I can tell you that it is starting to look like one along Rt 80 in northern california. Driving from SF to SACTO brings into view an increasingly large number of going out of business, vacant and otherwise never occupied property on the commercial side. And of course we already know the residential picture along that road is skidsville. But I think we are really seeing the effect of a dying consumer on retail and the flowthrough to commercial building, which is to come as vacancies shoot up.

With the economy now in recession, a lot of the housing inventory will shift into the "must sell" category, and I also doubt banks would be willing to carry REOs until the market recovers ... whenever that comes.

All this supply being dumped onto the market and cleared at a median price of $425k? Sorry, don't think so.

As the saying goes, "Where are the customers' yachts?"

Lots of residential real estate for sale in coastal Orange County.

Increasing for lease signs on vacant CRE.

One of my friends got a great deal on office equipment from an auction of a defunct mortgage broker.

Clarification on my last post....I'm talking specifically about the Silicon Valley. I haven't been out and about around the rest of NorCal.

she was always kidded me "Hey, where is the recession?" It definitely didn't feel like a recession in SoCal in December.

Ya my wife is the same way - her company is doing ridiculous amounts of overtime... but then her product sells domestically AND int'l... they have Chinese partners selling their output lights out in Asia right now.

Yet she looks at the numbers & sees the news and goes 'what the heck?'... it doesn't GROK...

That's why I asked... big historical events like this should be told both by the numbers but also by the narrative... we have enough people around the country (and even world) to do that... to look around & report in.

Thx for your effort.

I'll echo CR's comment that it doesn't feel like a recession yet. I'm in Huntington Beach and, although I see many vacant stores and going out of business signs, I also see good traffic at the newly redeveloped mall and Costco and Target.

A lot of vacant CRE available though. Boeing spec-built an industrial park in Seal Beach that completed recently. I haven't seen much actual business there though. No tumbleweeds yet.

USCB Alum - you ever meet Dr N?

BTW, it's starting to look like I've made a bunch of enemies in the office by jokingly saying, two months ago, that I was shorting the NASDAQ because everybody here was long.

Lots of people giving me nasty looks now.

Be careful with that stuff.

Also, don't show up with a new luxury car and say "Hey everybody, I charged this to your 401k!"

They don't like that either.

Greater PHX resale numbers
The 2007 Greater Phoenix resale home market continued to slow in December, with 3,290 sales recorded (3,280 sales in November), compared to 4,620 sales for a year ago. This is the lowest level of activity for December since 3,240 sales were recorded in 1999.

For 2007, a total of 50,975 sales were recorded, in contrast to 67,035 for 2006 and 110,835 sales for 2005. The market slowed greater than expected, especially in the latter months of 2007, ending as the lowest level of activity since 45,620 sales were recorded in 1997.

Activity is in the gutter, prices are in freefall in the periphery, starting to slide in the city core.

A teardown house I was looking at that I had been told had sold for full boat turns out to have been pulled off the market and now they're looking to re-list. They're now interested @ my offer of 10% of their asking($56 sq/ft), but I've found a spot with double the lot asking $40 sq/ft.

To add to Misean's commentary, if you get off of the freeway and drive into industrial park areas there is a for lease or sale sign in front of every other building and several large buildings mixed in that are in some stage of contruction and have a for lease/sale sign in front of them too. I have seen this in Ventura, Oxnard, and Camarillo. Also, a friend of mine bought a large wharehouse for half of its appraised value he said.

I'm keeping quiet about any financial good fortune I have going for me these days. I've learned that people don't like it when you tell them not to run with the herd. And they really don't like it when you are doing well and the herd isn't.

Hell, one time I refused to buy a ticket in the office lottery. Everyone was chipping in to buy a bunch for the big payout. I declined. I was scorned and derided, "you'll be sorry when we win". I told them they were wasting their money and if they wanted to be rich, there were much lower risk methods. I was right. and another reason I no longer work in an office.

more of a fear and loathing in Las Vegas moment

I was wondering when we would reach the fear and loathing point in this. Sometimes I think the rest of the country is the attorney in the opening page when it comes to all of this. And the people on this blog have seen the

"terrible roar all around us and the sky was full of what looked like huge bats, all swooping and screeching and diving around the car, which was going about a hundred miles an hour with the top down to Las Vegas. And a voice was screaming: "Holy Jesus! What are those goddamn animals?"

Then it was quiet again. My attorney had taken his shirt off and was pouring beer on this chest to facilitate the tanning process. "What the hell are you yelling about?" he muttered, staring up at the sun with his eyes closed and covered with wraparound Spanish sunglasses. "Never mind," I said. "It's your turn to drive." I hit the brakes and aimed the Great Red Shark toward the shoulder of the highway. No point mentioning those bats, I thought. The poor bastard will see them soon enough.

"To once again put price increases into perspective, here are the SoCal median prices per DataQuick:

1998 $187,000
1999 $198,000
2000 $220,000
2001 $247,000
2002 $289,000
2003 $346,000
2004 $424,000
2005 $479,000
2006 $490,000
2007 $425,000"

So -- $346K again in early 2009? Any takers?

It always seems like get-rich-quick types pile in right at the top.

That's almost the definition of a top.

I'm actually starting to believe that the average person would do well to stay away from stocks. Stock markets tend to have dramatic highs and lows precisely because so many investors are buying and selling at precisely the wrong times.

I think the typical person will tend to get poor returns from stocks relative to the risk simply because the typical person is quite typically driven by psychological forces.

Maybe they're best advised to stay away.

So many people I knew bought houses in 2005-2006. There was not a thing you could do or say to dissuade them. I know; I tried.

I am not qualified to answer.

I am not qualified to answer.

Oh come on now, that never stops any of the rest of us from answering questions.

12th percentile:

I gave the audiobook version of Fear and Loathing to my Arizona friends. Told them to start the CD as they hit Joshua Tree monument.

""No point mentioning those bats, I thought. The poor bastard will see them soon enough.""

When with friends, I've taken this approach about real estate and the economy chitchat.
There are still people drinking Kool-aid in Portland Oregon.. this, despite all the for-sale signs, the starting to be abandoned infill and CRE projects.... I figure, what the hell... they'll see those damned bats soon enough.
Toke?

Chevy Chase apparently quit originiating anything in FL because the valuations just aren't there. Too risky - how is that for FL news? The chances of them doing the same is CA is?

"So many people I knew bought houses in 2005-2006. There was not a thing you could do or say to dissuade them. I know; I tried."

The holistic investment adviser across the street (not kidding, this is Santa Cruz) has been trying to talk her SiliValley clients out of real estate investments for that long or longer. She said the response has almost always been the same: a self-assured "But real estate always goes up.."

interesting tidbit from San Diego. In December 31% of sold homes were foreclosures, vs. 4% in Dec. '06. See
voiceofsandiego.org | News. Investigation. Analysis. Conversation. Intelligence.

Oh, and December had a record number of new foreclosures, so that more foreclosure inventory coming on line in the next couple of months.

It's just Boeing. Boeing shares drop 6.5% to $76.35 after 787 delay report

tj & the bear said: "Sebastian, the one-man economy! :-)"

Evidently. Must be why the Efficient Market theorists get it wrong so often, there's only just the one rational investor, LOL!

S.

APPL was bound to disapoint this year, you can't have a new iPhone every year. I think thier business model will suffer greatly in a recession.

CR - is it starting to 'look' like a recession out there? [dryfly]

dryfly -- It definitely looks like a recession here in Detroit, mainly because of the vacant houses, but now it's also the talk of the town.

Last year at this time, the vacant houses were beginning to be noticeable, but the number just exploded in the spring. Still, the economy seemed to be humming along otherwise. But now everyone is talking about the recession. Still some CRE development, but now the reports of new projects usually include some cautionary comments regarding the poor state of the economy.

I guess Detroit/SE Michigan has been in recession for 2 1/2 years now, but the pace has recently accelerated. I get the feeling that we're ahead of the rest of the country on this one...

re: page 11, so Denver only has at most a 10% chance that local home prices will decline within 2 years. Another rose colored report.

I started writing down comments as people made them on TV and radio so that I could go back a year later and listen to them (I always forget how wrong so many experts can be).

Here is my list so far (mostly from bloomberg and a So Cal radio show).

I didn't know it would only take a few weeks to see some results:

----"This is not what a recession looks like....no way!" Mike Green and Jim Benham show 11/16/07

----Mike Green: "Wallstreet thinks things are bad, but in reality things are very good!!) 12/18/07 Dow at 13323 Das at 2596, S&p 1454

----"I have a real problem with people not using facts in basing their opinions."

Pat Powell, Powell investments (Reference Peter Schiff's opinion
we are in a recession right now 11/22/07)

----"all the bad news is priced into financials" Mike Green and Jim Benham show 12/14/07

----Fred Layne (layne and Barry) "This is a great time to be a buyer of equities 12/19/07 on bloomberg.

----Donald Luskin calls the bottom for financials on 12/07/07 (VFH at $56.22 at time of call----$48.45 on 01/15/08)

----Economist Monti says there will probably not be a recession 12/17/07

----Mike Green: "This is the cheapest stocks have been in my lifetime" 12/17/07

----Fed Chairman, Fred Lacker said growth for 2008 will be between 2 and 2.5% 12/19/07

----Michael Darda from MKM partners: "There is no evidence for that (recession)" "I think those who think a recession is coming are wrong, dead wrong". 12/20/07

----Bruce Kassim "We think growth will rebound rather smartly in the second half of 08" 12/20/07

----Larry Kudlow "It does not look like a recession to me!" 12/20/07

----Brian Wesbury on Larry Kudlow show, "Brian Wesbury is not seeing recession, so add me to that list" 12/20/07 (Estimated 3.0 real growth next year, while Roubini estimated -1.5% 2008)

----Buzz Zaino, Royce & Associates: "I think the spring will see a rise in homebuying, why wait until 2009, the early buyers will get the best deal." "I think we've seen the bottom (housing stocks)" 12/26/07

----Richard DeKaser National City Chief Economist: "I think the first half of 08 will have GDP at less than 1% with a rebound to 3% in the second half of 08".

----Joe Brusuelus "I see an average growth of 2.1% for 2008. I think we will skirt a recession." 01/02/08

----Paul Kandel "I think we skirt by both a recession and stagflation and just see slow growth for 2008." 01/02/08

----Mike Green "These tech stocks are the cheapest I've ever seen them" 01/02/08

----Commerce Secretary Carlos Guitierrez, "we still see growth in 2008" (this after a horrible jobs report for December)

----01/06/08 Abby Joseph Coen calls for a 14% return on the S&P for 2008 to 1650 due to avoiding recession.

----01/06/08 Colin Glingsman Oppenheimer Capital...This month (Jan) is the bottom for financials, we will have a slight recession, the stock market will be up on anticipation for 2009,

Average Joe - Thanks for the concensus view!

Speaking of credability...MUNICH (Reuters) - Germany's Hypo Real Estate sprang a nasty surprise on investors on Tuesday, announcing unexpected subprime-linked writedowns that sent its stock down by more than a third.

Hypo Real Estate (HRXG.DE: Quote, Profile, Research), an investment bank and property lender, said it would take a writedown of 390 million euros ($580 million) on 1.5 billion euros of collateralised debt obligations (CDOs) -- close to the net profit it made in 2006.

The bank said in a presentation slide its net exposure to U.S. collateralised debt obligations (CDOs), a type of asset-backed security carrying various degrees of risk, was now less than 1 billion euros.

Investors, who had heard repeatedly from management that the credit-market crisis had passed it by, were shocked and the Munich bank's shares plunged, cutting about 2 billion euros off its market value.

Mo Money!
The Federal Reserve’s Flow of Funds data for Q3 showed that, not only was the economy’s net flow of credit uninterrupted as the credit crisis unfolded, it actually surged to a record USD 5trn or 35.7% of GDP. Some credit crunch!

RGE - Editor's Pick: The Effective Nationalization of the U.S. Mortgage Market in Q3 07

well i'm glad i held onto my shorts!

All we need now is for Bush to attack Iran and throw the world economy into a tailspin.

James,

He doesn't even have to do that. He just needs to follow the Republican rhetoric, which says we ought to blow a couple of those inflatable speedboats right outta the water.

The Iraquis have good cameras. If the Muslim world saw body parts and rubber raft parts flying, the global jihad would be on.

All it takes is one destroyer captain watching a McCain speech at the wrong time.

Schmoe asks: ... data I'd like to see is that it would show (as you put it) the number of "people swimming naked" in specific areas.

Or, to put it another way, margins can be very thin and fleeting (e.g., when just a couple of houses in Brentwood go belly up) ...

It doesn't work that way. When my house went up 6x 1995 to 2006 there were no transactions to provide datums. Any refis or Helocs made no difference further obscuring valuations. Money ultimately has only one color. You want to know where exotic financial products are concentrated? First define geography, exotic and density. And even then I say it doesn't matter. Look at Buffalo, NY; $16,000 homes. Nobody is pulling No Doc I/Os on them and yet they still suffer.

We are in the process of nationally correctly pricing housing. It will be messy. At peaks like now there is froth, just like at troughs there is mud. My anchor is rent equivalents. Not the obscene OER the Census uses but the monthly renting versus owning net ROI.

I think the market was hoping for new iPhone models to be brought out, not just software upgrades.

Forget the rate cuts. What this economy needs is iPhone 2.0.

I'm actually starting to believe that the average person would do well to stay away from stocks.

ac, You are right. Hedge funds have destoyed the stock market for everyone else. Maybe for a long time to come.

There two basic ideas that made stock markets work for a hundred years. One is the idea that you have some loyalty to a given company, if only for a short time. The other is that you can only invest money you actually have (plus a bit of margin). Those ideas are gone.

rich

u left out the truly fundamental detrimental effect of hedge funds and Wall St in general. lack of TRUST. the ordinary investor can no longer invest in a company based on fundamentals. stock prices get manipulated all over the place. fortunately for all of us here, the financial economy eventually succumbs to the real economy.

"i hope no one here"

Leaving the rally that late means only 1 thing: short covering, especially if the volume(currently Nas 1.9, DJIA 1.3) adds another 500mm shares each in 30 minutes.
Alec | 01.15.08 - 3:40 pm

Is 450mm shares in the last 30 minutes close enough?

Intel shares fall more than 10% in after hours trading

>

...but Cramer said buy techs

my TWM just did a bottle rocket.

ac, I was at a mutual fund client that had Money Mag's #1 fund in some category the year before. I sat near the call center and the phones rang off the hook for a while with new investors. They all went to the slaughterhouse for the next 3 years. That's the other way people doom their returns; chasing last year's news. If those funds ever had to report dollar weighted returns, there'd be alot of jaws on the ground.

stocks are meant to separate ppl from their money.

Well, the way I'd put it is that routinely throughout history the markets get hijacked by a bunch of professional cons and they use stocks to separate people from their money. Nothing intrinsically evil about stocks IMO. It's the deceptive, predatory mentality and lack of education on the subject that are the fundamental problem.

Misean

i agree 100%. have u ever read the Creature from Jekyll Island by Griffin? about the genesis of the Fed.

Hmm.. This is from Wikipedia, but seems to support my Great Depression consumer's view theory somewhat.

Great Depression - Wikipedia, the free encyclopedia

"Lurching downwards

The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below of peak in September 1929.[2] Together government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the prior year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.

In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas where commodity prices plunged, and in mining and logging areas where unemployment was high and there were few other jobs.
..."

Cal, I'm a fan of Bogle. I've been on the inside of dozens of public companies wondering why the stock price is going up or down..knowing it had nothing to do with what the company was doing.

whoa, SRS up to 137 AH on a huge buy.

CFC now down to 5.72. stocks are realizing the BAC buyout will be a bust.

I'm up in the NW corner of the country, north of Bellingham, WA. We had our own little bubble here with McMansions covering any bit of formerly-productive farmland the zoning folks would allow to be subdivided.

I bought in 2005, but got a small, wonderfully-kept 1920 farmhouse on 1.3 acres of fertile land. The price was well within my budget, even during the boom, and I got solid 30 yr fixed terms and even managed to put a decent amount down. We're getting the gardening thing down pretty good and can grow and put up close to half of our food. We'll have milk once my cow calves. That is one big part of my "investment" strategy, tho it takes a bit of work.

On my 13 mile commute to the university I work for, I see house after house on the market, most with 'price reduced' signs aging in the winter weather. Subdivisions in the middle of nowhere sitting half, or less than half, built. Vacancies for rentals in town are low, but it's a college town and tenements are in demand. But the usual landscape of vacant condos, townhouses, brand new CRE, boarded up big box stores, etc. are everywhere in this tiny county.

Canadians flock south to pick our economic bones and rave about 'how cheap everything is', while we rapidly decline to our former rols as one-employer town in the middle of barely solvent farms.

aotc

no i haven't owned gold since 1980. i've owned it since 2005. up 2x.

I was Anonymous at 6:15 PM...

Andrew, good analogy. With the media hanging on his every word, it would have been risky for him to give a strong warning a year or two ago. But he truly seemed to be a bit clueless. The clearest example I recall was back in August. One day they said everything appeared to be contained, then a couple of days later they had to take emerygency action (discount rate cut, I think). By that time, he should have been aware of the iceberg and better able to communicate sensibly...

Re: INTC after-hours price drop

I've no experience with the after-hours market (clearly! -ed)
psychodave

In INTC's case, they will DEFINE the market tomorrow - especially the TECH side - so any play made must be thought of as a market play not a single stock play.

I'm waiting till the pre-open trading session before I make any trading move (long, short, index or sympathy stock). 12 Hours is a long time for things to go awry - in particular the rumor that the Fed may make an emergency cut, and the possible up (OR DOWN! ) reaction to it.

Then there's the CPI coming out tomorrow too.

Either way I'll wait till about 8:40 am EST before I act.

-K

Oops, rcyran, not rcryan.

Thanks, rcyran. Wonder what happened to that lyrical banker?

I guess my daughter commented at 10:06. I'm sure her insights helped you all.