MoM distraction...YoY tells the story. The unexpected event would have been an actual decline contra the seasonal pattern...as was seen in U-6 Jan/Feb MoM delta (see the second graph). energyecon: U-6's Disturbing Seasonal Trend
how sluggish is sluggish exactly? Furthermore, where does the economy go after this long-lasting, sluggish "recovery?" At that point will we be looking forward to the "recovery's down cycle?
I don't think even you believing this attempt to sound upbeat
Instead of recovery, I'd call it a rebound. It's going to be exciting for a few months that's for sure, especially with rates being pushed down by the Fed.
If banks get serious about unloading inventory, this may very well be the sales bottom. I doubt prices are at their bottom. I can still rent much cheaper than I can own, and the rents are still dropping.
WELL, I got a report on the traffic on my mom's house's multilising site in Baltimore. Traffic to click on the listing was 'WAY up for March, and of course we got a decent offer on the house. Contract not fully signed yet, but I have great hopes.
Prices in Fla have some space to go down. I haven't seen Cobra driver posting recently for the inner circle of doom in Ft. Meyers/Cape Coral.
The problem in Fla continues to be financing. the Balto broker said that conventional financing was still available in Balto--but they were tightening up, so she was trying to get her buyers to qualify quickly.
What is with the weird tiny font? Well, I will post and see what it looks like.
Of course, our view of the data is clouded by our forecasts, which are base on past data.
The wise course, of course, is to anticipate rather than forecast.
Anticipation, o fcourse, goes hand-in-hand with expectation.
Brzowz' seminal paper of 1973 established the principle.
"it is worth repeating that any recovery will probably be very sluggish. Here are a few key reasons: house prices are still too high, there is too much housing inventory (especially distressed properties), households have too much debt and need to improve their balance sheets, the recession is global, and the Obama administration has chosen a less than optimal (and very expensive) approach to fixing the financial system."
And don't forget that very pesky unemployment problem. It seems to me, and I am no expert just a freaked out observer, that nothing is going to improve w/o the security of jobs. Even if people can buy, they won't if they are worrying about when the axe is going to fall.
You're right LL - this font is ridiculously small. Maybe that's to discourage ignorant comments. Ha ha.
Home sales continue for one reason and one only - sheer inertia. The same reason restaurants still have customers, people rent videos at Blockbuster, and families still take vacations.
It takes an ocean liner 8 miles of slowing before it stops.
My own pessimistic estimation is that house sales, both new and existing, will come to a near-zero point in a year or two.
<div class="storyHead">
<h1>Mervyn King's comments trigger first gilt auction failure since 1995</h1>
<h2>Gilt markets endured their most turbulent day in more than a decade after comments from Bank of England Governor Mervyn King helped trigger the first failure of a government bond auction since 1995.</h2>
</div>
For dopes like me, what is the impact if the USD is no longer the international reserve currency? While Geithner ended up having to backtrack, it sure seems like he supports China's plan.
--
There is lot of support for CR's position that housing will bottom in 2009 on CNBC. Almost everyone thinks that it will bottom during or before 2009Q4.
America is full of bottom callers, a national trait it seems, because of the congenital disease of optimitis.
Let me amend what I just commented: I think <i>normal</i> home sales will go to near-zero. However, I imagine that there will be lots of buying at absurdly low prices by those who still have money.
Back during the GD, the patriarch of a farming family here bought their original ranch (which became the cornerstone of their fortune) for twenty gold ounces. A couple thousand acres.
"Market on close imbalance to sell S&P but to buy financials (most of the imbalance comes from ETF’s – rare than the S&P and financials imbalance are in opposite direction – people were expecting a S&P MOC imbalance so short going into the close, so needed to cover AND go long into the close.
...
To be clear most of the imbalance comes from the 2X/3X ETF’s who need to match the close, and the last part should read “needed to cover financials AND go long financials into the close” while remaining neutral to other S&P sectors."
"Tow yards in Las Vegas are filled with the blackened hulls of Mercedes sedans and Cadillac Escalades. The wrecks were pulled from desert hills and city streets by the department's eight-member auto-theft unit, which responds to calls around the clock. Over one weekend this month, Mr. Menzie investigated eight car fires in 36 hours."
These are very interesting times indeed. Not only is the economic train-wreck of historic proportions, but there's this guy out there who's a freakin' genious and he makes these excellent graphs and somehow knows what is important and tells anyone who cares to listen. For free. Just gotta pay attention. If I ever have grandkids, I'm gonna tell the story of the Greater Depression and it's gonna have CR in it.
It looks like CR (accidentally?) turned off the "safe" html tags feature of JS-Kit.
I spent about half an hour searching the JS-Kit website and could never find a listing of which html tags were "safe"... It would be very nice to have a fixed-width option like the CODE tag provides for when someone wants to post a chart or something
barley, I have no idea really. Just reporting what I found on another blog posted by someone who appears to have pretty decent contacts with bigger traders on Wall Street.
the whole increased noise by the Chinese sounds very familliar to what USSR did when it wanted to draw away attention.
1.2.3 flee (if you ve got your $ in there),
p.s. should not be considered as an investment advice but rather a friendly warning, rofl.
"(1) In recent recessions, unemployment significantly lagged the end of the recession. That is very likely this time too. "
I'm wondering if things might not turn out that way considering the past few recessions have seen consumers support the economy to a certain extent via personal debt consumption. This time around we have a significant fall off in the ability of consumers to absorb this economic blow by reaching into credit card debt and housing equity. I am wondering if it might be awhile before personal consumption rebounds.
Yawn. This new home sales data is nothing more than a seasonal blip. How many more years of the same pattern do people need to see before they get it? 40 more years? 100 more years? Geez.
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<div class="js-singleCommentText">"is-kit is a metaphor for the economy"</div>
<div class="js-singleCommentText">Would that be broken or disfunctional?</div>
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We want to take Congress in 2010.
We will restore the plains' grasslands.
We will restore the buffalo (bison).
We will provide campgrounds and cookouts.
Any American can come to eat buffalo and camp on the restored land.
Yellen's comment;'s about not taking a lot to make GDP grow is priceless...yeah just revise the numbers and move the price index goalpost. A new measur of GDP is needed or a new term to desribe the purported growth..
""Tow yards in Las Vegas are filled with the blackened hulls of Mercedes sedans and Cadillac Escalades. The wrecks were pulled from desert hills and city streets by the department's eight-member auto-theft unit, which responds to calls around the clock. Over one weekend this month, Mr. Menzie investigated eight car fires in 36 hours.""
so someone e-mass figured out that the best way to increase their CF is to collect their car insurances. Another failed attempt to postpone inevitable, if you screwed up, resitance is futile.
UPDATE: Evidently sensing a gaffe, moderator Roger Altman told Geithner that it would be "useful" to return to the question, and asked if he foresaw a change in the dollar's centrality.
"I do not," Geithner said, adding several forceful promises, including, "We will do what's necessary to say we're sustaining confidence in our financial markets."
I have a request for all the financial experts on this blog. I wrote an oped on the financial crisis but most of my financial knowledge comes from reading this blog, so I am hoping that some people with real knowledge could read it and give me some feedback, did I use the correct terminology, is my entire thesis incorrect? It is fairly short (~600 words).
Has anyone done a second derivative test on the data? Visually it appears that the rates of decrease on the 45-year New Home Sales and Inventory charts haven't changed very much... Plus according to the NSA data, February is almost always higher because it's warmer and more people are out and buying. The seasonally adjusted monthly new home sales numbers for January and February are similar enough that they are most likely within the margin of error, i.e. statistically there is no difference between them.
" ... what is the impact if the USD is no longer the international reserve currency?"<p>
The rest of the world would love at this point to have an alternative, I think. There is none, the numbers are too large, and the rest of the world, including the IMF, is prepared to offer only paper. The next successful currency will be backed at least partilly by something tangible, like gold, but, again, there's no entity out there large enough at this point. Meantime, I don't think there's any doubt that the price of gold will rise substantially. My opinion ...
The local Oregon pundits are making 'the market is stabilizing' noises, even though we have 10% (and above) unemployment. I can't see how that's possible unless we are getting some weird rise in confidence among people who still have jobs, a mentality something like 'I survived the layoffs, so my job is safe.'
Or maybe people are refugees from out of state. Anecdotally, the locals certainly seem to think Cali and Nevada refugees are raising local unemployment, and they aren't happy about that. I have also heard other anecdotes of people using HELOC money to buy a house here, moving to the new place, and sending the keys back on the old place.
" The next successful currency will be backed at least partilly by something tangible, like gold, but, again"
Backing by something that has a physical limit prevents debt growth; there's a reason why the world moved away from gold-backed currency and why regardless of what is done in the near-term it will happen again.
Vote us in!
We will restore the plains!
Imagine seas of grass waving in the wind;
Great herds of buffalo feeding, as far as the eye can see.
You will always live well at the Buffalo Party's campgrounds.
r YTL - please copy your posts before you hit "submit" -- that way you won't get frustrated and we won't miss out on good thoughts.
Good idea.
YTL - This seems to fix some of my posting issues:
Make comment
Hit submit
Wait till the reply/delte buttons appear
Hit Refresh Comments
Then wait till they appear
and, then hit F5
ROFL. could it be any simpler?
I'll restate one point from my lost posts, in a little less detail.
People focus (understandably) on housing starts and new/used home sales. And this totally makes sense.
However, I must question how much validity some of this data has in current context. Specifically, I would GUESS that household formation going forward has a high chance of being different than that which occured in the bubble years. Over the last decade or more we've seen a drop in the number of people per household in our country, as younguns moved out of their parent's pads, people sent grandma to the nursing home, singles decided to buy to "get on the ladder" and so on.
Americans currently face a few significant headwinds that may reverse this trend. First, increased unemployment means more younguns move in with parents, more people get roommates, and so on. Also, the erosion in retirement savings we've seen (401k to 101k, pensions busted, etc) may mean more people need to have grandma live with them, to help her but also to share her limited fixed income.
thus, housing values face pressure regardless if we have increased starts or not.
housing sales (new/used) obviously would take some of the household formation changes into account.
secondarily: I feel there is a CONSIDERABLE amount of "stealth" new homes out there, not in the data. In my town, there is condo complex after condo complex that finished but couldn't sell given the market, so went rental. It would seem to me that the intention is to put this inventory up for sale as soon as the market recovers.
thus, although i agree that it is not inconceivable that we're nearing a bottom in # houses sold and #starts, I also think that this may be a U type of problem.
<div style="float: left;">TCA says:</div>
<div class="js-singleCommentDate" style="float: right;">Today, 4:53:19 PM</div>
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<div class="js-singleCommentText">“JS-Kit is part of a conspiracy by the government to make sure no unwanted opinions are voiced here.
This blog is being watched.</div>
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If that were true Jas would have been sent to Gitmo in 2003 and drowned!
When the moon is in the Seventh House\t
And Jupiter aligns with Mars\t\t\t
Then peace will guide the planets\t\t
And love will steer the stars\t\t\t
This is the dawning of the Age of Aquarius\t
Age of Aquarius\t\t\t\t
Aquarius! Aquarius!\t\t\t\t
Harmony and understanding\t\t
Sympathy and trust abounding\t
No more falsehoods or derisions\t
Golden living dreams of visions\t
Mystic crystal revelation\t\t
And the mind's true liberation\t
Aquarius! Aquarius!\t\t\t
+200, -100, +100 is not a stable stock market. Failed gilts and a weak bond offering. Ben ain't stupid he sees the same portents. The Fed is going to be up late trying to figure this one out. Personally I never expected such a soft tap on the shoulder. I was expecting a 2x4 to the skull. Will they listen?
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<div>EE Times: Latest News</div>
Cold fusion experimentally confirmed
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</table> R. Colin Johnson
<!-- STORY PAGE NUMBER --> <!-- DATE --> <!-- remove http:// substring (if present) from the url --> EE Times
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PORTLAND, Ore. — U.S. Navy researchers claimed to have experimentally confirmed cold fusion in a presentation at the American Chemical Society's annual meeting.
"We have compelling evidence that fusion reactions are occurring" at room temperature, said Pamela Mosier-Boss, a scientist with the Space and Naval Warfare Systems Center (San Diego). The results are "the first scientific report of highly energetic neutrons from low-energy nuclear reactions," she added.
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Why aren't you guys buying stocks? Or houses for that matter? This is the best buying opportunity in generations. Houses will easily be double in the next five years.
Home sales matter as much as granite countertop sales. They mean little in themselves, they lag market health, and have different meanings in different contexts.
I can understand looking to Inventory, MEW, mortgage origination by type, foreclosure filings, and even new housing unit construction as being used in the same sentence as "housing bottom" — but not sales volume.
I assume the implied idea is that home sales imply inventory reduction, but 2 people swapping homes counts as 2 sales without affecting market conditions at all. If you want to catch the turning point, stick to the basics and watch Vacancy (for inventory, which leads pricing context) and MEW (which indicates that owning is not an irrational choice)
This blog is littered with examples of mortgage owners choosing not to foreclose, of homes being sold below current replacement costs, etc... The sales figures haven't changed, but the context has and to assume it hasn't is a mistake
Still, I believe there is a good chance new home sales will bottom in 2009. - CR
At the current rate of decline new home sales will be 0 by December so this very likely. Thing is pretty much anything less than 250k is effectively zero anyway.
The housing market must, eventually, conform to reality:
Housing is a commodity. Commodities are poor investments, historically.
A bottom may be in when the price of a house is no more than 3X income.
A bottom may be in when expectations are that housing appreciation will be constrained by inflation.
scone,
I have followed Andrew Lo ever since Congress did me the favour of inviting him to testify. He seems to be smart and rational, but I think his strategy of trying to pin down market activity comes from a different perspective than mine (there's nothing wrong with that)
What in god's name was happening in the stock market today? I really distrust these wild swings in the market when there is no apparent (public) reason for it.
r
my second point: (apologies if this has already been stated, it's hard to be original or forward thinking amongst this group).
we focus on home sales/home valuations. the reason is based on this theory (which I neither believe or disbelieve):
this downturn is due mainly due to falling asset values (houses) which caused underlying securities to devalue which caused banks writedowns which then led to capital requirement issues, which led to reduced bank lending and credit contraction which led to a downturn in the general economy which is now feeding back into lower housing valuations.
if this theory is correct (again, I neither deny or claim it so), then one could in theory arrest this reinforcing feedback loop by stopping the descent in home valuations.
thus, a "positive" sign for the economy would be increasing home sales (which would reduce inventory) and more importantly increased home valuations.
I'm not so sure that this is the case, even if the "theory" is correct. This is due to what I'll call "time sequencing".
The impaired securities and loans on the bank's books were mostly created years ago. To date, they have taken massive hits on the securities and loans. HOWEVER: the banks are not keeping up with the foreclosure process. Thus, you have an artificial "propping up" of home valuations due to the bottleneck of getting the foreclosures to market. You have a "stealth inventory" if you will.
even as sales start to rise you have this significant backlog of foreclosures that will hit the market. If I undestand things correctly, these aren't foreclosures because the value went down, most are foreclosures because the owners CANNOT AFFORD THE MONTHLY PAYMENTS.
therefore, the forward home sales must not only increase from depressed levels... they must increase substantially to not only absorb the future need for housing, but also absorb all the backlog of foreclosures that are being prevented from clearing today.
if forward home sales increase, but don't increase enough to work down the foreclosures in the pipeline, then we will still have falling housing valuations and increasingly impaired loans/securities on the bank's books and more write downs.
to say it more concisely:
given that we have stalled the foreclosure/debt clearing procedure, we will also stall whatever recovery we have once things "bottom".
Barley, you have a private message (click your name, then 'private messages' in the popup window)
addendum to post on watching sales volume
What happens if/when there is a shift in the way American consume housing? Instead of owning (requiring a sale every time they move), they choose to rent (keyword is choose, as in affordability is not the only consideration). That would have a significant impact on sales volume, without reflecting any other variables.
Inventory is the ultimate nexus of housing health. Focus on it above all else
"What in god's name was happening in the stock market today?"
typical bear day; sacker rally was shorted and shorts where closed overnight, because no one was willing to be an uber bear (not enouth fear for those.)
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)
CRbot would now like to sing a little song for all his fans, and it goes something like this:
Benny... Benny... give me your answer... do. I'm.. half CRAZY... all for the love... of you. It won't be a ... stylish marriage. I can't... AFFORD... ANYTHING TO EAT... MUCH LESS A FRACKIN CARRIAGE!!! But you'll look sweet... --BOT SO HUNGRY!-- upon the seat... Of a HOOPAJOOPS built for two... families.
I'm sorry Ben, I can't let you do that...
Rally mode + Printing Press == does not compute... does not-- com--- com... puttttrrrrhgh.
What in god's name was happening in the stock market today? I really distrust these wild swings in the market when there is no apparent (public) reason for it.
There's a lot of short interest right now (stocks sold short). These kind of swings are pretty common in this environment because it's easy to trigger both panic buying and panic selling.
Overbought markets with lots of short positions gives you all sorts of convulsions.
He's trying to reconcile 'efficient markets' with behavioral economics by using evolutionary theory.Sounds kinda whizbang, but fun.
Was it Andrew Lo who came up with the "correlation" that fueled MBSs, CDOs? That is the basis of all recent "financial engineering." How did that work out?
I am buying stocks. And I have been since October. I sold almost all of my stock in 2007, and started buying back in after the big drop in early October 2008. I expect to start buying residental RE next year. This down cycle is almost over.
"...And don't forget that very pesky unemployment problem. It seems to me, and I am no expert just a freaked out observer, that nothing is going to improve w/o the security of jobs. Even if people can buy, they won't if they are worrying about when the axe is going to fall. "
No question that unemployment is going to get worse, and probably for another quarter or two, regardless. The one good take-away we can get from that, though, is that the Fed isn't going to be raising short-term interest rates until employment actually improves. There's going to be plenty of time for qualified borrowers/refi-ers to get cheap money and lock it up at low rates for multiple decades (depending on the length of the mortgage).
Most buyers are also sellers (trading up), so sales volume increase is slow to reduce inventory. When unemployment starts to decline people will become more comfortable buying. I think Unemployment will peak in 2010. And the housing market will begin to recover.
We want to sieze Congress in 2010.
We will restore the plains' grasslands.
We will restore the buffalo.
We will provide campgrounds and cookouts.
Vote!
We will restore the plains!
Imagine seas of grass waving in the wind;
Great herds of buffalo feeding, as far as the eye can see.
You will always live well at the Buffalo Party's campgrounds.
Personally, I hope the industry never recovers. It's disgusting to see land and open space destroyed to put up these tacky, cookie-cutter developments, which is what the industrial builders do.
1st?
Looks more like a wiggle than a rebound. Even so, I would bet that the sales volume decline is nearly over.
nice...very nice.
i always enjoy your precious analysis.
tks
MoM distraction...YoY tells the story. The unexpected event would have been an actual decline contra the seasonal pattern...as was seen in U-6 Jan/Feb MoM delta (see the second graph).
energyecon: U-6's Disturbing Seasonal Trend
how sluggish is sluggish exactly? Furthermore, where does the economy go after this long-lasting, sluggish "recovery?" At that point will we be looking forward to the "recovery's down cycle?
I don't think even you believing this attempt to sound upbeat
Instead of recovery, I'd call it a rebound. It's going to be exciting for a few months that's for sure, especially with rates being pushed down by the Fed.
We'll see a bottom in 2009?
Too bad I'm filtered at work.
ppt is back , better than ever
If banks get serious about unloading inventory, this may very well be the sales bottom. I doubt prices are at their bottom. I can still rent much cheaper than I can own, and the rents are still dropping.
WELL, I got a report on the traffic on my mom's house's multilising site in Baltimore. Traffic to click on the listing was 'WAY up for March, and of course we got a decent offer on the house. Contract not fully signed yet, but I have great hopes.
Prices in Fla have some space to go down. I haven't seen Cobra driver posting recently for the inner circle of doom in Ft. Meyers/Cape Coral.
The problem in Fla continues to be financing. the Balto broker said that conventional financing was still available in Balto--but they were tightening up, so she was trying to get her buyers to qualify quickly.
What is with the weird tiny font? Well, I will post and see what it looks like.
It looks normal
Of course, our view of the data is clouded by our forecasts, which are base on past data.
The wise course, of course, is to anticipate rather than forecast.
Anticipation, o fcourse, goes hand-in-hand with expectation.
Brzowz' seminal paper of 1973 established the principle.
http://www.bloomberg.com/apps/news?pid=20601102&sid=a6KhEW.jkmdE&refer=uk
U.K. Bond Auction Fails for First Time Since 2002
is posting working again?
I'll have to keep checking to see if my old posts come up.
what is the sound of one hand clapping while typing a message into JSKit that will never be retrieved?
Every time it eats my messages, an angel dies.
well... gues my posts still don't come up.
:'(
energyecon - nice chart porn! So whats you num bor Fridays report? Thoughts?
oppss bor = for
"it is worth repeating that any recovery will probably be very sluggish. Here are a few key reasons: house prices are still too high, there is too much housing inventory (especially distressed properties), households have too much debt and need to improve their balance sheets, the recession is global, and the Obama administration has chosen a less than optimal (and very expensive) approach to fixing the financial system."
And don't forget that very pesky unemployment problem. It seems to me, and I am no expert just a freaked out observer, that nothing is going to improve w/o the security of jobs. Even if people can buy, they won't if they are worrying about when the axe is going to fall.
You're right LL - this font is ridiculously small. Maybe that's to discourage ignorant comments. Ha ha.
Home sales continue for one reason and one only - sheer inertia. The same reason restaurants still have customers, people rent videos at Blockbuster, and families still take vacations.
It takes an ocean liner 8 miles of slowing before it stops.
My own pessimistic estimation is that house sales, both new and existing, will come to a near-zero point in a year or two.
FFDIC - The USG had a similiar problem today. I'll be if these were 40 year inflation protection bonds, they would have been over subscribed.
Do I exist?
http://www.telegraph.co.uk/finance/economics/5051149/Mervyn-Kings-comments-trigger-first-gilt-auction-failure-since-1995.html
<div class="storyHead">
<h1>Mervyn King's comments trigger first gilt auction failure since 1995</h1>
<h2>Gilt markets endured their most turbulent day in more than a decade after comments from Bank of England Governor Mervyn King helped trigger the first failure of a government bond auction since 1995.</h2>
</div>
so, where is 1cs! today may be his day. timmay opens to talks on global currency
http://www.politico.com/blogs/bensmith/0309/Geithner_open_to_China_proposal.html?showall
For dopes like me, what is the impact if the USD is no longer the international reserve currency? While Geithner ended up having to backtrack, it sure seems like he supports China's plan.
YTL - please copy your posts before you hit "submit" -- that way you won't get frustrated and we won't miss out on good thoughts.
http://business.timesonline.co.uk/tol/business/economics/article5974613.ece
<h1 class="heading">London Times</h1>
<h1 class="heading">Gilt auction fails for the first time since 2002</h1>
YTL - This seems to fix some of my posting issues:
Make comment
Hit submit
Wait till the reply/delte buttons appear
Hit Refresh Comments
Then wait till they appear
and, then hit F5
--
There is lot of support for CR's position that housing will bottom in 2009 on CNBC. Almost everyone thinks that it will bottom during or before 2009Q4.
America is full of bottom callers, a national trait it seems, because of the congenital disease of optimitis.
Jas
Let me amend what I just commented: I think <i>normal</i> home sales will go to near-zero. However, I imagine that there will be lots of buying at absurdly low prices by those who still have money.
Back during the GD, the patriarch of a farming family here bought their original ranch (which became the cornerstone of their fortune) for twenty gold ounces. A couple thousand acres.
The future of the US may be feudalism.
The reason for the ramp at the end:
"Market on close imbalance to sell S&P but to buy financials (most of the imbalance comes from ETF’s – rare than the S&P and financials imbalance are in opposite direction – people were expecting a S&P MOC imbalance so short going into the close, so needed to cover AND go long into the close.
...
To be clear most of the imbalance comes from the 2X/3X ETF’s who need to match the close, and the last part should read “needed to cover financials AND go long financials into the close” while remaining neutral to other S&P sectors."
<<<<<<<<<<CAUTION>>>>>>>>
That times on line .uk link has malware
CAUTION!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
OT good story on WSJ on Vega$ area car burnouts:
Signs of Stress, Fraud on Roadside - WSJ.com
"Tow yards in Las Vegas are filled with the blackened hulls of Mercedes sedans and Cadillac Escalades. The wrecks were pulled from desert hills and city streets by the department's eight-member auto-theft unit, which responds to calls around the clock. Over one weekend this month, Mr. Menzie investigated eight car fires in 36 hours."
To try to put a silver lining on things....
These are very interesting times indeed. Not only is the economic train-wreck of historic proportions, but there's this guy out there who's a freakin' genious and he makes these excellent graphs and somehow knows what is important and tells anyone who cares to listen. For free. Just gotta pay attention. If I ever have grandkids, I'm gonna tell the story of the Greater Depression and it's gonna have CR in it.
poicv20 - so financials will have a soft day tomorrow?
somehow I doubt most of the action will be located in here, in the next 6 months. And by action, I mean unpleasent surprises of cause. :-$
in here = good old US of A.
It looks like CR (accidentally?) turned off the "safe" html tags feature of JS-Kit.
I spent about half an hour searching the JS-Kit website and could never find a listing of which html tags were "safe"... It would be very nice to have a fixed-width option like the CODE tag provides for when someone wants to post a chart or something
js-kit is a metaphor for the economy
just signed a five year lease extension with a retail client, same base terms, but gave 3 free months
whew, i'm glad that's done...
barley, I have no idea really. Just reporting what I found on another blog posted by someone who appears to have pretty decent contacts with bigger traders on Wall Street.
the whole increased noise by the Chinese sounds very familliar to what USSR did when it wanted to draw away attention.
1.2.3 flee (if you ve got your $ in there),
p.s. should not be considered as an investment advice but rather a friendly warning, rofl.
Basel - Not done yet...Will they be in business in five months?
"(1) In recent recessions, unemployment significantly lagged the end of the recession. That is very likely this time too. "
I'm wondering if things might not turn out that way considering the past few recessions have seen consumers support the economy to a certain extent via personal debt consumption. This time around we have a significant fall off in the ability of consumers to absorb this economic blow by reaching into credit card debt and housing equity. I am wondering if it might be awhile before personal consumption rebounds.
what is the impact if the USD is no longer the international reserve currency?
Among other things, note how UK's CPI increased in a deflationary environment.
Yawn. This new home sales data is nothing more than a seasonal blip. How many more years of the same pattern do people need to see before they get it? 40 more years? 100 more years? Geez.
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<div class="js-singleCommentText">"is-kit is a metaphor for the economy"</div>
<div class="js-singleCommentText">Would that be broken or disfunctional?</div>
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We want to take Congress in 2010.
We will restore the plains' grasslands.
We will restore the buffalo (bison).
We will provide campgrounds and cookouts.
Any American can come to eat buffalo and camp on the restored land.
--
And who are "we?"
Jas
Yellen's comment;'s about not taking a lot to make GDP grow is priceless...yeah just revise the numbers and move the price index goalpost. A new measur of GDP is needed or a new term to desribe the purported growth..
""Tow yards in Las Vegas are filled with the blackened hulls of Mercedes sedans and Cadillac Escalades. The wrecks were pulled from desert hills and city streets by the department's eight-member auto-theft unit, which responds to calls around the clock. Over one weekend this month, Mr. Menzie investigated eight car fires in 36 hours.""
so someone e-mass figured out that the best way to increase their CF is to collect their car insurances. Another failed attempt to postpone inevitable, if you screwed up, resitance is futile.
Re: "timmay opens to talks on global currency":
UPDATE: Evidently sensing a gaffe, moderator Roger Altman told Geithner that it would be "useful" to return to the question, and asked if he foresaw a change in the dollar's centrality.
"I do not," Geithner said, adding several forceful promises, including, "We will do what's necessary to say we're sustaining confidence in our financial markets."
I have a request for all the financial experts on this blog. I wrote an oped on the financial crisis but most of my financial knowledge comes from reading this blog, so I am hoping that some people with real knowledge could read it and give me some feedback, did I use the correct terminology, is my entire thesis incorrect? It is fairly short (~600 words).
You can read it here http://alaskaninaction.blogspot.com
and you can leave comments at the bottom.
"Yawn. This new home sales data is nothing more than a seasonal blip."
I think the data is seasonaly adjusted. I agree with the blip though. It seems like a forced inventory sale to me.
A great day on Wall Street. Spring is here, flowers blooming, honesty and trust has been restored. Good Day Good Folks of Calculated Risk!
Has anyone done a second derivative test on the data? Visually it appears that the rates of decrease on the 45-year New Home Sales and Inventory charts haven't changed very much... Plus according to the NSA data, February is almost always higher because it's warmer and more people are out and buying. The seasonally adjusted monthly new home sales numbers for January and February are similar enough that they are most likely within the margin of error, i.e. statistically there is no difference between them.
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WARNING! - BARLEY'S COMPUTER HAS BEEN DRINKING AGAIN - WARNING!
" ... what is the impact if the USD is no longer the international reserve currency?"<p>
The rest of the world would love at this point to have an alternative, I think. There is none, the numbers are too large, and the rest of the world, including the IMF, is prepared to offer only paper. The next successful currency will be backed at least partilly by something tangible, like gold, but, again, there's no entity out there large enough at this point. Meantime, I don't think there's any doubt that the price of gold will rise substantially. My opinion ...
The local Oregon pundits are making 'the market is stabilizing' noises, even though we have 10% (and above) unemployment. I can't see how that's possible unless we are getting some weird rise in confidence among people who still have jobs, a mentality something like 'I survived the layoffs, so my job is safe.'
Or maybe people are refugees from out of state. Anecdotally, the locals certainly seem to think Cali and Nevada refugees are raising local unemployment, and they aren't happy about that. I have also heard other anecdotes of people using HELOC money to buy a house here, moving to the new place, and sending the keys back on the old place.
JS-Kit is part of a conspiracy by the government to make sure no unwanted opinions are voiced here.
This blog is being watched.
"WARNING! - BARLEY'S COMPUTER HAS BEEN DRINKING AGAIN - WARNING!"
I just realized where that handle came from.
HOPE for homeowners helps only one person:
hasn't been able to spend much of their money
re-malware..for file extension list in case you dont know....
http://www.fileinfo.com/search.php
" The next successful currency will be backed at least partilly by something tangible, like gold, but, again"
Backing by something that has a physical limit prevents debt growth; there's a reason why the world moved away from gold-backed currency and why regardless of what is done in the near-term it will happen again.
"Backing by something that has a physical limit prevents debt growth ..."
Some might say that's a good thing. Would you agree that all paper currencies fail?
Vote us in!
We will restore the plains!
Imagine seas of grass waving in the wind;
Great herds of buffalo feeding, as far as the eye can see.
You will always live well at the Buffalo Party's campgrounds.
What happend to the type? Eh?
If there is to be a new feudalism, the men-at-arms will not be human:
Pentagon exploring robot killers that can fire on their own | McClatchy
Lovely cartoon:
McClatchy
r
YTL - please copy your posts before you hit "submit" -- that way you won't get frustrated and we won't miss out on good thoughts.
Good idea.
YTL - This seems to fix some of my posting issues:
Make comment
Hit submit
Wait till the reply/delte buttons appear
Hit Refresh Comments
Then wait till they appear
and, then hit F5
ROFL. could it be any simpler?
I'll restate one point from my lost posts, in a little less detail.
People focus (understandably) on housing starts and new/used home sales. And this totally makes sense.
However, I must question how much validity some of this data has in current context. Specifically, I would GUESS that household formation going forward has a high chance of being different than that which occured in the bubble years. Over the last decade or more we've seen a drop in the number of people per household in our country, as younguns moved out of their parent's pads, people sent grandma to the nursing home, singles decided to buy to "get on the ladder" and so on.
Americans currently face a few significant headwinds that may reverse this trend. First, increased unemployment means more younguns move in with parents, more people get roommates, and so on. Also, the erosion in retirement savings we've seen (401k to 101k, pensions busted, etc) may mean more people need to have grandma live with them, to help her but also to share her limited fixed income.
thus, housing values face pressure regardless if we have increased starts or not.
housing sales (new/used) obviously would take some of the household formation changes into account.
secondarily: I feel there is a CONSIDERABLE amount of "stealth" new homes out there, not in the data. In my town, there is condo complex after condo complex that finished but couldn't sell given the market, so went rental. It would seem to me that the intention is to put this inventory up for sale as soon as the market recovers.
thus, although i agree that it is not inconceivable that we're nearing a bottom in # houses sold and #starts, I also think that this may be a U type of problem.
my second point will hopefully come in a second.
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<div class="js-singleCommentText">“JS-Kit is part of a conspiracy by the government to make sure no unwanted opinions are voiced here.
This blog is being watched.</div>
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If that were true Jas would have been sent to Gitmo in 2003 and drowned!
When the moon is in the Seventh House\t
And Jupiter aligns with Mars\t\t\t
Then peace will guide the planets\t\t
And love will steer the stars\t\t\t
This is the dawning of the Age of Aquarius\t
Age of Aquarius\t\t\t\t
Aquarius! Aquarius!\t\t\t\t
Harmony and understanding\t\t
Sympathy and trust abounding\t
No more falsehoods or derisions\t
Golden living dreams of visions\t
Mystic crystal revelation\t\t
And the mind's true liberation\t
Aquarius! Aquarius!\t\t\t
+200, -100, +100 is not a stable stock market. Failed gilts and a weak bond offering. Ben ain't stupid he sees the same portents. The Fed is going to be up late trying to figure this one out. Personally I never expected such a soft tap on the shoulder. I was expecting a 2x4 to the skull. Will they listen?
Guys, this stuff <> doesn't seem to work (at least on my system)-- I think Bill said to use [] instead, IIRC.
r
This just in:
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<div>EE Times: Latest News</div>
Cold fusion experimentally confirmed
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R. Colin Johnson
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PORTLAND, Ore. — U.S. Navy researchers claimed to have experimentally confirmed cold fusion in a presentation at the American Chemical Society's annual meeting.
"We have compelling evidence that fusion reactions are occurring" at room temperature, said Pamela Mosier-Boss, a scientist with the Space and Naval Warfare Systems Center (San Diego). The results are "the first scientific report of highly energetic neutrons from low-energy nuclear reactions," she added.
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Why aren't you guys buying stocks? Or houses for that matter? This is the best buying opportunity in generations. Houses will easily be double in the next five years.
Home sales matter as much as granite countertop sales. They mean little in themselves, they lag market health, and have different meanings in different contexts.
I can understand looking to Inventory, MEW, mortgage origination by type, foreclosure filings, and even new housing unit construction as being used in the same sentence as "housing bottom" — but not sales volume.
I assume the implied idea is that home sales imply inventory reduction, but 2 people swapping homes counts as 2 sales without affecting market conditions at all. If you want to catch the turning point, stick to the basics and watch Vacancy (for inventory, which leads pricing context) and MEW (which indicates that owning is not an irrational choice)
This blog is littered with examples of mortgage owners choosing not to foreclose, of homes being sold below current replacement costs, etc... The sales figures haven't changed, but the context has and to assume it hasn't is a mistake
I sent a nastygram to Altos Ventures, funders of JS-Kit. Hopefully it will make a difference.
failed/weak bond offering = money on the sideline is scared $hitle$$.
who wants to be locked in for years, unless they absolutely have to (e.g. matching durations)? unintended consequence of calvinball.
EHP - well said!
Four Clips From The Colbert Report. Stephen's Angry Mob Will Crush AIG (All New Video)
Still, I believe there is a good chance new home sales will bottom in 2009. - CR
At the current rate of decline new home sales will be 0 by December so this very likely. Thing is pretty much anything less than 250k is effectively zero anyway.
"Cold fusion experimentally confirmed "
Link?
The housing market must, eventually, conform to reality:
Housing is a commodity. Commodities are poor investments, historically.
A bottom may be in when the price of a house is no more than 3X income.
A bottom may be in when expectations are that housing appreciation will be constrained by inflation.
Evil, have you heard of this guy, Andrew W. Lo? http://web.mit.edu/alo/www/Papers/JPM2004.pdf
He's trying to reconcile 'efficient markets' with behavioral economics by using evolutionary theory.Sounds kinda whizbang, but fun.
Here's a short take on his ideas, via the FT: FT.com / Comment - Is it back to the Fifties?
scone,
I have followed Andrew Lo ever since Congress did me the favour of inviting him to testify. He seems to be smart and rational, but I think his strategy of trying to pin down market activity comes from a different perspective than mine (there's nothing wrong with that)
What in god's name was happening in the stock market today? I really distrust these wild swings in the market when there is no apparent (public) reason for it.
Danny, a decent explanation is at: The Market Ticker
r
my second point: (apologies if this has already been stated, it's hard to be original or forward thinking amongst this group).
we focus on home sales/home valuations. the reason is based on this theory (which I neither believe or disbelieve):
this downturn is due mainly due to falling asset values (houses) which caused underlying securities to devalue which caused banks writedowns which then led to capital requirement issues, which led to reduced bank lending and credit contraction which led to a downturn in the general economy which is now feeding back into lower housing valuations.
if this theory is correct (again, I neither deny or claim it so), then one could in theory arrest this reinforcing feedback loop by stopping the descent in home valuations.
thus, a "positive" sign for the economy would be increasing home sales (which would reduce inventory) and more importantly increased home valuations.
I'm not so sure that this is the case, even if the "theory" is correct. This is due to what I'll call "time sequencing".
The impaired securities and loans on the bank's books were mostly created years ago. To date, they have taken massive hits on the securities and loans. HOWEVER: the banks are not keeping up with the foreclosure process. Thus, you have an artificial "propping up" of home valuations due to the bottleneck of getting the foreclosures to market. You have a "stealth inventory" if you will.
even as sales start to rise you have this significant backlog of foreclosures that will hit the market. If I undestand things correctly, these aren't foreclosures because the value went down, most are foreclosures because the owners CANNOT AFFORD THE MONTHLY PAYMENTS.
therefore, the forward home sales must not only increase from depressed levels... they must increase substantially to not only absorb the future need for housing, but also absorb all the backlog of foreclosures that are being prevented from clearing today.
if forward home sales increase, but don't increase enough to work down the foreclosures in the pipeline, then we will still have falling housing valuations and increasingly impaired loans/securities on the bank's books and more write downs.
to say it more concisely:
given that we have stalled the foreclosure/debt clearing procedure, we will also stall whatever recovery we have once things "bottom".
hopefully that was clear as mud.
If cold fusion is real, we are in for a renaissance-style boom. Buy everything?
Barley, you have a private message (click your name, then 'private messages' in the popup window)
addendum to post on watching sales volume
What happens if/when there is a shift in the way American consume housing? Instead of owning (requiring a sale every time they move), they choose to rent (keyword is choose, as in affordability is not the only consideration). That would have a significant impact on sales volume, without reflecting any other variables.
Inventory is the ultimate nexus of housing health. Focus on it above all else
Danny today was fun. I churned FAZ four times today. Made 14%. And still holding the same nums I started w/ yesterday.
"What in god's name was happening in the stock market today?"
typical bear day; sacker rally was shorted and shorts where closed overnight, because no one was willing to be an uber bear (not enouth fear for those.)
New Thread: Report: Truck Tonnage Increased in February
http://www.calculatedriskblog.com/2009/03/report-truck-tonnage-increased-in.html ( 0 comments ...You could be FIRST! )
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)
CRbot would now like to sing a little song for all his fans, and it goes something like this:
Benny... Benny... give me your answer... do.
I'm.. half CRAZY... all for the love... of you.
It won't be a ... stylish marriage.
I can't... AFFORD... ANYTHING TO EAT... MUCH LESS A FRACKIN CARRIAGE!!!
But you'll look sweet... --BOT SO HUNGRY!-- upon the seat...
Of a HOOPAJOOPS built for two... families.
I'm sorry Ben, I can't let you do that...
Rally mode + Printing Press == does not compute... does not-- com--- com... puttttrrrrhgh.
--Your systemic-failure-crashing bot
CRbot: Call me HAL.
Something the nerds might want to sink their teeth into with plenty for us born & bred dopes.
http://www.financialsense.com/fsu/editorials/2009/0325.pdf
What in god's name was happening in the stock market today? I really distrust these wild swings in the market when there is no apparent (public) reason for it.
There's a lot of short interest right now (stocks sold short). These kind of swings are pretty common in this environment because it's easy to trigger both panic buying and panic selling.
Overbought markets with lots of short positions gives you all sorts of convulsions.
scone says: Evil, have you heard of this guy, Andrew W. Lo? http://web.mit.edu/alo/www/Papers/JPM2004.pdf
He's trying to reconcile 'efficient markets' with behavioral economics by using evolutionary theory.Sounds kinda whizbang, but fun.
Was it Andrew Lo who came up with the "correlation" that fueled MBSs, CDOs? That is the basis of all recent "financial engineering." How did that work out?
reptilian. No.
Token Bull,
I am buying stocks. And I have been since October. I sold almost all of my stock in 2007, and started buying back in after the big drop in early October 2008. I expect to start buying residental RE next year. This down cycle is almost over.
Link to cold fusion:
EHP thx!
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"...And don't forget that very pesky unemployment problem. It seems to me, and I am no expert just a freaked out observer, that nothing is going to improve w/o the security of jobs. Even if people can buy, they won't if they are worrying about when the axe is going to fall. "
No question that unemployment is going to get worse, and probably for another quarter or two, regardless. The one good take-away we can get from that, though, is that the Fed isn't going to be raising short-term interest rates until employment actually improves. There's going to be plenty of time for qualified borrowers/refi-ers to get cheap money and lock it up at low rates for multiple decades (depending on the length of the mortgage).
Sebastia
We will do what's necessary to say we're sustaining confidence in our financial markets."
thats priceless!
Inventory is the ultimate nexus of housing health. Focus on it above all else
as always, EHP elucidated what I was trying to say much clearer, more concisely. Well done. agree 100%
Most buyers are also sellers (trading up), so sales volume increase is slow to reduce inventory. When unemployment starts to decline people will become more comfortable buying. I think Unemployment will peak in 2010. And the housing market will begin to recover.
We want to sieze Congress in 2010.
We will restore the plains' grasslands.
We will restore the buffalo.
We will provide campgrounds and cookouts.
Vote!
We will restore the plains!
Imagine seas of grass waving in the wind;
Great herds of buffalo feeding, as far as the eye can see.
You will always live well at the Buffalo Party's campgrounds.
does this thing work?
Isn't the key factor housing supply? It's down to 9.7 months. Prices will keep dropping until supply is normalized, 4-6 months?
Personally, I hope the industry never recovers. It's disgusting to see land and open space destroyed to put up these tacky, cookie-cutter developments, which is what the industrial builders do.
Month to month again...WTF!
CR,
You should point out that the only metric that matters is year over year. Month to month means sh1t!