California Bay Area Home Sales: "Robust" and "Anemic"
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CalculatedRisk on Thu, 05/21/2009 - 10:22am (111 comments)
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So one of them is more red than the other?
The Trillion dollar question is what will lead us out of this mess.
It will not be the politicians, for they are bankrupt morally.
It will not be the automakers, for they are also bankrupt.
It will not be housing, for the industry is bankrupt.
And it certainly will not be the economic leading indicators, since they increased by 1% due to the rising stock market.
My best bet is the individual households. Not every household is swimming in debt. These households provide a bottom to the recession. They can afford to buy, for example, the cheap Chrysler's that are on sale now from dealerships closing.
Then there are the individual households that slowly repair their balance sheet by paying off debt. They will provide the slow growth in the future. They will need to buy, for example, cars to replace their old ones that wear out.
quick hypothetical situation:
Going forward could FNM/FRE MBS have a lower yield than US Treasury debt? Unlike the Treasury, it is secured by a mortgage pool in addition to government guarantee
Is there anyone left in CA trying to argue that prices won't go down cuz it's different there?
EHP: Interesting thought, but unlikely. Since cash is fungible and Treasury can always refill its coffers via Fed QE, I think Treasuries remain the floor.
The crisis is so much bigger than housing or TED spread etc now.
Treasuries and USD are the dominos that Ben & Timmay decided to put into play. Now what ?
JP, are you kidding? There is a seemingly endless supply of people in denial.
best to all
OT:
Wanted a good CRE post to put this picture on, even though it would probably still be OT. I just couldn't resist when I saw the name on the building, and the huge "Please for the love of Glod lease something in me" sign out front:
http://s558.photobucket.com/albums/ss28/proven50/?action=view¤t=Sebastian.jpg
@JP: Yes. I run into them everyday. Many bought their homes decades ago and have seen decades of price appreciation with some bumps along the way. They believe this is another bump.
Meanwhile somebody is putting a short squeeze on GM. That is too funny.
Saw a Chrysler Ad last night on the teevee... Featuring LIFETIME WARRANTY GUARANTEED BY.... none other than the US Government !
Not kidding.
Jerry,
+1
Where's the PONY today ? Kudlow's gonna blow a gasket.
Until home prices stabilize, and not at their current levels, this debacle will continue.
dum luk, thanks for the posts on Uncle Buck.
"There is a seemingly endless supply of people in denial."
Are you referring to T-bill holders, sir?!
"In lower-cost communities, first-time buyers have turned to government-insured FHA mortgages, which represented a record 26 percent of all Bay Area home purchase loans in April, up from 3.2 percent a year ago."
Somehow this does not make me feel confident in the future of the market.
PPT has got to be hitting the button today. Alternatively, all the momentum day traders might be looking to get out.
Aside: It is depressing that our capital markets are now feel like a rigged casino. Whatever happened to taking prudent risk and the efficient allocation of capital?
DXY. Not so pretty.
WOW$
CR,
Here's an article in the WSJ about investors buying with cash:
Investors Pounce on Distressed Homes - WSJ.com
...in some markets, it's as high as 67% cash sales.
But with rents falling, and another round of foreclosures likely, might not investor demand get sated in sometime this year?
Even if you are getting really good prices from the banks, I would think there's a limit to how concentrated investors would want to be in the housing market.
No they are all in the Hamptons
Comrade Kristina (profile) wrote on Thu, 5/21/2009 - 2:25 pm reply Ignore user FD, you are under the mistaken impression that you are the "norm"...I would guess that would be the case for the majority of people.
Thanks lady! Though i have never ever considered myself norm, far from it, if i had more money i would be eccentric, and i wanted to major in being a philanthropist, but couldnt prequalify...
as far as the norm my wife will tell you that i hold that if the rest of the world were more like me it woul dbe a wonderful place, (except for the haters-no pleasing them)
But i take what you say as a compliment... ; 0~
Weenie Job Ad Of The Day
craigslist | Page Not Found
"Even then, you must perform before you will be compensated"
Translation - we don't have any money but we want you to work like a dog until we do.
stock's negative correlation to the dollar reversed massively today.
this is an important change.
take notice.
Weenie Job Ad Of The Day
Is that like an intern?
Jerry +100
BR,
the kill the second born was irony, not espoused, ... i agree again with do not punish the child for the parents sin, punish the parent, but how do we determine, which parent to punish... those non producers that procreate against big brothers edict or the producer that heeds big brothers orders and abstains, but since they are productive, must be evil in nature and fortunate, so they must suffer the slings and arrows for their to be assigned non producing less fortuante corssican brother.....
From BR's ad
WOW, that is an impressive line of BS. I bet he flipped houses in a past life for a cable tv show
We work hard and play hard and hold ourselves highly accountable. Deadlines and integrity mean something. In order for me to make the claims I have, we must have the right person. You must live within 6 hours of me because I want to meet you and work with you. Expect to be punished and put through hell if you apply for this opportunity. We will validate your skillset and run you through the meatgrinder. Then, if you make it, we’ll introduce you to the leadership team, tell you what we’re doing and determine how you want to be a part of it. Even then, you must perform before you will be compensated. If this sounds good to you, you’re a sick person – and you’re already half-qualified. If you make the grade, we can have an awfully good time making a lot of money.
.
"Going forward could FNM/FRE MBS have a lower yield than US Treasury debt? Unlike the Treasury, it is secured by a mortgage pool in addition to government guarantee"
If Ben buys all of the MBS, (either directly or through an intermediary) and Treasuries then rise. Barring that, or some other similarly gross intervention, no.
Rich,
It looks like TBT has usually gone up during the rallies and down during the legs down. If we are about to have another leg down wouldn't TBT continue to follow this pattern? Thanks for your always welcome advice.
"Is that like an intern?"
Don't know.
I'm tempted to reply just for fun.
Everybody is going to be a millionaire.
What they really want is some sucker to finish the hard stuff for free.
Is there anyone left in CA trying to argue that prices won't go down cuz it's different there?
It also doesn't help that Zillow continues to provide estimates that are 50% over any rational value.
Rich, if you're out there, I owe you a cold one. I didn't think TBT could go up 5% in one day.
That ad sounds like you will get to be a coder for the Marines.... nothing like being paid squat to do all the heavy lifting
I was actually thinking about sending him my resume... Figured he might enjoy it as much as I enjoyed his write up....
It's honestly a shock to see a down day. Obama better get on this.
Broward,
Quick, need 30 people that want to lose weight now... (from their wallet)
Is today's bond market pricing in federalization of CA?
Is today's bond market pricing in federalization of CA?
I think its a long overdue movement for the last 9 months of shenanigans... Lets admit so far the USD and the UST's have gotten off easy....
@ CR, others: Thanks for the reminder.
You know, there's a part of me that wishes my mind would allow me to live in a fairyland too. Alas, I was born cynical (or as I prefer to say: a realist.)
Ah yes CR, people in denial...
what are you suggesting, do tell all of us "willing fools"...
Second half recovery, here we come !?
not that bad. i went to mcdonalds for lunch. it was packed.
"Is today's bond market pricing in federalization of CA?"
I like the theory that todays was precipitated by the UK debt downgrade, and based on fundamentals.
Broward,
I love ads like that. It lets any decent job-seeker know instantly that it's not a serious or rewarding position.
Student Who Auctioned Virginity Online May Have to Pay Half Her Earnings in Taxes
"every time i try and get out , they pull me back in"
Alas, I was born cynical (or as I prefer to say: a realist.) ~JP
When I was a kid i punched my hand thru a window... I thought I was He-Man (You know that whole "I have the power" thing)
Anyway, I get cut kinda bad on my wrist. We go to the emergency room to get stitches.... The nurse comes out with a needle and tells me she has "happy juice to make me better.... "
"Faaak nooo...." (Not in so many words)
My pops says: Its anesthesia so it wont hurt when you get stitches...
I put my arm out to get the shot....
I was 6 years old....
"Is today's bond market pricing in federalization of CA?"
I doubt if $23 billion means much in a $2 trillion pool of "offerings".
I like the theory that todays was precipitated by the UK debt downgrade, and based on fundamentals.
I tend to agree with you, but someone asked earlier "If you were running the PPT what would you do?" Short squeezes have worked pretty well so far. So, I'd let em load up again.
nades,
had you just seen One flew over the cuckoos nest?
Final hour.... place your bets!
""every time i try and get out , they pull me back in"
That's a good tagline for her Deflowerer's Trojan commercial.
It won't really be a down day until Monday's BS "rally" is eclipsed.....otherwise it's just low volume rookie day (and tomorrow as well).
Ciao
MS
LOL! I dont think so... I was way more in to cartoons....
But I've always been a skeptic of people peddling elixirs...
broward,
; )
It won't really be a down day until Monday's BS "rally" is eclipsed.....otherwise it's just low volume rookie day (and tomorrow as well).
While I completely agree, you know if we were up 200 (which we may be soon) that CNBC would never mention "rookie day".
Hey Otis, My Man...here is one for you!
Citi Sees S&P 500 Earnings Up 10% In 2010
NEW YORK -- Citigroup Inc. raised its earnings estimate by 10% for the S&P 500 next year, the bank said Thursday in a note to clients. The bank reiterated a $51 operating earnings per share for 2009, and beefed-up its guidance for 2010 from $54 to $56, and believes it will jump 14% to $64 in 2011. "While significant fragilities and some risk of a 'relapse' remains, we continue to expect a more cyclical recovery to gradually gain traction - with the necessary assistance of truly massive policy steps," wrote Steven Wieting, a market analyst at Citi, in the report. The estimated gains for 2010 EPS reflect a pace of growth below what was experienced in the late 1990s, and is far removed from what Citi believes the U.S. economy could generate if at full potential, the note said. The calculations assume a financial sector profit level similar to the mid 1990s. Earlier in the week Treasury Secretary Timothy Geithner told lawmakers the financial system is "beginning to heal." The S&P 500 recently fell 2.35% to 882.22 points.
I like the theory that todays was precipitated by the UK debt downgrade, and based on fundamentals.
Regarding the Treasury market action, I'm of the opinion that the forest has been bone dry for a long, long time now. Don't know if it was an arsonist, an errant cigarette butt, or a lightning strike that set off this blaze. And I'm not sure if the Benny and Timmy fire brigade will be able to contain this one or not. It doesn't really matter, the only thing that matters is that there is only more drought in the forecast for a long, long time to come. The whole forest will burn, it's just a matter of when.
I doubt if $23 billion means much in a $2 trillion pool of "offerings".
Good point, although sometimes there is a psychological trigger for an overdue event.
" Weenie Job Ad Of The Day"
"Even then, you must perform before you will be compensated""
I've interviewed at companies like that. When they tell you about how proud everyone is to work like a dog -- yes, it's the biggest line of BS you're ever likely to see. One guy proudly boasted of their refrigerator full of free energy drinks -- every brand known to man -- and hideous deadlines. Everybody there was under 30. You've got to be young and full of yourself -- and stupid -- to fall for a line like that.
And the funny thing is that the outfits that operate this way usually make mediocre products, if they make anything successfully at all. Because if they had their acts together, they wouldn't have to operate this way.
Link it quick as it usually gets taken down fast.....funny as all hell , I like posting it on day like this.
http://msunderestimated.com/SNLBailoutSkit.wmv
Fiduciary Doodie (profile) wrote on Thu, 5/21/2009 - 11:58 am nades,
had you just seen One flew over the cuckoos nest?
Should be required viewing for anyone who thinks that big government is a good thing.
I don't believe it. Oh, I think they can prove that 7,139 houses closed but given the distribution I'd be willing to bt no more than half went to actual end users and the rest went to intermediaries purchasing out of distress with the intent of fix and flip.
Just like where CR advises caution on the median price I urge caution when reading the sales numbers in this environment.
had you just seen One flew over the cuckoos nest?
Edit: hould be required viewing for anyone who thinks that big government, religion, or business is a good thing.
I tend to agree with you, but someone asked earlier "If you were running the PPT what would you do?"
That was me, but I did not use the term "PPT". I asked what you would do if you had a federal guarantee of unlimited liquidity regardless of your losses, which is a bit different.
The PPT, if it exists, has the task of keeping prices up (hence the name). The trading desk of Goldman Sachs has the job of maximizing profits, and you can be damn sure they'd let the market crash if that was what would bring in the most money.
low volume rookie day
NYSE volume is slightly under the 5 SMA, but the NAZ is higher. Shark Investing - Volume Charts
" outfits that operate this way usually make mediocre products"
Energy != work
Fire != hair
It took me quite awhile to figure that out, though.
Like I said, look at the Transports.
fidoodie,
wow, that is criminal negligence. i feel so sorry for anyone who believes those lies:
"The bank reiterated a $51 operating earnings per share for 2009"
all of a sudden the demonic shills all point to operating earnings.
so pathetic how they hide from the bottom line.
i'd like to rub their noses in the bottom line like you housebreak a puppy.
dum luk-
I speak form the standpoint of typical holiday action...leading up to it has usually been low volume rookie day.....for many, many years.
Ciao
MS
uffda
Does not mean squat what Equity's do at the end of today's session, Bonds, The Dollar, and above all Gold, already called the shots today and the direction.
This Market is baseless, therefore a lagging indicator...and that my friends is
" Better than Expected "
what the feck is a rookie day?
May 21 (Bloomberg) -- San Francisco Bay Area home prices fell 41 percent in April from a year earlier as foreclosures accounted for almost half of all sales, MDA DataQuick said.
The median price dropped to $304,000 from $518,000 a year earlier. That’s 54 percent below the peak reached two years ago, the San Diego-based research company said today in a statement. A total of 7,139 new and existing houses and condominiums sold in the nine-county area, a 13 percent increase from April 2008.
Nades
An article with quotes from injured Pakistani soldiers
DAWN.COM | Pakistan | ‘I was standing in front of my trench, when I was shot…’
Hey, show of hands. Who wants to hold US equities over the long weekend?
[crickets]
Thought not.
Short squeeze or no, whointhehell is agreeing to pay $1.70 for GM stock that might be worth 1¢ the next chance you get to trade?
rookie day= all senior traders and management have already gone to the Hamptons while leaving the shortened session to the junior people.
that's what the "fuck" rookie day is....
Ciao
MS
Who wants to hold US equities over the long weekend?
Agree, cashing out for gas money, after all its gone up 30 cents a gallon in the last cpl of weeks, plus the 1.50 a day camping fee at the state park....
need some putt putt money too....
"what the fuck is a rookie day?"
That's when Bernanke buys bonds.
GM execs. (at least Bob Lutz) still exercising options on a sell on issue.
Should have waited all of two days for a better deal methinks.
Invalid Ticker Symbol - Yahoo! Finance
But what do you expect from the real leader of GM..
Ciao
MS
I Thought Europe Was a Country - Video
why do i feel that this represents 90% of americans... not including the smart ones that disagree with me BTW
As oil storage continues to fill...
Natural Gas Futures Drop Most in Almost 2 Years as Supply Gains
May 21 (Bloomberg) -- Natural gas futures fell the most in almost two years after a government report showed a bigger-than- forecast increase in U.S. inventories, as the recession cut demand for the industrial fuel.
Stockpiles rose 103 billion cubic feet last week to 2.116 trillion cubic feet, the Energy Department said. Analysts expected a gain of 95 billion. Supplies were 22 percent higher than the five-year average as factories and power plants trimmed purchases during the worst economic slowdown in a half century.
“This number surprised everyone it appears, so there’s a violent reaction,” said Brad Florer, a trader for Kottke Associates Inc., a commodity futures broker in Louisville, Kentucky. “This is just another sign that this economic turnaround we keep hearing about may not exactly be in place yet. Let’s call it a mirage, so far.”
Natural gas for June delivery fell 36.9 cents, or 9.3 percent, to $3.601 per million British thermal units at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. A close at that price would be the biggest decline since Aug. 20, 2007. Gas futures have dropped 36 percent this year.
Natural Gas Futures Drop Most in Almost 2 Years as Supply Rises - Bloomberg.com
well there sure are a lot of rookies selling. i guess the plan to lure the retail rookies in to the market is not working so well. i would think the pumpers would be able to take advantage of a "low volume day."
is it even a low volume day? and do pros just shut down their quant machines at 11:30, turn off their blackberries, shut down windows, and start partying... i doubt it.
"is it even a low volume day? and do pros just shut down their quant machines at 11:30, turn off their blackberries, shut down windows, and start partying... i doubt it."
They used to.....they can't now. A few people I have spoken to over the year's have told me that last year was the first year that they actually got a phone number to contact any upper management during the two days before a long weekend.
Ciao
MS
‘It was midnight. I was standing in front of my trench, when I was shot. They always attack secretly. I wanted to tell them ‘don’t attack like jackals, attack like men’,’ he said.
Wow, if that's the average quality of Pakistani infantry, they are sunk. Out of your shelter, wanna fight "straight up like a man". Just wow. And this is a janissary state ruled by a military elite? That guy's a category C combatant.
Byz,
That seems a bit of a stretch, he reads more like the 18 yo FNG...
whoa - it would really suk to own UNG. $14.15 .....-1.38 .........- 8.8%
energyecon (homepage, profile) wrote on Thu, 5/21/2009 - 12:30 pm
As oil storage continues to fill...
Wow... it's almost... you know. Like things people predict in the comments of Calculated Risk start coming true shortly afterwards.
People don't understand what happens to dampened physical systems when inputs exceed circuit capacity. This isn't a bond auction failure because of oversupply where some numbers sit in one account for a few extra days.
Well, he sounds smarter than Kelly Pickler.
Pimco says sell-off driven by fears U.S. could lose AAA
NEW YORK (Reuters) - Bill Gross, the co-chief investment officer of bond giant Pacific Investment Management Co., said market fears that the U.S. is at risk of losing its AAA credit rating is sending the U.S. dollar, stocks and bonds under severe selling pressure on Thursday.
Asked what is driving the market declines, Gross told Reuters via email that investors fear the U.S. is "going the way of the U.K. -- losing AAA rating which affects all financial assets and the dollar."
Yahoo! 404 - Page Not Found
Byzantine_Ruins (homepage, profile) wrote on Thu, 5/21/2009 - 12:37 pm
That guy's a category C combatant.
Translation for most; category C == cannon fodder.
energyecon (homepage, profile) wrote on Thu, 5/21/2009 - 3:41 pm reply Ignore user Byz,
That seems a bit of a stretch, he reads more like the 18 yo FNG...
No doubt, but, they are going to have to use heavy weaps to plow the place under with those kind of troops. No economic activty to speak of in the conflict zone for the next couple years, their PGM stockpiles are going to get run down. no doubt they're going to kick the Taliban out of the Swat Valley, that's a given but it's bad news even in the medium term with Uncle Sugar's credit card getting the limit lowered.
RD,
Yes and the nat gas story could end up staying ugly for awhile - I suspect we (the USA) will receive some heavily discounted LNG cargos later this year because they need to dump it someplace and we will take if off their hands for $2/mcf - many LNG projects economics are driven by the liquids stripped from the natural gas production stream, the dry gas is effectively a by-product and needs to go away...
Speaking of cannon fodder, I'm guessing this last half hour burst off of last week's low is the result of a bunch of retail, pile-on shorts getting their heads handed to them by a PPT rear-guard action.
Gross is pure BS..... nothing more or less.
Like they would ever downgrade the hand that feeds the system.
Ciao
MS
Byz,
Yes - old playbook, probably was old when the Romans used it in the maniple - the veterans exploit the cherries and those that survive become veterans...
Liked your space elevator idea a thread or so back, but I'm partial to a mass driver as an interim solution, the materials issues that need resolution for an elevator are likely a b!tch...
CHK should be showing more pain 20.78 ....- 1.19 ..... - 5.3 %
ACP,
That and nobody wants to leave a position on going into the long weekend, short or long...
The interesting thing about a pumping crisis regardless of price per barrel is an opportunity to test the theories of replenishment. Good news for US fields supposedly depleted.
Natgas is merely the canary in the coal mine (yes, I am mixing metaphors) for the energy sector. Recall also a coming regional electricity surplus as aluminum smelting furloughs. That has knock on effects for say, California who buys surplus hydro from the PNW and drastically reduces their peak demand for natgas.
"Gross is pure BS..... nothing more or less.
Like they would ever downgrade the hand that feeds the system."
Spot on! +1
Fiduciary Doodle, you throw out a lot of comments; at least some are on-topic -- but could you please refrain from comments without any reference to economics or housing, being that this is an economics blog? For example, I see no reason why you should be posting Kelly Pickler links on this site. Your S/N ratio is hovering near the "Ignore User" cutoff. Consider yourself warned.
The shoots are green but black.
@Rob Dawg
In the Philly Fed thread, when Schaeffer posted the Bloomberg article on the Index of Leading Economic Indicators, you immediately blew him off, saying that the stock market is a "circular argument."
Sorry, but that's not only rude, it's intellectually dishonest. There are ten leading indicators and the S&P 500 index is only one of them. Seven of those indicators are showing improvement for the first time in this recession. Additionally, the Philly Fed index is also showing signs of improvement.
What's your agenda?
we're off the session lows. the rookies lose, america wins. all is well in america.
Rob Dawg writes: Recall also a coming regional electricity surplus as aluminum smelting furloughs.
Yeah, damn shame my local company, SDGE, locked in sweet exorbitant rates during the Enron fiasco, so I have $200/month energy bills for my 800/sf house. No surplus for me!
"That and nobody wants to leave a position on going into the long weekend, short or long..."
Feels good to have beaten the race to the exits by dumping most of my ultrashorts today prior to 3 PM.
I must say, I'm a bit surprised there wasn't a selloff into the close. Go PPT!
Go PPT
I was kinda hopin it was the rookies.
"What's your agenda?"
I serve the Dark One.
Jas Jain.
energyecon (homepage, profile) wrote on Thu, 5/21/2009 - 3:50 pm reply Ignore user Byz,
Yes - old playbook, probably was old when the Romans used it in the maniple - the veterans exploit the cherries and those that survive become veterans...
Oh yeah. I just find the idea of a straight up fight in the repeating rifle age to be hilarious. You want to be a martyr kid, you ain't gonna have to wait long.
mp (profile) wrote on Thu, 5/21/2009 - 12:55 pm
@Rob Dawg
In the Philly Fed thread, when Schaeffer posted the Bloomberg article on the Index of Leading Economic Indicators, you immediately blew him off, saying that the stock market is a "circular argument."
Sorry, but that's not only rude, it's intellectually dishonest. There are ten leading indicators and the S&P 500 index is only one of them. Seven of those indicators are showing improvement for the first time in this recession. Additionally, the Philly Fed index is also showing signs of improvement.
What's your agenda?
Wow. First, I did not blow anyone off. Read the subsequent exchanges where no one else saw offense and many saw my point. The last time the S&P500 correctly "predicted" the general economy and/or their own referenced earnings was April 2007. Demonstrating their being provably wrong for 2 years running is hardly intellectually dishonest.
What's my agenda? Well at the top of the euphoria I was vociferous that what we were seeing was wave peak froth. Now as we enter the trough I am warning that we are merely observing reef churn.
I see the same numbers that are in the noise. I just do not accept that because the data has gone from "clearly negative" to "not clearly negative, perhaps neutral" that it is time to call that actionable improvement.
Byzantine_Ruins (homepage, profile) wrote on Thu, 5/21/2009 - 1:04 pm
I just find the idea of a straight up fight in the repeating rifle age to be hilarious. You want to be a martyr kid, you ain't gonna have to wait long.
When you get really lucky you can get them to line up shoulder to shoulder in bright red coats on the open field near the green green forest.
In Silicon Valley, the denial is in full swing. We've learned to live on bubbles.
90% of people just see this as a bump in the road, just like the dotcom bust. 20%/year housing price increases start this summer!
They just don't get that the game has changed.
I'm not worried, in the long term markets always win over dreams.