearly | 02.02.09 - 12:32 pm | #
Always was and always will be. Economics & politics are joined at the hip - the question is which twin takes 'command'... market forces or political structures. Pining for 'free markets' is like pining for 'socialist utopia'... good luck w/ that.
"Makes me wonder about the nature of our current disaster. Like would it have happened at all if it had only been a matter of housing prices going through a normal correction, or if it was summoned by people who had the power to bring about disaster."
- Seb
It must be a conspiracy. Everything was sound, subprime contained..
Rob Dawg writes:
The next "rule of thumb" to be demolished will be new vehicle sales versus repair/maintenance expenditures. At the reducto absurdum extreme imagine post revolution Cuba and their auto "industry."
Yes, Dawg, exactly. And the result in Japan will be mothballed auto plants (in Japan and also overseas, of course, but they remit to Japan, or at least they used to . . .).
dryfly, I'm glad you're here because I wanted your opinion on this (from my above post): "...Something we've noticed about prices, though. At the end of last year we started buying new faucets and light fixtures to replace some of the lower-end "builder's brass" in our home. We could get great prices a couple of months ago, but they've jumped quite a bit since and some of what we bought before isn't available anymore even at higher prices...."
Do you think this is something or do you think it's nothing?
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: Mibbit IRC client widget (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
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dryfly writes:
Free market capitalism is a myth.
bearly | 02.02.09 - 12:32 pm | #
Always was and always will be. Economics & politics are joined at the hip - the question is which twin takes 'command'... market forces or political structures. Pining for 'free markets' is like pining for 'socialist utopia'... good luck w/ that.
Right, right, right.
No "free market" without property, which is constituted and protected in law, which is made and enforced by governments. Sure, barter can proceed in stateless societies . . .
Don't forget the high quality products sold by HD will surely last forever and when coupled with the extraordinary skills of day laborers while supervised by novice contractors and approved by overworked building inspectors and bought by blind speculators...
I dunno -- maybe there's some nesting , hunker-down instinct at play in the face of a deteriorating economy. People have the feeling they're going to be in the same house for another ten years, so they decide to fix it up? I know we spent about $10K to make our never-very-functional kitchen much more functional (you can actually do serious cooking in there now), and are eating at home more.
Bob Dobbs
Bob, I recall this happening in the early nineties. First time I'd heard the phrase 'nesting'. People were stuck in their homes for a while and did exactly what you've described. I'm guessing this is happening again.
Nesting does seem like a likely answer. I have a friend who does wallpaper and painting, usually in high end homes. She saw a serious downturn in her business when the housing market crashed.
But now her business is picking up again. I suspect she's seeing both the nesting aspect and the altered plans of some who wanted to do a major remodel and are now settling for cosmetic changes.
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: Mibbit IRC client widget (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
What others have said about CRBot: Gary writes: This CRbot is pretty nifty. EvilHenryPaulson writes: CRBot is great on mobiles Loudocracy writes:
Thank god CRbot spared me from that dead thread. Hoopajoops writes: Posting a test message from the IRC Channel... THIS THING ROCKS
CRBot: Killing dead threads deader since last week.
At the end of last year we started buying new faucets and light fixtures to replace some of the lower-end "builder's brass" in our home. We could get great prices a couple of months ago, but they've jumped quite a bit since and some of what we bought before isn't available anymore even at higher prices...."
Do you think this is something or do you think it's nothing? Sebastian | 02.02.09 - 12:48 pm | #
it was the 'metals lag' - prices sky rocketed last spring and killed margins for a lot of producers - they eventually bit the bullet and produced using higher priced material - now that prices are falling they have the ugly choice of getting clipped again (selling product at prices reflecting current metal prices OR holding out a hoping to sell at the higher price and recover the cost of metal). Eventually they will match the market and take their lumps or go broke - I think you are seeing both.
BTW - the same thing is happening in aerospace w/ high priced aluminum, titanium & 'super alloys'...
High prices aren't a problem. Low prices aren't a problem. Wildly fluctuating prices (up or down) is a huge problem for producers. It is though th especulators play ground - hope some are having fun.
People getting ready to flip the house, obviously.
Does this mean Tim Allen and Pam Anderson come back on the television?
We need a Home Improvement Czar.
I wonder if Bob Vila has evaded any taxes. If so, he's the obvious choice.
more pain for Lowes and home depot
Is it improvement or maintenance? Repairs to sloppy work done by sloppy contractors for flippers or those flipped to?
Accidental landlords discovering that high end kitchens and baths are a poor choice for most rental units?
Oh my!
Nostrovia,
Realtor commissions peaked at almost 1% of GDP?
The horror
Haloscan?
emo
Is there a bottom in there somewhere?
Hello, Nemo....
Nostrovia,
Hello, Nemo....
Nostrovia,
Home Depot and Lowes will be doing yard sales of their fixtures if improvement spending falls further.
Just think about how many pickups/vans of stuff it would take to empty a Home Depot store.
I wonder how much home improvement is related to repairs of damage occurring after foreclosure? Perhaps that work will keep this portion of "investment" propped up in the next year or two.
darned downside risk agai
Let the banks fail, screw Nationalization! No bailout for banksters!
OT:
Boycott CNBC day - FEB 3rd
Boycott CNBC Day on Tuesday February 3 StockTwits Blog
"I wonder how much home improvement is related to repairs of damage occurring after foreclosure?"
Creative destruction?
Ome
hoowee: BAC (BOA) is heading for $5.00 share so they can compete in the under $5.00 bank share market. Down another 5% today!
Will Charlotte turn into Detroit?
How about a Sirius-XM type merger, and call it "Lowe's Depot."
I donate this idea freely, by the way. I would only ask that my Mulit-Million dollar commission as corporate strategist be donated to something worthwhile, like Ronald McDonald House. Or alternatively, a bunch of executives could just line their pockets.
"An internal server error occurred. Please try again later."
Yeah, who needs more than 64k of ram anyway?
Nostrovia,
More winter? Shit !
We need a Groundhog Czar.
Puxatawney Phil is the new squirrel-meat.
Yeah, who needs more than 64k of ram anyway?
The 80286 was the peak of civilizatio
Yeah, who needs more than 64k of ram anyway?
Nostrovia,
Comrade Misean is Dope
The mice on the power-gen wheels are TARPED out.
"The 80286 was the peak of civilization"
Rubbish! You'll take an 8080 an like it.
"We need a Groundhog Czar.
Puxatawney Phil is the new squirrel-meat.
anonymous | 02.02.09 - 11:43 am"
+1 ROFL.
Nostrovia,
Home Depot and Lowe's need to cut prices on mustard seeds.
I dunno - I suspect in California home improvement expenditures will continue to rise - so much of the housing stock is getting old (by the standards here, say 50 years) and in need of repair. The coastal town I live in 15 miles from downtown San Diego, could easily spend a couple hundred million in renovations once the octogenarians start dying off.
So from the home improvement graph, it looks like things started dropping off around the end of 2007 - which was what I found to be true, and made me call recession first around here (have I ever mentioned that before?) --
So home improvement looks like it is continuing a steady slide down.
Interesting on the other graph how multi-family investments have not followed with single family? Multi seems to be much more flat. Were people not flipping multis?
Dawg and Ruins, et al
Regarding your exchange about global shrinkage on the last thread:
Have you read Naked Capitalism's post on Japan, on the theme of global shrinkage? Now this apocalypticism that I can believe in:
Veneroso: Japan on the Edge of the Abyss « naked capitalism
Veneroso: Japan on the Edge of the Abyss
Every week it gets worse and worse and worse. Today it was Japan....
THERE HAS NEVER BEEN DATA THIS BAD FOR ANY MAJOR ECONOMY EVEN IN THE GREAT DEPRESSION. December industrial production came in down 9.6%, worse than the METI forecast. It is now down almost 21% year over year. METI forecasts a further 4.7% decline in February. The inventory to production ratio soared again. Maybe METI will be correct. . .
The yen is strengthening massively against currencies all over. On a trade weighted basis, it is by far the strongest currency on the planet. There are long lags between changes in currencies, exchange rates and trade. The recent take off in the yen is not yet fully reflected in Japanese exports. The lags are too long. The weakness we are seeing in Japanese exports today is in large part derived from aggregate demand weakness from its trading partners. . .
When the long lags between the yen exchange rate change and trade and industrial production fully run their course the land of the rising sun may fall off the face of the earth. And with it will fall all the market participants who refuse to look at fundamentals and chase chart witchcraft and ephemeral market dynamics who have been the big bulls engineering that yen exchange rate that will maximally undermine the markets, economy, and social fabric of Japan.
Puxatawney Phil is the new squirrel-meat.
anonymous | 02.02.09 - 11:43 am | #
Paulsontawney Tim saw his bottom with the aid of Turbo Tax which indicates there will be several more rounds of TARP.
looks like a new 52 week low on the DOW today 7879.8 (looking at google finance)
Trillion dollar question:
L or V shaped single family structures graph this time next year?
HD will be a $10 stock within 12 months.
Breach update: "Heartland categorically denies that Mr. Carr was aware of a potential security breach at the time he adopted his trading plan."
Heartland Update: Reps Respond to Questions : Information Security Resources
elmer fudd writes:
looks like a new 52 week low on the DOW today 7879.8 (looking at google finance
nah it hit 7449 back in november
Dear Informed Type:
Well, the Super Bowl is over and an east coast rodent told me winter wasn't over yet. Frankly, I"m still a little hung over. Was that Danica Patrick in those weird ads last night? It was? How humiliating for her.
What should we talk about now?
CR Chart pron? Wow. That stuff looks pretty awful. And that's HERE? In the U.S., you say....hmm. Had no idea.
Tell me again, what does this 'tarp' thing all about...that stuff sure is confusing. Oh, it's an acronym and not a real tarp... HA That's funny.
Wait..Holy smokes. March Madness is only a few weeks off ! I gotta get my picks together. I'll talk to you later.
signed,
Joe DupePack
CNBC headline: Senator Dodd will refinance 2 mortgages in ethics probe
F'n crooks, and now that their bad deeds come out, they hit the "undo" button and everything is ok.
52wk Range:\t7,392.27 - 13,191.50
The home improvement line was a lot noisier until about 1987 or so when it smoothed out somewhat. While it generally followed the new construction line, it was no where near as bubbly so maybe, just maybe, home improvements will not take such a big hit. After all, people will still be buying one can of paint for their makeover-before-distress-sale transaction...
anyone think we'll hit a fresh low this week?
joe schmoe,
It isn't so much "shrinkage" as it is "disruption." That's an important distinction. The disruption can be ameliorated before it turns into shrinkage. Unfortunately it will take one of those unique instances of nations working for the greater good over perceived self interests.
You can thank us for helping with the home improvement part since we've been pouring thousands of dollars fixing up our home here in the OC during Dec'08 and Jan'09.
Actually, this will probably be a multi-month/quarter/year thing since we have a long ways to go to get our 50+ year old home into updated state (inside and outside need a lot of work). We're doing the kitchen now. Bathroom will be next....
mal,
My working guess right now is sometime in the next 2 weeks with decent probability, and by the end of the quarter with high certainty.
U.S. President Barack Obama on Monday underscored his support for health secretary-designate Tom Daschle, despite tax errors that prompted Daschle to pay $140,000 in back taxes
Obama says 'absolutely' stands by Tom Daschle
| Reuters
Not paying taxes must be a job requierment for "O" not that any of these guys really pay them anyway because they are the frigging tax.
Treasury to release new bank rescue plan early next week
Last fall, I went to Home Depot in DC, where I live, to get a couple of things. Literally swarming the parking lot were day workers, presumably many of whom were non-documented. I wonder how that not insignificant sector of home remodeling will be impacted including related spending.
yeah, looks like the 52 week low is the closing low, vs. today's intraday low. so interesting we have hit the 52 week closing low today, but previous comment incorrect. (google finance)
"This would seem to suggest there remains significant downside risk to home improvement spending over the next couple of years."
.
Another way to think about it. Back in the boom, people were playing housing musical chairs on a whim-- a lot of moves were optional, not really necessary. That's certainly true for me, my last move was simply and solely because I wanted to design-build from scratch. What I'm suggesting is, a lot of the "flipping" in the past was due to hobby/semi-pro decorators/flippers like me, fueled partly by house lust and decorating magazine porn. The market seemed to support this frothiness, and for a while we got away with it. I've still got the "urge," I must say. The taste of plaster dust in one's mouth is a difficult addiction to overcome. There's a really cute little Victorian that could be so glam with just a cosmetic makeover...
BTW, if you want to gauge the strength of these "optional moves," go over to city-data forum and look at the real estate sub-forum. Many of the people who are complaining about not being able to sell their homes are "optional movers." IMO, they are keeping their homes on the market on the off-chance someone will buy, artificially inflating the inventory. That's my theory, anyway.
Not paying taxes must be a job requierment for "O" not that any of these guys really pay them anyway because they are the frigging tax.
I dunno - I suspect in California home improvement expenditures will continue to rise - so much of the housing stock is getting old (by the standards here, say 50 years) and in need of repair. The coastal town I live in 15 miles from downtown San Diego, could easily spend a couple hundred million in renovations once the octogenarians start dying off.
Sinomania! | Homepage | 02.02.09 - 11:47 am | #
I dunno -- maybe there's some nesting , hunker-down instinct at play in the face of a deteriorating economy. People have the feeling they're going to be in the same house for another ten years, so they decide to fix it up? I know we spent about $10K to make our never-very-functional kitchen much more functional (you can actually do serious cooking in there now), and are eating at home more.
Among my acquaintances, other people are also having the kitchen done; the siding repaired or replaced; decks repaired or expanded; new double-paned windows put in throughout the houes. More now than in the last few years. And none of these people are flippers; they're staying in place. The small-time contractors I've talked to lately say that big jobs are dead, but kitchen- and bath- jobs and other small remodels are still quite active.
Why? In the case of my kitchen, this was a sort of batten-down-the-hatches mentality. I wanted it; it would be of practical use come a bleaker future; and I have the money now. I suspect most of my friends are thinking the same way.
Proshares (srs, skf, sds, etc.) are a division of Barclays (and I think formerly Lehman). Am I the only one that thinks these products will fail when TSHTF again? Could be from our market tanking, skyrocketing the ultrashorts, making counterparties unable to afford the losses. Or, Barclays, a division of the U.K. government now, getting hit by the Pound's collapse, causing a quagmire in all products run by Barclays. I'm very skeptical on all the leveraged ETFs at this point.
Does anyone else notice that the Brokers commision line is very much like Shillers composite graph? With the exception that .5% would seem to be the 100 line on the index, and we know houses havent gone below 100......yet
Treasury to release new bank rescue plan early next week
REBear
And if not next week, the week after, for sure, unless it gets delayed again, in which case you should just wait longer. But eventually...
Rob Dawg writes:
joe schmoe,
It isn't so much "shrinkage" as it is "disruption." That's an important distinction. The disruption can be ameliorated before it turns into shrinkage.
Dawg,
Not sure I see the relevance of the distinction to this data. The data looks to me like the collapse of inflated demand.
Demise of fog a mirror cheap credit and collapse of asset values leads to collapse of demand for Japanese exports (also via rising unemployment, of course).
And demise of fog a mirror cheap credit and collapse of asset values leads to search for safe havens that inflates the Yen at the very moment that the Japanese economy is plunging faster than any major industrial economy.
When the Yen bubble pops (and this seems much more a near term certainty to me than a US dollar bubble pop), it will be a hellacious implosion.
How do you write the narrative of this as a disruption, rather than shrinkage?
Sincere question. I don't see your implied terms.
actually interesting the market apparently pinged off that closing low
the veneroso artical on the yen has some interesting comments on what i think he called the insanity of technical analysis when it is predominant in the market
....many of the improvements might center around changes required for multiple generational increases in the household (kids and their kids are moving back in).
Extra rooms, bathrooms, tudio kitchens, etc.
s0mebody writes:
Proshares (srs, skf, sds, etc.) are a division of Barclays (and I think formerly Lehman). Am I the only one that thinks these products will fail when TSHTF again?
Panic first and dump ultras after the last person panics
Home Depot sales should be bifurcated between Remodeling and General Maintenance. In the past decade, or more, Remodeling experienced the greater growth for HD, no doubt, with General Maintenance steady but always trailing, in regards to growth. I surmize that trend will reverse. The net effect will most likely be negative.
REBear(Unrated) writes:
Not paying taxes must be a job requierment for "O" not that any of these guys really pay them anyway because they are the frigging tax.
Some Republican said the Democrats like higher taxes because they themselves don't pay them. It seems to make sense that tax cuts have a better chance of staying in the stimulus package because of this.
Hey everybody! Cheer up. The alternative to SFR as share of GDP falling 50% is for GDP to fall 50% and preserve the ratio. See? Best of all possible worlds.
[studio]
"Cheer up. The alternative to SFR as share of GDP falling 50% is for GDP to fall 50% and preserve the ratio."
R Dawg
thinking outside the box
Panic first and dump ultras after the last person panics
Anonymous
I don't want to do business with Barclays, so I'll just steer clear.
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
There are numerous complex questions going directly to the heart of our frozen financial system: who do we reward, what penalties do we exact, were crimes committed, and when can trust and transparency be restored.
I am looking forward to seeing the answers.
Local Home Depot in West Sacramento has resorted to Craigslist to advertise excess inventory.
Hammah' time....
Love the ad.
Ciao
MS
Rob Dawg,
"always look on the bright side of life"
YouTube - Always Look On The Bright Side of Life
Nostrovia,
The trend used to be when markets tank, big money would plow money into their homes via major remodelings. This could mean that big money is out of options at this point, want's to avoid bonds, equities, MM, etc., and is going back to major remodeling jobs. I have noticed more remodeling work going on in the $1.5m and up housing market.
I'm baffled by the inclusion of brokers' fees here. It's a service - if not a very helpful one - that is mostly involved in the transfer of existing assets. I suppose the BEA has a rational for it but a search of the site didn't yield much in the way of explication.
Elmer Fudd
Yes, I also liked Veneroso's comments on trading, technical analysis and the turning of markets into casinos.
However, Veneroso refers to the bubble years as the casino time, and I think that appelation better fit us now.
There was a massive misallocation of resources during the bubble, not because the markets ran as a Casino but because they were run as a Ponzi scheme. In a Ponzi Scheme, the marks think they are investing on fundamentals, though that is an illusion or deception.
These days, I think there is much less illusion. The financial stocks trade up and down largely on expectations of bailouts, and guesses as to the effects of the bailouts. Sure, a few people think they are investing long term on the basis of fundamentals, but it seems to me that most of the action is wagering, pure and simple.
Some individuals are better gamblers than others - I don't want to get into an argument about whether individuals here know how to make fortunes off the market gyrations.
Instead, i think Veneroso raise an important question about the social reasons for havind such markets: to relatively optimize the allocation of resources. This is now haywire and, I think, yet another major reason why banks need to be nationalized and cleansed, then privatized under new regulatory structures for all banks.
Our neighbors across the street (two of them right next to each other) just finished two pretty big remodeling/addition jobs on their homes. The home directly next to it finished a complete re-do about a year or two ago. Neighbor next door (has three kids, adopting another) thinking of adding on to his home. The wife and I are sitting tight. Would love to get windows replaced and kitchen and bathroom re-done but now is not the time. Time to sit tight.
Max writes:
Local Home Depot in West Sacramento has resorted to Craigslist to advertise excess inventory.
And here on the East coast, they're using unemployed fishmongers.
Bob Dobbs said: "...Among my acquaintances, other people are also having the kitchen done; the siding repaired or replaced; decks repaired or expanded; new double-paned windows put in throughout the houes. More now than in the last few years. And none of these people are flippers; they're staying in place. The small-time contractors I've talked to lately say that big jobs are dead, but kitchen- and bath- jobs and other small remodels are still quite active...."
This exactly describes what my wife and I are doing, cost-efficient, functional improvements but no over-the-top kitchen and bath remodels.
Something we've noticed about prices, though. At the end of last year we started buying new faucets and light fixtures to replace some of the lower-end "builder's brass" in our home. We could get great prices a couple of months ago, but they've jumped quite a bit since and some of what we bought before isn't available anymore even at higher prices.
My point: Evidently some of that excess inventory is being worked off.
Sebastia
How do you write the narrative of this as a disruption, rather than shrinkage?
Sincere question. I don't see your implied terms.
joe shmoe | 02.02.09 - 12:08 pm | #
Disruption is when letters of credit are not honored. Shrinkage is when LOCs are not available.
Disruption is a hurricane. Shrinkage is mothballing cargo aircraft at the Mojave Spaceport.
The Yen is "safe." Being among the least worse alternative economies. The dollar retains value for some of the same reasons as does Germany. We all build stuff people need and have societies that can do with the stuff people want. Canada has stuff people need as well in contrast to Mexico which has needs it cannot supply or effectively trade to get.
What's this got to do with your question? We are seeing global economies reassessing their priorities and relationships. Japan, US, Germany have lots of potential dates for the prom. The BRICs are finding out that while they popular when they were cheap and easy they aren't steady girlfriend material. Heck, they are just now finding out they were the girlfriend. [apologies for the decidedly un-PC tone of the analogy]
Mr. Beach writes:
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
There are numerous complex questions going directly to the heart of our frozen financial system: who do we reward, what penalties do we exact, were crimes committed, and when can trust and transparency be restored.
I am looking forward to seeing the answers.
Mr. Beach | 02.02.09 - 12:14 pm |
I think the delay is intended to build concerns, such as you express, and also to allow the House hearings with the CEO's of the top banks to begin before any plan is announced.
I think (and I hope) that Obama is setting the timing so that his plan comes out while the public scandal around banks is peaking, and while the bank CEO's are themselves in front of televised Congressional hearings.
If this is the plan, and I suspect that it is, it is designed to put rev up public demand for greater punitive and reconstructive action (i.e., something like nationalization) and to simultaneously expose the bank CEOs before the public.
I don't think this is an accident
Mr. Beach writes:
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
There are numerous complex questions going directly to the heart of our frozen financial system: who do we reward, what penalties do we exact, were crimes committed, and when can trust and transparency be restored.
I am looking forward to seeing the answers.
Who do we reward?
Everyone will be rewarded, its TARPville. However some people will get a itty-bitty tarp, and it won't cover them completely, so they will suffer the elements.
Penalties?
Well TPTB will sling some poo, call some people out, slap them on the wrist and send them to Maximum Security Madoff.
Were crimes committed?
Seriously is that a question?
When can trust and transparency be restored?
Well trust was never destroyed, before I thought that Banksters and "high finance" were evil, now I know so. Hell I would even go so far as to say that my trust was cemented. Now about transparency, well since I have never known that, not in my lifetime, then I guess you don't really miss that which you never had.
Morocco Bama writes:
Home Depot sales should be bifurcated between Remodeling and General Maintenance.
That makes sense. Maintenance may even grow a bit as we all stay put.
We need to bailout Home Depot
I'm confused.
"Markets are the most efficient asset pricing mechanism in existence"
"Mortgage backed paper is being massively underpriced by the markets so government must decide on pricing"
So either the markets are rigged now or the government thinks it has to rig markets. Free market capitalism is a myth.
We need to bailout Home Depot
Doofus, natch | 02.02.09 - 12:29 pm | #
Will we get pitchforks in return?
"I wonder how much home improvement is related to repairs of damage occurring after foreclosure?"
speed racer | 02.02.09 - 11:40 am | #
I think that will be a major factor going forward - if 1/3 to 1/2 of all sales are foreclosures and they are as bad as some I've looked at lately - the 'improvement' factor will be significant just to bring them up to 'code' for renting. Some places DO still have codes & enforce them.
Will be looking at a foreclosure today - report back later.
Mr. Beach writes:
The 'bank rescue' plan is now over promised and under delivered. For every 24hrs we have to wait, the market will expect that much more care and preparation in the details of the plan.
Now that a menu of possible options has been prepared, it's going to take a few days to review campaign contribution records and determine which bank gets assigned to which course on the menu.
The next "rule of thumb" to be demolished will be new vehicle sales versus repair/maintenance expenditures. At the reducto absurdum extreme imagine post revolution Cuba and their auto "industry."
I am amazed that broker's commissions on sale of structures almost hit 1% of GDP in 2005.
How exactly was that earned?
FWIW I have rec'd two Home Depot "12 months No interest" offer's in the space of one week.
Whoever said there is an end-game to zero % financing obviously doesn't work in finance at HD.
Too bad I've already done the major renovations and paid them off.
Ciao
MS
I am amazed that broker's commissions on sale of structures almost hit 1% of GDP in 2005.
How exactly was that earned?
sm_landlord | Homepage | 02.02.09 - 12:37 pm | #
Why does a dog lick his balls?
sm_landlord,
"How exactly was that earned?"
Breath on this mirror please.
Thank you, sign here please.
Nostrovia,
MS,
"FWIW I have rec'd two Home Depot "12 months No interest" offer's in the space of one week."
They hand them out like party favors at the entry door.
Nostrovia,
(OT) bearly said: "So either the markets are rigged now or the government thinks it has to rig markets. Free market capitalism is a myth."
I was reading something just this morning in an essay about LTCM's blow-up that bears this out.
Paraphrased: In nature, a hurricane isn't more or less likely to hit based on how much hurricane insurance was written. In financial markets, though, the people who know how much financial insurance you sold have the power to make a disaster happen.
Makes me wonder about the nature of our current disaster. Like would it have happened at all if it had only been a matter of housing prices going through a normal correction, or if it was summoned by people who had the power to bring about disaster.
Sebastian
Dawg
Thanks for your explanation.
I agree that the Yen was safe and then has seemed relatively safer (Yves at NC added a smiliar comment to the Veneroso excerpts). But I find Veneroso's argument persuasive that the Yen is now doing a Wile E Coyote routine by running out far beyond the edge of a cliff. Sometime soon it will look down.
Veneroso's argument is that the rising Yen leads to a further fall in exports that leads to more layoffs that leads to shrinking demand within Japan . . . a fast downward spiral . . . or just a drop like a stone.
As you say, Japan and the US and Germany and Canada all make things people need . . . but Japan's drop in exports includes an awful lot of stuff like cars, for which demand is highly elastic, as opposed to, say, US grain exports.
I think we're seeing mothballing of capacity that is becoming more excess by the day.
I wish Conjure was around to comment.
Free market capitalism is a myth.
bearly | 02.02.09 - 12:32 pm | #
Always was and always will be. Economics & politics are joined at the hip - the question is which twin takes 'command'... market forces or political structures. Pining for 'free markets' is like pining for 'socialist utopia'... good luck w/ that.
How exactly was that earned?
sm_landlord | Homepage | 02.02.09 - 12:37 pm | #
Rent capture - good biz if you can get it.
"Makes me wonder about the nature of our current disaster. Like would it have happened at all if it had only been a matter of housing prices going through a normal correction, or if it was summoned by people who had the power to bring about disaster."
- Seb
It must be a conspiracy. Everything was sound, subprime contained..
RD, Misean;
But 1% of GDP? That used to be a large number!
dryfly writes:
"Rent capture - good biz if you can get it."
Apparently I am not capturing the right kind of rent!
Rob Dawg writes:
The next "rule of thumb" to be demolished will be new vehicle sales versus repair/maintenance expenditures. At the reducto absurdum extreme imagine post revolution Cuba and their auto "industry."
Yes, Dawg, exactly. And the result in Japan will be mothballed auto plants (in Japan and also overseas, of course, but they remit to Japan, or at least they used to . . .).
dryfly, I'm glad you're here because I wanted your opinion on this (from my above post): "...Something we've noticed about prices, though. At the end of last year we started buying new faucets and light fixtures to replace some of the lower-end "builder's brass" in our home. We could get great prices a couple of months ago, but they've jumped quite a bit since and some of what we bought before isn't available anymore even at higher prices...."
Do you think this is something or do you think it's nothing?
Sebastia
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dryfly writes:
Free market capitalism is a myth.
bearly | 02.02.09 - 12:32 pm | #
Always was and always will be. Economics & politics are joined at the hip - the question is which twin takes 'command'... market forces or political structures. Pining for 'free markets' is like pining for 'socialist utopia'... good luck w/ that.
Right, right, right.
No "free market" without property, which is constituted and protected in law, which is made and enforced by governments. Sure, barter can proceed in stateless societies . . .
We need to bailout Home Depot
Doofus, natch | 02.02.09 - 12:29 pm | #
Will we get pitchforks in return?
Morocco Bama
.
Pitchforks on aisle 7, torches on aisle 5.
Don't forget the high quality products sold by HD will surely last forever and when coupled with the extraordinary skills of day laborers while supervised by novice contractors and approved by overworked building inspectors and bought by blind speculators...
You get the picture.
I dunno -- maybe there's some nesting , hunker-down instinct at play in the face of a deteriorating economy. People have the feeling they're going to be in the same house for another ten years, so they decide to fix it up? I know we spent about $10K to make our never-very-functional kitchen much more functional (you can actually do serious cooking in there now), and are eating at home more.
Bob Dobbs
Bob, I recall this happening in the early nineties. First time I'd heard the phrase 'nesting'. People were stuck in their homes for a while and did exactly what you've described. I'm guessing this is happening again.
Nesting does seem like a likely answer. I have a friend who does wallpaper and painting, usually in high end homes. She saw a serious downturn in her business when the housing market crashed.
But now her business is picking up again. I suspect she's seeing both the nesting aspect and the altered plans of some who wanted to do a major remodel and are now settling for cosmetic changes.
It's kind of forced when the realtor had to replace the kitchen cabinets on all those foreclosures.
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crbot is confused
At the end of last year we started buying new faucets and light fixtures to replace some of the lower-end "builder's brass" in our home. We could get great prices a couple of months ago, but they've jumped quite a bit since and some of what we bought before isn't available anymore even at higher prices...."
Do you think this is something or do you think it's nothing?
Sebastian | 02.02.09 - 12:48 pm | #
it was the 'metals lag' - prices sky rocketed last spring and killed margins for a lot of producers - they eventually bit the bullet and produced using higher priced material - now that prices are falling they have the ugly choice of getting clipped again (selling product at prices reflecting current metal prices OR holding out a hoping to sell at the higher price and recover the cost of metal). Eventually they will match the market and take their lumps or go broke - I think you are seeing both.
BTW - the same thing is happening in aerospace w/ high priced aluminum, titanium & 'super alloys'...
High prices aren't a problem. Low prices aren't a problem. Wildly fluctuating prices (up or down) is a huge problem for producers. It is though th especulators play ground - hope some are having fun.
US Sen Dodd to refinance two Countrywide mortgages
UPDATE 2-US Sen Dodd to refinance two Countrywide mortgages
| Reuters
This bastard along with our little banking den of thieves needs to drug out of the temple.