This doesn't sound like a green shoot at all...

I'm sorry, I just don't understand the call for a bottom in 2009 for housing starts or completions. I guess if you ignore the swollen inventory, ignore credit availability, ignore jobs and ignore incomes, yeah... I see a bottom this year.

Let's see; the builders' confidence is surging (yesterday's release) but it hasn't quite surged enough that they want to actually build anything?

Did I get that right, Mr. Orwell?

Please tell me you're not actually looking for rationality.

no one man needs the market.

Yeah, and they'll figure that out - the easy way or the hard way.

This is important because residential construction employment tends to follow completions, and completions will probably decline further.

That is an important point. It implies that completions and residential construction employment have a ways to go.

Starts and completions aside, we have way to many units - currently 20 million unoccupied. And over 50% of occupied units have less than two occupants.

Big time glut.

Nasty chain store sales this past week:

Store sales were weak in the May 16 week, according to ICSC-Goldman's same-store tally that fell 1.2 percent and is down 0.3 percent year-on-year vs. year-on-year growth of 0.5 percent in the May 9 week. Another month of weak retail sales would seriously push back the economic outlook. Redbook will post its results at 8:55 a.m. ET.

Cool weather hurt seasonal demand and made for a 0.3 percent year-on-year same-store sales decline in the May 16 week. Redbook said sales so far this month are down 0.2 percent compared to April. A third month-to-month decline for retail sales would badly set back the economic outlook.

no one man needs the market.

That's why I currently find the equity markets frustratingly entertaining, and a good indicator of what TPTB are trying to message to the public, but I won't put any money in play there.

My investment focus is on the long end of the yield curve and dollar strength/weakness. These are much less open to opaque manipulation and also the areas where TPTB's actions will result in consequences first - IMO.

"Let's see; the builders' confidence is surging (yesterday's release) but it hasn't quite surged enough that they want to actually build anything?"

The builder confidence survey should have a different degree of survivor bias.

I wonder if Google crashed again?

Keep getting their server error message & none of the links work ...

I wonder what the USA would look like if we had lived here as long as the Chinese have lived in China?

I think they're taking the view that any house is better than a house on fire, Rajesh.

Dirk: 10K rebate to new home buyers in CA. We need more houses.

"Whether there actually is a bottom depends on their enablers the local community banks that lend to home builders."

Well, good thing CRE is contained then.

Are house starts gross, or net of bulldozing?

The homebuilders are a much broader version of "House of Games", a must-see if you haven't already.

I was thinking more along the lines of the us here and now being here for around 3,000 years, no disrespect to the natives.

Green Shoots: Drinking a whole bottle of Midori out of a brown paper sack

Please tell me you're not actually looking for rationality.

Thanks Eric. I may have needed that.

How much deleveraging?

Since the start of the U.S. recession in December 2007, household leverage has declined. It currently stands at about 130% of disposable income. How much further will the deleveraging process go......

The Japanese stock market bubble burst in late 1989, followed soon after by the bursting of the real estate bubble in early 1991. Nearly 20 years later, stock and commercial real estate prices remain more than 70% below their peaks, while residential land prices are more than 40% below their peak.

Economist's View: FRBSF: U.S. Household Deleveraging and Future Consumption Growth

The stock market has gotten way ahead of itself on a recovery in housing- and they are over estimating the 'recovery' of the economy in the second half of the year.

Did you see this?

The Fragrantly Visible Hand

They didn't describe the actual smell.

(The former) America in 3,000 years? There will eventually be abandoned cities that no one at all lives in. Obviously, Detroit is on the way to that.

However, the peoples who used to live in those cities will probably be found living in newer villages not too far from the ruins. Or, smaller cities will gain somewhat greater prominence. This has been the pattern of collapse and resettlement since the beginning of recorded history (although, not necessarily in China where urban centers tend to remain occupied).

Something I didn't see in discussion of banks returning TARP money. Does that mean Timmy Geithner can re-cycle that money back into the system? For some reason I thought he could re-TARP money that is paid back...

I think we're entering the next stage which has very little to do with fiscal policy and very much to do with the survival of political systems and governments, possilby framed as saving civilizations and sacred ways of life, but this all resembles a limited number of life-boats bought and paid for in advance, and now the fairer-class is exercising its nobless oblige.

--bh

YLSP (profile) wrote on Tue, 5/19/2009 - 1:49 pm
Something I didn't see in discussion of banks returning TARP money. Does that mean Timmy Geithner can re-cycle that money back into the system? For some reason I thought he could re-TARP money that is paid back...

TARP is like a bottle deposit.

Timmay is collecting soda cans by the side of the road.

special-issue calculator with the BLS birth-death chip NOC

LOL!

According to the CIA world factbook: GWP (gross world product) = $65.95 trillion (2006 est.) Western financial institutions have BET THE WORLD almost ten times over that things will continue as before.

force majeure and no more corporate liability shield for the directors of financial enterprises!

this is all the banking reform you need.

Housing starts are dependent upon credit. First new credit needs to be extended to home builders, then builders need to use that money to reactivate and pay off any accumulated debt, sub-contractor suits, etc. Then with all that credit used up to bring the home builders back on line they'll need another round of credit to purchase materials and labor as no one in those fields will extend them so much as 30 days. See the problem? IMO even if credit were extended again right now the home builders couldn't start slapping the first two sticks together in 2009. I won't even bother to call for a housing starts rebound until 3 quarters after there is convincing evidence that the homebuilders have new access to capital.

So where is the recovery hiding in this report ? In the downwardly revised prior numbers ?

Green shoots has some 'splainin' to do.

"Stocks opened lower Tuesday after an unexpected drop in home construction outweighed strong financial results from Home Depot and clouded the outlook for the economy."

........unexpected by WHOM??? Crap sakes - I almost make more sense than these idiots at CNNMoney

Blackhalo (homepage, profile) wrote on Tue, 5/19/2009 - 9:52 am reply Ignore user "Does that mean Timmy Geithner can re-cycle that money back into the system? For some reason I thought he could re-TARP money that is paid back..."

Congress was not fond of the idea of a 700T$ slush fund and were making noises that any payback go back into the general fund.

The elected conmen in DC are doing an end around on the law mandating TARP money returned to the general fund. The law applied to proceeds from the sale of toxic assets, not loans giving to banks being re-paid. Timmy can do whatever he wants with the paid back TARP largesse.

....sadly yes, ".....Timmy can do whatever he wants....."

it bears repeating:

the powers that be need the market.

no one man needs the market.

Rob Dawg,

I agree. And this goes right down the line for auto-manufactoring as well. BKing the auto-companies simply means you make sure the parts suppliers don't get to collect on their debt, (180 or more days old), and they have to BK, which means secondary and tertiary suppliers don't get paid, along with banks extending credit to both primary, secondary, and tertiary support layers...point is, we've got a year at least just to clear out all the debt at the mythical bottom.

--bh

If only the short sellers would go on strike, Wall*Street would have nobody left to swindle...

" Chainsaw (profile) wrote on Tue, 5/19/2009 - 8:49 am

Let's see; the builders' confidence is surging (yesterday's release) but it hasn't quite surged enough that they want to actually build anything?"

As housing starts precipitously approach zero, one can more reasonably call a bottom, and also conclude that it can't get much worse. Isn't that cause for increasing confidence!?

"BKing the auto-companies simply means you make sure the parts suppliers don't get to collect on their debt, (180 or more days old)"

Isn't all of it that old since many automakers are on Net-180 terms?

A bit OT......"Polls suggest voters are likely to turn down all the propositions, except one that bars legislators from getting pay increases when the state is running a deficit."

.......How about one that says Legislators get paid NOTHING if they run a deficit - Isn't that their job and part of the State Constitution??

dryfly,

I see your point, but it is not one I believe the Chinese share from that particular perspective. The question is how does their government remain intact, in control, the populace adequately passified. Remember, 10s of millions of have lost their jobs in the cities and have simply been turned, sometimes at gunpoint back into the countryside. yes, they have social unrest, and political demonstrations happening everyday, but at the same time the calculus is different. The political system need only survive and doing so implies stability, not necessarily dependant upon the value of the dollar, or exports, or secular value (good/bad) of the fiscal policy.

If (when) the dollar gets trashed, sitting on a vast stockpile of oil, coal, and industrial metals is good a hedge as any, even as their vast t-bill/dollar holdings are composted into dirt.

"If only the short sellers would go on strike, Wall*Street would have nobody left to swindle... "

i covered all my individual retail shorts yesterday for a small profit and bought december puts. except for hedging my savings in the forex market i am done trading. if they run stocks up all the way through december they can have the money on the puts.

the PTB can play with themselves for all i care. i will never invest counter to reason.

the powers that be need the market.

no one man needs the market.

fuck them.

"My investment focus is on the long end of the yield curve and dollar strength/weakness. These are much less open to opaque manipulation..."

I have been thinking A LOT about this, and this is why I am playing the commodities markets almost exclusively (though currencies is a good play too). Being global markets, I don't think BB can manipulate those markets like he is manipulating the MBS, equities, commercial paper, etc markets.

Not that I think oil is trading on fundamentals of supply/demand right now, but at least it is honest speculation, unlike the equities markets, which would have collapsed without the Fed sponsorship.

BSR,
California R Maldonaldo was actually able to negotiate 3 items from dealing with D's to get the budget enacted. One of those was 1F. Another two are going onto the 2010 June ballot; the one of them entitled "No Budget No Pay Act" will amend the state Constitution to do that. The other one will allow for open primaries.

I'm not sure if these are locks to get onto the ballot anymore given the situation however; I would think they would be as it would show the D-side to be untrustworthy... but it's politics... so who knows.

Been Away what did I miss???

OT I sold all my Gold ETF which was hard because I really believe gold is a great hedge but I decided I can't trust the people that run these things. Going to buy physical gold. Anyone buy off kitco?

tim, Silver, Silver Bar, Silver Bars, Silver Bullion, Gold and More - APMEX.com

Ever try to drink cash?

"All of my wealth is tied up in land with water rights, and owned outright."

........my gawd.....a man with an intelligent investment strategy...........

By the way, the seeding is all over the place for the FED to adopt an official policy of targeted inflation, and even price-target inflation (see bloomberg or any other outlet). Aside from the inevitable from a fiscal standpoint, it will be the official policy we're all supposed to rally around. The hope is that inflation (FU savers), will inflate away magically our debts while dollar gets shredded. So, might want to secure your 100 acres of ag land now, plus your coal, oil, industrial metals because we are going to inflate eventually. However, I suspect the employment does not magically follow as many believe, since vast sectors of the economy will no longer exist at their previous employment levels, ever again.

--bh

....I forgot about the "edit" button - thnx, kenC & CR......

That is a Fed paper which confuses debt with debt::income ratios and sometimes uses personal income and other times household income.

dryfly (profile) wrote (in reply to...) on Tue, 5/19/2009 - 10:05 am

If so they better find that other house fast - one that buys the output from their export sector or they will be living in a box instead.

http://repository.upenn.edu/cgi/viewcontent.cgi?article=1057&context=wharton_research_scholars

History of bad management as state enterprises, history of business by personal relationships, no experience in fast buildouts, coming off the greatest industrial bubble in the history of man by a long walk. You think our banking system is shaky.

So, it's good to understand it in the context of some people running around with no idea what to do and a problem bigger than America's.

They're also currently the major buyer in the ship scrapping market, making all kinds of money-losing deals to do business. Further depressing domestic raw materials prices.

It seems like failed / fraudulent company business models are the way of this contraction. If the US is turning into an ABCP conduit borrowing short to kite long, the Chinese are stockpiling like a sinking business that buys its own stock from distributors to round trip the books into order at the end of the quarter.

FDIC Receives Bids for BankUnited

"By the way, the seeding is all over the place for the FED to adopt an official policy of targeted inflation, and even price-target inflation (see bloomberg or any other outlet). Aside from the inevitable from a fiscal standpoint, it will be the official policy we're all supposed to rally around."

That's the plan I am sure, but I do not think inflation will work that way. We are currently in a deflationary rut, due to the collapsing debt bubble. If Ben prints enough to kick us out of it, there is no telling where it will go. How does the fed propose to control inflation? Raise rates? And if so, how much can they do so if it means crushing housing and the banks?

An amazing amount of freshwater flows by me everyday, who's going to take away my riparian rights, and how would they go about doing it?

Move the river away from my property?

"well" not "we'll" -- I don't know why I'm making so many typos today.

"Move the river away from my property?"

It would not be the first time...

In practice, it's probably impossible to do anything like that anyway...

Twenty-seventh Amendment to the United States Constitution - Wikipedia, the free encyclopedia

If you're going to do something I think it'd be better to run special elections for the entire assembly, and prevent the currently seated from running in them.

"if you wanted to get technical you could calculate the density using the water displacement method."

That can be defeated by using Osmium or Indium (plus something else) clad in gold. At $500 per troy ounce difference, it'd probably even be profitable to make fake bullion like that.

My take, soon to be posted on Zacks:

Housing starts and permits are one area where “bad news” is really good news. Falling starts and permits will allow the huge inventory overhang of houses to be worked off. This is not without a cost however, it means that the Residential Investment part of GDP is off to a very weak start for the second quarter, and this despite it already being the smallest share of GDP on record in the first quarter.

In April, building permits fell to a Seasonally Adjusted Annual Rate (SAAR) of 494,000, down 3.3% from March and 50.2% below April 2008 levels. This suggests that housing starts will be weak again in May. Most of the decline in permits came from multi unit structures, a.k.a. Apartments and Condos, which plunged 21.6% for the month and are down 66.2% from a year ago. Single family permits actually rose 3.6% and are down “only” 42.3% from a year ago. Regionally, total permits fell the most in the Northeast with a 7.1% drop, followed by declines of 4.8% in the Midwest and 3.4% in the all important South region. In the west permits were unchanged from last month. On a year over year basis things tend to even out more regionally, with declines ranging from 52.3% in the West to 49.1% in the South.

Turning to Starts, they plunged 12.8% from last month to just 458,000, which as the graph below shows (larger version available at Blogger: Page not found is a record low. Starts are 54.2% below a year ago. However, as with Permits, the damage was concentrated in multi family structures, dropping an astounding 42.2% in the month and down 74.8% on a year over year basis. Single family starts were actually up 2.8% nationwide for the month but are down 45.6% from a year ago. Regionally there were huge disparities (keep in mind that particularly at the regional level the numbers are subject to huge margins of error and can be significantly revised later, the confidence intervals are much smaller for permits than they are for starts). The Northeast was by far the hardest hit, with starts plunging 30.6% for the month and down 45.7% year over year. The Midwest and the South were also hit hard with monthly drops of 21.4% and 21.1%, respectively. The West was the anomaly with starts jumping 42.5% on the month. As with permits the disparities are much less on a year over year basis. The South is down the most compared to a year ago, off 57.0% while the Midwest is down 52.5% and the West is down 52.9%.

While the drop in permits and starts means that we are following the first law of holes, when you find yourself in one, stop digging, it does indicate that residential investment will once again be a significant drag on GDP in the second quarter. These figures are well below anything on record with total starts below the previous low points in other recessions for single family starts alone. It is also bad news for not only the Homebuilders like D.R. Horton (DHI) but also for suppliers like Weyerhaeuser (WY), Masco (MAS) and Whirlpool (WHR). This recession is substantially different than previous downturns. The only previous downturn that remotely matched the severity of this housing downturn was the double dip recessions of 1980 through 1983. Mortgage rates were in the high teens back then as inflation was being squeezed out of the system. This one is happening with long term mortgage rates at generational lows, and the Fed buying up every mortgage backed security is sight in a desperate attempt to prop up the housing market. So far it does not seem to be working, but on the other hand, we don’t know exactly how ugly it would be if the Fed was not taking those “heroic” measures. Still, it is unlikely that housing starts will fall to zero. An empty house in Detroit is not exactly a perfect substitute for a house in Dallas. There are some people out there who simply have very strong preferences for having new homes. Massive numbers of foreclosures weighing on the used home market can overcome those preferences for many though. The second wave of foreclosures is upon us, and this time will not be restricted to the wrong side of the tracks. Most of the option ARM’s that are recasting (technically different than resetting, a recast is a change in payment, a reset is a change in rate, so both can happen at the same time, but don’t have too) were made to people in more upscale neighborhoods. These foreclosures will be even more competition for new homes than the first wave was.

While the reduced supply of new homes will help, the housing slump is clearly not over.

"If that's your call, I'd suggest December."

31st.

Bloomberg: House sales in hamptons declined record in Q1. Inventory stands at 34 months at current sales rate whcih is 3x the us level (10 months). Oh don't eworry the fed is going to inflate print money which you will not see in wages or in your savings. They are trying to cram people back into equity markets to blow a bigger bubble. One suspects the sovereigns have 0 interest in playing the pathetic fed game. propped up equites or copper.One spontaneosly combuists the other isn;t perishable. China opting for the later ret of worl to follow.

Oh but don;t worry...

US equity market rally....
bank stress tests better than expected...
banks rush to do market offerings andd raise capital into the squeeze...
major banks so healthy to repay tarp...
US sovereign cds spreads compress madly into the prop,..
VIX being crushed down as libor is ridden down.....

Does this sound like a hollywood script...equity markets really are the excretion of the markets