the problem that dealerships have implementing cash-4-clunkers is that the program began on 7/1/09, but the rules weren't set until this monday. some dealers didn't read the fine print, thought it was like the $8K credit, and will get hosed if the trade-in isn't eligible. there are already reports that some models were dropped from eligibility during the last 3 weeks. also, heard that some dealers weren't aware that they had to use sodium silicate to destroy the engine.
Your site is one of the, if not the most, balanced forms of information available today. There are few spots I know of where I can find an honest attempt at the truth, but this is one of them. You have no need to 'apologize' for anything, and I for one thank you again for the service you provide.
I for one have always appreciated your restraint, even when I disagree with your views.
I kind of wish you didn't disclose your 'stock market' position. I prefer to think of you as above the fray, not involved in 'the markets' and certainly not to the degree that you can ever be accused of 'talking your book.'
I know that i do appreciate it that you don't try to link the economic/housing/etc reports to equity or bond markets - I think that doing so is a rapid way to destroy credibility (EMH beliiever or not, most of us likely agree that 'markets' don't always respond the way we might expect).
I am a bit surprised that you felt the need to make this post- I haven't read much of the comments today, but I'm wondering what prompted this post?
"Nice" bit of interpretation there by the either the author or the editor - interesting thing is there is no byline on the article, just this paranthetical statment at the article's end: (Reporting by Kristina Cooke; Editing by Kenneth Barry)
There is an email link at the upper left if you care to share your thoughts on this bit o' framing...just sayin'
Fed job approval rating lower than IRS: Gallup poll
NEW YORK (Reuters) - Americans think the Federal Reserve is doing a worse job than even the much-maligned Internal Revenue Service.
Only 30 percent of Americans think the Federal Reserve's Board of Governors is doing a good job despite the central bank's unprecedented efforts to battle a crippling recession, according to a Gallup Poll released on Monday.
That makes the Fed the worst reviewed of nine key agencies -- including the tax-collecting IRS -- the Gallup poll of more than 1,000 Americans between July 10 and 12 showed. Twenty-two percent of Americans said the central bank was doing a poor job.
The poll comes as Fed Chairman Ben Bernanke is increasingly going public with a defense of the Federal Reserve's handling of the crisis in an effort to ward off a congressional proposal by Republican Representative Ron Paul that would undercut the Fed's independence. Fed job approval rating lower than IRS: Gallup poll
| Reuters
I actually believe the seasonal adjustment is not sufficient in part b/c of the lawler WSJ piece recently - in particular the low end of housing has become very unsticky, with the result being more price volatility, which is almost certainly being magnified seasonally
listening to the stories of bidding wars in the Inland Empire on the Califrnia report on NPR this morning made a small shiver go down my spine.
"The poll comes as Fed Chairman Ben Bernanke is increasingly going public with a defense of the Federal Reserve's handling of the crisis in an effort to ward off a congressional proposal by Republican Representative Ron Paul that would undercut the Fed's independence."
Bennies News Hour road show is happening for a reason. I'm sure the WH is well aware of poll numbers. And UE is not turning around tomorrow.
the problem that dealerships have implementing cash-4-clunkers is that the program began on 7/1/09, but the rules weren't set until this monday. some dealers didn't read the fine print, thought it was like the $8K credit, and will get hosed if the trade-in isn't eligible. there are already reports that some models were dropped from eligibility during the last 3 weeks. also, heard that some dealers weren't aware that they had to use sodium silicate to destroy the engine.
Pretty much as described above.
I have a family member who has been in the thick of it since last Friday. The computer system they needed to use crashed under load and caused a backlog of verification and data entry. Also, there are more verification requirements for each "clunker" than the dealerships had planned to meet. As it goes now, it is taking their technicians upwards of four (4) hours to verify that the car meets the qualifications along with the draining and destroying of car parts.
The other kicker has been that most of the clunker folks are the cleaning, tidiest credit people you can imagine. Paying for the cars in mostly cash and if with credit, very little. These people were the ones who drove the car 'til it fell apart and maintained it well along the journey. Each dealership is trying to undercut other participating dealerships which is killing any sales margin--forget F&I on the backend. The "clunkers" may be sitting on their lots for weeks or even months, and the payment cycle went from 1-2 weeks upwards to 4-6 weeks. To sweetened it even more, there is only so much money involved and many of the dealerships may be left with no credit from the U.S.G because there wasn't enough of the billion USDs to go around.
The fact that dealerships are jumping at these pennies made of depleted plutonium between a cliff's edge and an oncoming steamroller is probably telling about that sector's future performance. It is ugly.
Scrooge McDuck. I kept hinting in the comments ... but I don't feel comfortable giving advice.
I used to ignore sentiment completely, but the great Tak Hallus (a pen name - lawyer, author of "Star Gate" and more) taught me about using sentiment. He passed away in 2003, but I know he would have been buying in early March. He always looked for upside or downside surprises for the market - but of course you have to be confident in your own analysis.
More Cuts for California Budget i.e. health insurance for poor children, AIDS programs and the state’s parks system. As of Monday, the state had issued 209,000 i.o.u.’s totaling $1.08 billion.
ShortCourage, I've never had a flu shot - but I'm going to get one this year. I'll probably recommend that on the blog too (if people want to remind me). There are a strong chance of a really bad flu season
It's worthwhile to examine monthly fluctuations in financial data in the first few years of a business venture. Aside from that, I don't know of any use. I think MSM finds itself reporting on the announcements of industry groups' PR, rather than reporting pertinent facts and reasoned analysis.
It's easy to write it off as lazyness, but they are under pressure to report quickly and with brevity.
I'd put money on the "unrelated event" being a major earthquake in California, causing the IOU situation to completely break down and force the Feds to bailout or let fail.
I'm sure it will blamed on the little people like me for not seeing the big picture. CR we are now nearing the crest of the V by Dec. every one will look back at this time as the good old days of 2009. Thanks CR for all that you provide and to you commentors thanks also.
montas ankle, as I mentioned in the post, I felt the media got the story wrong today on house prices. And I've been saying positive things on housing - well, housing starts and new home sales - so this reporting bothered me.
So I thought I'd share my views with a few friends. Things could change ... maybe Cramer is right and prices have bottomed.
energyecon, if so, I'll get a hold of banker and hide out in the Bankerdome. I haven't heard from him for some time - I hope he is doing OK
Now that we're off the front page and in the comments, I can confidently report that CR has been discovered to be an advanced blogging algorithm which has been released into the blogosphere by paul krugman in an attempt to collect enough data to combat the evil blogging AI released by goldman sachs. You heard it here first.
I've had flu shots every year for years. I started getting them when I was commuting from the suburbs by bus, and sharing air with lots of strangers for an hour and a half every day.
I kept getting the shots because I noticed that the jolt to my immune system seemed to clear up my usual late fall allergies/throat infection.
I kept getting the shots because I noticed that the jolt to my immune system seemed to clear up my usual late fall allergies/throat infection.
I found the same thing except I jolt my immune system by reading Broward's posts out loud while imagining him in full on leather bondage gear, bending over a pool table in front of me for a particularly tricky shot, as a herd of intoxicated community college students flirt and chainsmoke around him.
jo6pac (profile) wrote (in reply to...) on Tue, 7/28/2009 - 5:09 pm
I'm sure it will blamed on the little people like me for not seeing the big picture. CR we are now nearing the crest of the V by Dec. every one will look back at this time as the good old days of 2009. Thanks CR for all that you provide and to you commentors thanks also.
Assuming that they don't look back at this time as being when they should have been stocking up on dried beans, ammo, etc.
Cases in England jumped by 100K in the past 7 days.
It's causing tissue damage in respiratory systems because it's going deeper into the lungs than a normal flu.
The gene sequences aren't being released like with the bird flu, meaning that amateur researchers can't track mutations online.
Joanna (homepage, profile) wrote on Tue, 7/28/2009 - 5:11 pm
People are still calling for some Iran/Israel breakout in Oct. That would be a fair sized scapegoat.
When is Yom Kippur this year? Maybe that should be factored into the GS shorting scheme?
First, if I've let a little hubris slip into my recent posts, I apologize. My goal is to be the most humble blogger in the world (an old joke).
Add me to the list of people who are baffled by this apology of yours, CR. I just went back through a week's worth of your posts, certain that I'd missed something. No dice.
And, anyway, I'd say you're entitled to a little bit of immodesty, in the circumstances. Believe me: were I in your shoes, I'd be tempted to gloat in Denninger-size type about it. "I run the number one economics blog on the Internet. I called the bursting of the housing bubble in 2005. And I went long the market in early March. How DARE you peons question my line of reasoning!" When, in reality, if I ever read anything like that here, my immediate reaction would be, "Oh noes ... I guess CR got his site hacked."
volker the viking (profile) wrote on Tue, 7/28/2009 - 5:16 pm
Yom Kippur is in October
I don't remember if you were here when Rob suggested puts in the Sept.-Nov. time frame as a good investment strategy, but there was some discussion of how to divvy up the puts in Oct. I realize that Yom Kippur is in Oct., and that's why I put it in that reply. The question would be when in Oct., and how does it relate to options expiration s and other factors that might impact Rob's strategy.
Argh! You edited while I was fumbling on the keyboard to reply! Thanks for the info-
CR, I would have surprised to learn that you were not putting money into the market in February and March. And I completely understand why you would rather not talk about it. I try to limit my discussion of specifics here, probably for many of the same reasons. Although sometimes when I'm really scratching my head about something, it's tempting to put the question out on your blog...
If you are ever inclined to share your thoughts on interpreting/predicting sentiment, I would love to read it.
CR, you know I'm on your side, but those mushroom cloud explosions, sirens, and shrieking, 10 minute you tube videos where you stare weirdly in the camera, visibly frothing at the mouth while discussing goldman sachs and economic apocalypse is just too damn much.
Our experiences color our perceptions. Always and forever. What's important is that we all make ourselves aware of the perceptions/experiences of the sources of information that we chose to accept.
I wouldn't ask CR about quant models, or HFT, etc......just like I don't lean too hard on Tyler Durden for my macro economic topical discussions.
CR, next time you go long or sell your longs I would sure appreciate getting the memo. Not that I would blindly go all in or anything, just a heavily weighted data point...
CR, next time you go long or sell your longs I would sure appreciate getting the memo. Not that I would blindly go all in or anything, just a heavily weighted data point...
CR could make a FORTUNE if he turned this site into some kind of penny stock speculation pump and dump newsletter.
the SEC Phoenix case is related to Mortgages Ltd.
The Securities and Exchange Commission filed suit against four individuals for alleged fraud in connection with raising over $197 million from at least 900 investors nationwide in connection with a Phoenix-based commercial real-estate venture.
The venture's woes over the past two years were an early sign of troubles in the commercial-property market.
The SEC said the money raised from investors was used to help fund Phoenix-based Mortgages Ltd., which made short-term, high-interest loans to real-estate developers building malls, office parks, condominiums and other projects. Mortgages Ltd. filed for bankruptcy-court protection in June of last year. That same month, the company's chief executive, Scott Coles, committed suicide. His death and the company's problems were the subject of a page-one article last July in The Wall Street Journal.
A big law firm partner trying to make money off an associate is underpaying him by definition, presumably to mentor him, take care of fixed costs if he's young, and lend him the prestige of the firm name. More difficult to mentor 400 junior lawyers than 50 and tougher to police the rogues. Extra benefits from sharing fixed costs are marginal for large versus medium firms.
There are no corporate secrets, no patents, no secret sources of legal wisdom. With a hundred lawyers you ought to have every major specialty covered in triplicate. The work being entirely a licensed professional service, and volume dependent on personal contact and reputation, more than 100 dilutes the brand. Which is why the Senate is above the House.
Believe me judges take no greater pleasure than revealing the incompetence of a big name firm, whose associates make more money than they. The names only impress clients who regularly use lawyers but rarely go to court, like financial firms. The large number of suits are only needed for the largest wrongdoers: monopolists, conglomerates, bank holding companies, and are normally useful only to intimidate, delay, obfuscate...
In fact if firms get too big they are in danger of being disqualified in an important action by a diligent adversary, whenever he chooses to raise the issue, as the rules for conflicts of interest are stricter than for bankers. I've seen it done. "Didn't that new guy at your firm's old firm used to represent the cross-claimant?..."
But could it be you are reading too much in the detail. After all, the RE markets are not efficient, they are incredibly localized. What is happening in CA has nothing to do with what is happening in my town. So to generalize on some small data points is a little to much for analysis.
If and when the RE market becomes as efficient at the treasury market... then you might have something to work with.
Hoopajoops LTD (homepage, profile) wrote on Tue, 7/28/2009 - 5:22 pm
CR, you know I'm on your side, but those mushroom cloud explosions, sirens, and shrieking, 10 minute you tube videos where you stare weirdly in the camera, visibly frothing at the mouth while discussing goldman sachs and economic apocalypse is just too damn much.
You should check out Denninger if you haven't already
Hubris?
You're the most level-headed economics blogger out there.
And if the prices do drop in a couple of month the MSM will just change how they report the spin. It won't bother them a bit.
I doubt that prices have bottomed, and for many very solid reasons. Most solid of them: pricing is not arbitrary; there must be a buyer who is not just willing, but also able to pay. Their number is decreasing, not increasing. You have to remember: the big banks are bailed out, but at the expense of "Main Street"... because that's who gets the bill. And that's who buys houses. In all of the praise for Bernanke, I think a lot of economists have forgotten this fact - but the public opinion polls show that people are not stupid about this.
It's not just that the media got the story wrong. In at least one CS city the realtors are messing with the comps by not reporting certain transactions, which I suspect are very disproportionately the ones with big losses/markdowns. It is certainly more common in the high end homes, where there is less sales activity and a lot of price reductions. More Dallas home sales prices kept secret |
News for Dallas, Texas | Dallas Morning News
| Latest News
I'm going out on a limb here. Despite their good work, the people creating the CS index for Dallas show prices increasing here when in fact they are decreasing, especially at the high end. This is due to the increasing number of transactions with no reported price because the seller didn't want to be embarassed or the realtor doesn't want lower comps.
"CR, next time you go long or sell your longs I would sure appreciate getting the memo. Not that I would blindly go all in or anything, just a heavily weighted data point..."
Should use a pass phrase to provide plausible deniability.
Like, "The swallows have returned to Capistrano." for long, and "An African or European swallow?" for short.
I wonder if you want to push your timeline for unexpected surprises to December/January reporting. I think the $8K first-time homebuyer credit (expiring around Nov. 1) is likely to create a bit of a last second rush to buy in those months.
Also, I haven't read the Rosenberg/Zero Hedge report, but Zero Hedge is more than some blogger. His website is pretty top notch and has broken some good stories...maybe he's strayed a bit out of his expertise with the report (he's more of a hedge fund/IB/quantitative guy), but that's why discussion blogs are better than newspapers.
Shnaps,
Oh come on, you know when you look at Goldman Sachs, you mutter to yourself, "I felt like destroying something beautiful." followed by "I am Jack's smirking revenge."
I don't have much time to comment this week but I wanted to add that I greatly appreciated this piece. CR definitely gets humble blogger points. A little book disclosure would be helpful -- I've been troubled by some of CR's headlines showing a bullish bias relative to the content of the analysis over the past several weeks (not at a CNBS level, but observable) and knew he was on the bullish side as a result, but didn't understand why. And I for one feel greatly aided by the reminder that trading difficult markets is about sentiment as well as fundamentals.
First of all how could the case- schiller data not show a jump givin the 13 trillion spent to stem the problems? If I sat down with this report and a bag of popcorn , I wouldn't have anything to eat or much less anyting to read. It reminds me of the Bank's stress tests, a bunch of skewed garbage to hopefully make every sideliner jump right out and buy the American Dream? Well the American Dream would be to wait unless you want to lose another 35%? Wow where did I pull that # from? It really is simple if you look at the sales that made up the report. Most of the sales were below the $300K mark and were either distressed property or real estate investors looking for a flipper or a rental. What is most disturbing about the report is the fact that most sales were 1 and dones. That means there were NO move up sales, only a single deal at the lower market levels. The reason this is disturbing is because the next wave of foreclosures are on jumbo mortgages and higher priced homes and these homes will either have to drop dramatically or will just collect dust until they finally get sold for 1/2 price. The stack of notice of defaults has skyrocket and the pile of inventory is only going to get bigger. When the 90 day mortgage moratorium laws took effect Banks started hiding the true numbers and putting off foreclosures. Now a huge glut of this inventory is about to hit the market causing the perfect storm. The selling season ends just as the supply shoots through the roof , along with federal programs ending and mortgage rates rising. Not to mention that if this whole crisis was started by the subprime meltdown we had better start running for higher ground because this next tsunami will dwarf the subprime crisis and cut million dollar home values in half. If you want to lose money just join the pep ralley and go out with your pom poms and BUY, BUY,BUY. However if you want to avoid disaster just wait a few months and see how big this train wreck is really going to be?
Jesus guys Yom Kippur is September 27 at sundown to September 28th at sundown. The lunar calendar does the job with a triennial leap month.
Google before you doodle.
Is that the one where we wear funny hats, or is it the one where we huddle inside a makeshift hut in our back yard surrounded by fruit dangling from little strings? I can never keep these holidays straight.
Interesting Times (profile) wrote on Tue, 7/28/2009 - 1:59 pm
I expect the next leg down will be blamed on some completely unrelated event...
They will never connect it to a failed FED policy, toxic assets, etc again.
Anyone care to guess what it will be blamed on ?
Regardless of whatever trivial Baron is assassinated or natural disaster hits the Gulf or California or petty backwater uprising occurs the great derailment will ultimately be blamed on Chinese ruthless manipulation in the financial markets. This because evidence of ruthless manipulation of the financial markets will be blatantly obvious and the real manipulators will need an external enemy. We have always been at war with Oceania.
I went long oil in March, not because of any feelings of "sentiment", but because I saw Bernanke printing money like crazy to buy up the MBS market. Despite what the deflationists say, anyone could see that printing that much money in that short a time frame would have implications. Monetizing the single largest debt market in the world is going to lead to a weaker currency.
The fact that the stock market went up is a secondary effect at most, as rising commodities prices lift prices across the board. Also, given Bernanke's track record, I have no doubt he had a hand in manipulating stock prices higher.
As for house prices, we had a perfect storm of stimulus, and yet prices have barely stabilized, during the buying season!!!
Fed buys $535BB of MBS in 5 months to drive MBS rates to all time lows
Govt offers $8K FTHB credit that can be used as downpayment with FHA loans, leading to no-money-down loans
Foreclosure moratoriums keep supply off market during buying season
Govt paying servicers to modify rather than foreclose
And for this we get flat house prices (or slightly negative on a SA basis)?
Anybody who is long gold or silver should not get weirded out by days like today.
Sure, there's some manipulation. But the gold market is too big to manipulate for very long.
Somebody big is dumping gold at times, and maybe it's because they need cash. It happens.
What I've noticed is that there's relatively constant strong demand for gold, and it's not necessarily anybody big. Just "out there." It always bounces back. Remember that the biggest demand for gold comes from ordinary people, including poor people, in Asia. That kind of demand can't be manipulated.
Gold is just 7-8% off its all-time high -- when the stock market is still off 40% or so.
There's no way that weak dollar doesn't equal strong gold over time. Smart investors know it. Dumb investors know it.
It doesn't mean gold will soar. But I wouldn't worry too much with gold or silver. If you can handle the drops, it's like having your money in currency.
The fact that the stock market went up is a secondary effect at most, as rising commodities prices lift prices across the board. Also, given Bernanke's track record, I have no doubt he had a hand in manipulating stock prices higher.
I just came into a hellacious sum of money, and I figure oil and commodities are a good place to stash it to hide from the coming inflation -- I'm just waiting for the inevitable crash/pullback that I see coming in a few months to pull the trigger on oil.
"I think the $8K first-time homebuyer credit (expiring around Nov. 1) is likely to create a bit of a last second rush to buy in those months."
No way in hell the govt is going to let that tax credit expire in Nov. that will be a permanent feature of housing finance for at least the next 5 years.
I knew CR didn't agree with the magnitude of doom and gloom in the comments, but I didn't think he was long.
Thank you though for providing such great data with integrity and the astute analysis that complements it. There's a reason why I've been coming here daily for almost 2 years now and I continue to recommend this blog for anyone looking for data driven analysis with the only agenda being getting the most accurate picture possible. As someone in his mid 20s just barely into his career, it is good to know there are people out there who have led successful careers in business but have maintained the intellectual curiosity and drive for truth that this blog represents.
So while I will probably be moving to Pakistan by the end of the year, I will continue to frequent the blog (and comments) just out of sheer curiosity and habit.
Hoops you must atone for your biglaw work. And I for my capital gains from a corrupt system.
The hut is for Succot and can be a good party. One meaning associated with the holiday is to be reminded of those living in temporary shelters, as the tribe did for 40 years in the desert, according to the story.
It is important to recognize that the Case-Shiller HPIs are 3-month moving average measures. Given that fact, it is highly likely that the C-S composite 20-index, if it were measured just based on each month's transactions, increased considerably in both April and May.
E.g., the March SPCS-20 HPI, which reflects transactions from January through March, declined relative to the February HPI by 2.2%. The April SPCS-20 HPI, which reflects transactions from February through April, declined by just 0.56% relative to the March HPI, and the May SPCS-20 HPI, which reflects transactions from March to May, increased by 0.45%. Such a 3-month moving average pattern is difficult to get unless an April HPI and May HPI based just on the respective month's transactions increased considerably relative to March.
Of course, given the rather large decline in the share of "distressed" sales in April and May relative to January thru March, such gains are no surprise. After all, the SPCS index includes foreclosure/other distressed sale transactions, which on average have been sold at a huge discount.
In essence, these "super-motivated" sales "de-stickified" measured home prices in an unprecedented fashion, and the rebound in indexes that include such transactions in April, May, and almost certainly in June was perfectly predictable by folks who follow local sales trends/foreclosure sale share trends from local MLS.
Yours in "de-stickification",
Tom Lawler
Lawler Economic & Housing Consulting
PS: The June SPCS composite 20 is virtually certain to see a decent sized gain that will exceed the SPCS seasonal factors. It is virtually certain.
"I just came into a hellacious sum of money, and I figure oil and commodities are a good place to stash it to hide from the coming inflation -- I'm just waiting for the inevitable crash/pullback that I see coming in a few months to pull the trigger on oil."
My advice, and I am no expert, is to monitor the Fed's activities carefully.
I am not a proponent of "don't fight the Fed", but am a proponent of "don't fight the Fed on their turf". Bernanke, if given the political room, will absolutely destroy the currency in order to avoid further asset price deflation. He will monetize the debt to do it (while claiming he isn't doing so). He will buy every asset out there, creating new dollars the whole time. He will buy dirt from banks if that is what it takes to funnel them money.
If political pressure gets to him, though, and he has to back off, we could see deflation, and a significant pullback in commodities prices.
Bottom line: If allowed, Bernanke will destroy the currency (which will drive up commodities prices) to avoid asset price deflation, such is the power of a currency backed by NOTHING.
If pressured, he may back off, resulting in the deflation that should be happening.
There is no free lunch, either way you need to preserve your wealth from being destroyed by this maniac.
Hoops you must atone for your biglaw work. And I for my capital gains from a corrupt system.
Uhh, I'll be atoning for both of those. I hit it big last week - I suicidally invested a very large sum into a biotech that exploded, and got back a very, very, very, very large sum. I called everyone at my old law firm that was too frightened to give up the biglaw income and rubbed it in. Delightful.
Yeah, my re broker buddy--the one that is still in business that is--says he sees bidding
wars too. At between 45, maxing out at 60k ish on stuff that sold for 3xs that much.
" However if you want to avoid disaster just wait a few months and see how big this train wreck is really going to be? "
Oh yeah. There's a floor under the low end - shelter value as a rental. If the high end gets measured by that same stick everyone moving in now is sizing up the train wreck before the cars have stopped piling up.
Perhaps you'll be interested in this - I maintain a blog where I calculate a Case-Shiller-like index for San Diego in real time, thus avoiding the three-month lag:
I actually predicted today's uptick two months ago. According to my current numbers, San Diego is up more than 5% since March, way in excess of any seasonal fluctuations. Expect at least a few more months of Case-Shiller reports showing increases.
Also, if things do turn sour in the fall, I'll be the first to know.
Housing bottom= home prices that equal sustainable incomes.
National median houshold income= 53,247
20% down with this income buys a house of $245,000
Without ALT A and option arms how will all the Mc Mansions go away?
Without any creativity how will any homes over $ 400k go away?
Do you wonder why the spike in low priced homes?
National median houshold income= 53,247
20% down with this income buys a house of $245,000
Simple supply and demand economics
But what about all the rest?
to be cont...............
CR - "I'm not trying to pick on or embarrass any particular publication or blogger. But it helps to know your sources."
Just thought you would like to know just in case you miss it. Tyler answered your post stating the analysis in question was provided by rosie. He also has nothing but high praise for your opinions and blog.
If it's any consolation, I've never gotten anything close to the Case-Schiller numbers for the BWI metro. I have the CS methodolgy from S&P and I have access to the MD RE sales database, yet the curves are very different.
Daughter in Atlanta tonight for meeting at CDC tomorrow. I asked her if she would take the untested flu shot (whatever they develop) and she said she would rather take her chances on the untested shot against the swine flu. The time frame on the circulation of the flu around the world has shortened significantly - 6 months vs 6 weeks to circle the globe. Get ready folks. Also all over 65 years should get the pnemoccal shot.
They don't need me to defend them but they did clearly say on page 2:
"We demand that readers question any and all assumptions presented herein (as well as everywhere else) on this most critical subject" --Zero Hedge
To tell the truth, so much of the ZH presentation was lifted from David Rosenberg that I didn't page thru the whole thing until I came across your reference. (Those Brown'ish graphs are right out of Rosenberg's missives.)
If there are more complaints about the 72 pages than disputing a definition on page 42 & a mis-attribution on page 44, I would love to read it. (I read Rosenberg regularly also. FWIW, I think (~50% confidence) the "sales outlook" comment & ABI description (70%) were Rosenberg's & not originated by ZH.)
CR should email Rosenberg to see what the story is regarding this "Tyler Durden" character and the use of Rosenberg's name in a report that apparently was not thoroughly reviewed. Then let Rosenberg respond to his clients as he sees fit. Zero Hedge has a lot of conspiracy theories and very little substance, and I wouldn't bother with them any further. PR firms that have tried to engage ZH in his public forum have found the hard way that no matter what the issue is, a conspiracy theory will be the first reaction to the firms' position.
I'm wondering what Rosenberg was thinking. But again, take it directly to Rosenberg and don't give ZH more fuel to bring attention to their convoluted agenda.
" It was some sort of weird mash up between the excellent David Rosenberg and some blogger." Some blogger? That was lame. Would you care to please explain your omission of TD and ZeroHedge?
Late to the party, again. What am I, post 261? While we are/were on the subject of housing bottoms, I would like to throw out a little snapshot of the last major downturn in southern california real estate:
1987 - Prices start to move up;
1988 - 1989 - prices really start to move;
Summer 1989 - Market peaks, everyone is rich;
1990 - 1996 - Market dives, and then eventually, bottoms;
1996 - 2000 - Market makes a very slow and measured move up.
You know the rest of the story. The part of this timeline that stands out for me is the fact that after moving up rather substantially, southern california real estate did nothing for the next 10 years.
When you look at the big contributing factor, it was loss of defense spending in our state. And the drop in housing was somewhat regionialized, not a full blown national crisis.
Compare that scenario to where we are now. I would like to believe that real estate in this country has hit bottom, and could even see some negligible apprectiation down the line. But I would be lying to myself. This is the second major correction in real estate that I have seen since being an active participant. What did I learn the last time around?
A major clue that the market has bottomed is when people (en masse) stop talking about real estate as an investment. Or just stop talking about it all together
When buying, don't even let the prospect of appreciation factor into the equasion.
When buying as an investment, look at things like cash on cash return, realistic vacancy and expense factors, etc.
When I started buying back into the market in 1995, it was all about cash flow. Of course, that rule changed towards the end of this last cycle - there was no cash flow to be had. I was flipping at the end (thank god I called the top a year early).
If the last correction took 10 years, start looking for cash flow. If you are just looking for a place to live, strike your best price and enjoy your domocile. My two cents.
Carmen101 You obviously either just caught on to reading ZH or you do not have the mental capacity to grasp the material on his blog. That is not meant to be slight because his material is for the advanced. I suspect CAPTCHA is what discouraged you from being a regular reader. His material has great substance as does Calculated Risk. Tyler has been incredibly prescient on numerous occasions and has been at the forefront in terms of exposing some very relevant financial machinations within the industry (e.g. HFT Flash, AIG/GS debacle, etc) far ahead of the MSM. Personally, I believe if it wasn't for Mr. Durden some of the machinations would still be unnoticed today by the media. Mr. McBride was correct in his observation that a reading of the NHBA HMI index below 50 does not necessarily mean a contraction. However, the issue I take with his blog on the matter is the condescending way he presented it. It is my opinion Mr. Durden deserves a little more deference given his contributions. I also believe Mr. Durden and Mr. McBride could both benefit from reading one another's blogs.
Nemo?
the problem that dealerships have implementing cash-4-clunkers is that the program began on 7/1/09, but the rules weren't set until this monday. some dealers didn't read the fine print, thought it was like the $8K credit, and will get hosed if the trade-in isn't eligible. there are already reports that some models were dropped from eligibility during the last 3 weeks. also, heard that some dealers weren't aware that they had to use sodium silicate to destroy the engine.
A confidence-building campaign by the MSM!!???
Inconcievable!
CR, why don't you just come out and say it?
Short the homebuilders!!
CR: I feel you have no need to apologize or in any way explain yourself.
Yer da best. And I vote for you as the humblest blogger on the intertubes.
Thanks for your analysis, CR. Must've been hard to be long when most of your board was short
Meanwhile, a stunning surprise reported by Marketwatch:
"SEC says 900 investors were bilked in a Phoenix-based real-estate loan scheme."
No link yet, it's breaking on the front page. I'm shocked, etc...
Re: "Must've been hard to be long when most of your board was short"
Unless this is the control group.
I would be interested in the rationale for why the seasonal adjustments to C-S are insufficient. Maybe I just overlooked it?
Yes, CR. The rude reawakening is eminent. Call it surprise to the downside or inability to understand fundamentals. Either way, consider silver.
CR, if you ever decide to open a fund, please let many of us know!
well, 3 hours to kill in the Houston airport, so I took the test :
Your political compass
Economic Left/Right: -4.50
Social Libertarian/Authoritarian: -5.49
geez...
"Phoenix-based real-estate loan scheme."
I'll take mortgage adjustment scam for the win.
CR,
Your site is one of the, if not the most, balanced forms of information available today. There are few spots I know of where I can find an honest attempt at the truth, but this is one of them. You have no need to 'apologize' for anything, and I for one thank you again for the service you provide.
Jerry
wow, that was different
I for one have always appreciated your restraint, even when I disagree with your views.
I kind of wish you didn't disclose your 'stock market' position. I prefer to think of you as above the fray, not involved in 'the markets' and certainly not to the degree that you can ever be accused of 'talking your book.'
I know that i do appreciate it that you don't try to link the economic/housing/etc reports to equity or bond markets - I think that doing so is a rapid way to destroy credibility (EMH beliiever or not, most of us likely agree that 'markets' don't always respond the way we might expect).
I am a bit surprised that you felt the need to make this post- I haven't read much of the comments today, but I'm wondering what prompted this post?
"Nice" bit of interpretation there by the either the author or the editor - interesting thing is there is no byline on the article, just this paranthetical statment at the article's end: (Reporting by Kristina Cooke; Editing by Kenneth Barry)
There is an email link at the upper left if you care to share your thoughts on this bit o' framing...just sayin'
Fed job approval rating lower than IRS: Gallup poll
NEW YORK (Reuters) - Americans think the Federal Reserve is doing a worse job than even the much-maligned Internal Revenue Service.
Only 30 percent of Americans think the Federal Reserve's Board of Governors is doing a good job despite the central bank's unprecedented efforts to battle a crippling recession, according to a Gallup Poll released on Monday.
That makes the Fed the worst reviewed of nine key agencies -- including the tax-collecting IRS -- the Gallup poll of more than 1,000 Americans between July 10 and 12 showed. Twenty-two percent of Americans said the central bank was doing a poor job.
The poll comes as Fed Chairman Ben Bernanke is increasingly going public with a defense of the Federal Reserve's handling of the crisis in an effort to ward off a congressional proposal by Republican Representative Ron Paul that would undercut the Fed's independence.
Fed job approval rating lower than IRS: Gallup poll
| Reuters
thank you for illuminating the errors in the ZH doomer article.
I expect the next leg down will be blamed on some completely unrelated event...
They will never connect it to a failed FED policy, toxic assets, etc again.
Anyone care to guess what it will be blamed on ?
CR is really the baby in the Etrade commercials.
I thought everyone knew.
Anyone care to guess what it will be blamed on ?
Brown chutes? Ya know, something J6P can understand
sm landlord et al
I actually believe the seasonal adjustment is not sufficient in part b/c of the lawler WSJ piece recently - in particular the low end of housing has become very unsticky, with the result being more price volatility, which is almost certainly being magnified seasonally
listening to the stories of bidding wars in the Inland Empire on the Califrnia report on NPR this morning made a small shiver go down my spine.
blame it on the upcoming ETF implosion...
"The poll comes as Fed Chairman Ben Bernanke is increasingly going public with a defense of the Federal Reserve's handling of the crisis in an effort to ward off a congressional proposal by Republican Representative Ron Paul that would undercut the Fed's independence."
Bennies News Hour road show is happening for a reason. I'm sure the WH is well aware of poll numbers. And UE is not turning around tomorrow.
the problem that dealerships have implementing cash-4-clunkers is that the program began on 7/1/09, but the rules weren't set until this monday. some dealers didn't read the fine print, thought it was like the $8K credit, and will get hosed if the trade-in isn't eligible. there are already reports that some models were dropped from eligibility during the last 3 weeks. also, heard that some dealers weren't aware that they had to use sodium silicate to destroy the engine.
Pretty much as described above.
I have a family member who has been in the thick of it since last Friday. The computer system they needed to use crashed under load and caused a backlog of verification and data entry. Also, there are more verification requirements for each "clunker" than the dealerships had planned to meet. As it goes now, it is taking their technicians upwards of four (4) hours to verify that the car meets the qualifications along with the draining and destroying of car parts.
The other kicker has been that most of the clunker folks are the cleaning, tidiest credit people you can imagine. Paying for the cars in mostly cash and if with credit, very little. These people were the ones who drove the car 'til it fell apart and maintained it well along the journey. Each dealership is trying to undercut other participating dealerships which is killing any sales margin--forget F&I on the backend. The "clunkers" may be sitting on their lots for weeks or even months, and the payment cycle went from 1-2 weeks upwards to 4-6 weeks. To sweetened it even more, there is only so much money involved and many of the dealerships may be left with no credit from the U.S.G because there wasn't enough of the billion USDs to go around.
The fact that dealerships are jumping at these pennies made of depleted plutonium between a cliff's edge and an oncoming steamroller is probably telling about that sector's future performance. It is ugly.
So CR, is this a good time to go long on pork belly futures? Please help ASAP
This is why we are all here, and only go to CNBC to look at the pin up girls....
"I expect the next leg down will be blamed on some completely unrelated event..."
The assassination of a major political figure. Let's say Chris Dodd.
Scrooge McDuck. I kept hinting in the comments ... but I don't feel comfortable giving advice.
I used to ignore sentiment completely, but the great Tak Hallus (a pen name - lawyer, author of "Star Gate" and more) taught me about using sentiment. He passed away in 2003, but I know he would have been buying in early March. He always looked for upside or downside surprises for the market - but of course you have to be confident in your own analysis.
Best to all
The swine flu will make for a great trigger and scapegoat for a market crash this fall...
More Cuts for California Budget i.e. health insurance for poor children, AIDS programs and the state’s parks system. As of Monday, the state had issued 209,000 i.o.u.’s totaling $1.08 billion.
What's that flushing sound ?
nova, if you are asking about my eating habits, I'd suggest going long fruit, vegetables, turkey, chicken and fish.
I hope that helps
best wishes
BURN,
Got any links to articles on the upcoming ETF implosion?
"Anyone care to guess what it will be blamed on ?"
termites
CR - i've never actually typed it but here goes
lol
ShortCourage, I've never had a flu shot - but I'm going to get one this year. I'll probably recommend that on the blog too (if people want to remind me). There are a strong chance of a really bad flu season
best wishes
Blame it on the ah-ah-ah-ah-ah-alcohol.
It's worthwhile to examine monthly fluctuations in financial data in the first few years of a business venture. Aside from that, I don't know of any use. I think MSM finds itself reporting on the announcements of industry groups' PR, rather than reporting pertinent facts and reasoned analysis.
It's easy to write it off as lazyness, but they are under pressure to report quickly and with brevity.
I'd put money on the "unrelated event" being a major earthquake in California, causing the IOU situation to completely break down and force the Feds to bailout or let fail.
CR: I have never had a flu shot either, and I intend to keep my record intact. I recommend abstinence. Just say no.
major event - bursting of 3 gorges damn. Just a matter of when.
an earthquake would trigger federal emergency funds.
But one in SF would put a stake through the heart of that RE market.
I am going to quit licking door knobs until this flu thing goes away
"The assassination of a major political figure. Let's say Chris Dodd."
By escaped Guantanamo Bay TERRORISTS! Thus proving Darth Cheney right and O' wrong. Leading to a coup and Dick's return to power!
the excellent Rosenberg: Today's Housing Number Is A Real Green Shoot
Rosenberg: Today's Housing Number Is A Real Green Shoot
How about this for the trigger event?
The FDIC depletes its reserve fund, and goes hat-in-hand to Congress to cover the avalanche of bank failures...
The general availability of a vaccination for A/H1N1 this fall is currently...speculative.
an earthquake would trigger federal emergency funds.
Good point. Perhaps I am lucky that I didn't actually put money on it.
Elvis (profile) wrote on Tue, 7/28/2009 - 4:55 pm
Yes, CR. The rude reawakening is eminent. Call it surprise to the downside or inability to understand fundamentals. Either way, consider silver.
The problem is that the fundamentals are really unpleasant
/snark (for the humour impaired)
The big danger from the coming Swine Flu Part Deux is to the young and healthy.
It tends to cause the below phenomenon, which is more of a threat to non-old people.
Cytokine storm - Wikipedia, the free encyclopedia
I'm sure it will blamed on the little people like me for not seeing the big picture. CR we are now nearing the crest of the V by Dec. every one will look back at this time as the good old days of 2009. Thanks CR for all that you provide and to you commentors thanks also.
montas ankle, as I mentioned in the post, I felt the media got the story wrong today on house prices. And I've been saying positive things on housing - well, housing starts and new home sales - so this reporting bothered me.
So I thought I'd share my views with a few friends. Things could change ... maybe Cramer is right and prices have bottomed.
energyecon, if so, I'll get a hold of banker and hide out in the Bankerdome. I haven't heard from him for some time - I hope he is doing OK
best to all
That was some very responsible reporting CR.
Now that we're off the front page and in the comments, I can confidently report that CR has been discovered to be an advanced blogging algorithm which has been released into the blogosphere by paul krugman in an attempt to collect enough data to combat the evil blogging AI released by goldman sachs. You heard it here first.
I've had flu shots every year for years. I started getting them when I was commuting from the suburbs by bus, and sharing air with lots of strangers for an hour and a half every day.
I kept getting the shots because I noticed that the jolt to my immune system seemed to clear up my usual late fall allergies/throat infection.
Also, sounds like CR is Zone Dieter, maybe even a Paleo/Zone Dieter.
I am.
Watch out CR. you're gonna get a call from Jon Stewart pretty soon. Hopefully you don't have any embarrassing video clips.
People are still calling for some Iran/Israel breakout in Oct. That would be a fair sized scapegoat.
I kept getting the shots because I noticed that the jolt to my immune system seemed to clear up my usual late fall allergies/throat infection.
I found the same thing except I jolt my immune system by reading Broward's posts out loud while imagining him in full on leather bondage gear, bending over a pool table in front of me for a particularly tricky shot, as a herd of intoxicated community college students flirt and chainsmoke around him.
To imagine this... It hurts and it helps.
'housing prices' (whatever that means) in real terms, definitely have not bottomed
anyone who thinks otherwise is deluded
how far, and when they fall, anyone who thinks they can see that is also deluded
jo6pac (profile) wrote (in reply to...) on Tue, 7/28/2009 - 5:09 pm
I'm sure it will blamed on the little people like me for not seeing the big picture. CR we are now nearing the crest of the V by Dec. every one will look back at this time as the good old days of 2009. Thanks CR for all that you provide and to you commentors thanks also.
Assuming that they don't look back at this time as being when they should have been stocking up on dried beans, ammo, etc.
"maybe Cramer is right"
No, I'm pretty sure THAT's not it. Now if he goes short again, I might start to sweat.
Is he suggesting that Rosenberg helped him with that piece, or did Rosenberg just let him use his charts?
"Hopefully you don't have any embarrassing video clips. "
I'm hoping he does.
Some odd flu news...
Cases in England jumped by 100K in the past 7 days.
It's causing tissue damage in respiratory systems because it's going deeper into the lungs than a normal flu.
The gene sequences aren't being released like with the bird flu, meaning that amateur researchers can't track mutations online.
Assuming that they don't look back at this time as being when they should have been stocking up on dried beans, ammo, etc.
I usd to think it was about the ammo but now I know! Ammo and porkbellies is all I need
Joanna (homepage, profile) wrote on Tue, 7/28/2009 - 5:11 pm
People are still calling for some Iran/Israel breakout in Oct. That would be a fair sized scapegoat.
When is Yom Kippur this year? Maybe that should be factored into the GS shorting scheme?
volker the viking (profile) wrote on Tue, 7/28/2009 - 5:13 pm
"Hopefully you don't have any embarrassing video clips. "
I'm hoping he does.
There's always PhotoShop
V's don't have crests do they?
Yom Kippur is in October
starts Sept 27 this year and ends Oct 9
M = crest
K = ski jump
L = bummer
V = huh? green shoots?
I forgot
O = hope
First, if I've let a little hubris slip into my recent posts, I apologize. My goal is to be the most humble blogger in the world (an old joke).
Add me to the list of people who are baffled by this apology of yours, CR. I just went back through a week's worth of your posts, certain that I'd missed something. No dice.
And, anyway, I'd say you're entitled to a little bit of immodesty, in the circumstances. Believe me: were I in your shoes, I'd be tempted to gloat in Denninger-size type about it. "I run the number one economics blog on the Internet. I called the bursting of the housing bubble in 2005. And I went long the market in early March. How DARE you peons question my line of reasoning!" When, in reality, if I ever read anything like that here, my immediate reaction would be, "Oh noes ... I guess CR got his site hacked."
Thanks again for doing what you do.
"cramer" is a code word meaning get the hell out of the market
Yep already did beans, rice, ammo, garden seeds, wine, and 2 yrs ago added gold. I'm not ready for this but lest won't strave.
CR - Yes, only the smartest among us closed our shorts and went long....It feels good to be right.
closed your shorts?
ROFL
volker the viking (profile) wrote on Tue, 7/28/2009 - 5:16 pm
Yom Kippur is in October
I don't remember if you were here when Rob suggested puts in the Sept.-Nov. time frame as a good investment strategy, but there was some discussion of how to divvy up the puts in Oct. I realize that Yom Kippur is in Oct., and that's why I put it in that reply. The question would be when in Oct., and how does it relate to options expiration s and other factors that might impact Rob's strategy.
Argh! You edited while I was fumbling on the keyboard to reply! Thanks for the info-
CR, I would have surprised to learn that you were not putting money into the market in February and March. And I completely understand why you would rather not talk about it. I try to limit my discussion of specifics here, probably for many of the same reasons. Although sometimes when I'm really scratching my head about something, it's tempting to put the question out on your blog...
If you are ever inclined to share your thoughts on interpreting/predicting sentiment, I would love to read it.
Sorry - I just had this mental picture of a white guy with a pot belly wearing baggy white boxers that were gaping open. Then you went long..
Nevermind I will go
CR, you know I'm on your side, but those mushroom cloud explosions, sirens, and shrieking, 10 minute you tube videos where you stare weirdly in the camera, visibly frothing at the mouth while discussing goldman sachs and economic apocalypse is just too damn much.
Our experiences color our perceptions. Always and forever. What's important is that we all make ourselves aware of the perceptions/experiences of the sources of information that we chose to accept.
I wouldn't ask CR about quant models, or HFT, etc......just like I don't lean too hard on Tyler Durden for my macro economic topical discussions.
The right tool(blog) for the job.
crispyandcole,
And what will you do next, oh wise one?
I will admire you if you make the right call right now, at a very tricky time...
CR, next time you go long or sell your longs I would sure appreciate getting the memo. Not that I would blindly go all in or anything, just a heavily weighted data point...
CR, next time you go long or sell your longs I would sure appreciate getting the memo. Not that I would blindly go all in or anything, just a heavily weighted data point...
CR could make a FORTUNE if he turned this site into some kind of penny stock speculation pump and dump newsletter.
what we need is an icon of dice for these market participants
CR,
Just to be clear, you mean you went long in your Cabbage Patch Kids portfolio, right? Me too.
CR could make a FORTUNE if he turned this site into some kind of penny stock speculation pump and dump newsletter.
He leaves that to some of the commentariat.
Hoopajoops: I promise I will visit him when he's doing his stretch at Chino.
CR, Thanks for doing what you do.
the SEC Phoenix case is related to Mortgages Ltd.
The Securities and Exchange Commission filed suit against four individuals for alleged fraud in connection with raising over $197 million from at least 900 investors nationwide in connection with a Phoenix-based commercial real-estate venture.
The venture's woes over the past two years were an early sign of troubles in the commercial-property market.
The SEC said the money raised from investors was used to help fund Phoenix-based Mortgages Ltd., which made short-term, high-interest loans to real-estate developers building malls, office parks, condominiums and other projects. Mortgages Ltd. filed for bankruptcy-court protection in June of last year. That same month, the company's chief executive, Scott Coles, committed suicide. His death and the company's problems were the subject of a page-one article last July in The Wall Street Journal.
full story
[previous thread: biglaw addendum]
A big law firm partner trying to make money off an associate is underpaying him by definition, presumably to mentor him, take care of fixed costs if he's young, and lend him the prestige of the firm name. More difficult to mentor 400 junior lawyers than 50 and tougher to police the rogues. Extra benefits from sharing fixed costs are marginal for large versus medium firms.
There are no corporate secrets, no patents, no secret sources of legal wisdom. With a hundred lawyers you ought to have every major specialty covered in triplicate. The work being entirely a licensed professional service, and volume dependent on personal contact and reputation, more than 100 dilutes the brand. Which is why the Senate is above the House.
Believe me judges take no greater pleasure than revealing the incompetence of a big name firm, whose associates make more money than they. The names only impress clients who regularly use lawyers but rarely go to court, like financial firms. The large number of suits are only needed for the largest wrongdoers: monopolists, conglomerates, bank holding companies, and are normally useful only to intimidate, delay, obfuscate...
In fact if firms get too big they are in danger of being disqualified in an important action by a diligent adversary, whenever he chooses to raise the issue, as the rules for conflicts of interest are stricter than for bankers. I've seen it done. "Didn't that new guy at your firm's old firm used to represent the cross-claimant?..."
hft sneezes and gs goes splat
CR, no need to apologize....
But could it be you are reading too much in the detail. After all, the RE markets are not efficient, they are incredibly localized. What is happening in CA has nothing to do with what is happening in my town. So to generalize on some small data points is a little to much for analysis.
If and when the RE market becomes as efficient at the treasury market... then you might have something to work with.
In November MSM will report SA prices.
Remember media reporting core versus headline inflation numbers last year?
me and j6p(aka j12p) are cutting back way back.
Hoopajoops LTD (homepage, profile) wrote on Tue, 7/28/2009 - 5:22 pm
CR, you know I'm on your side, but those mushroom cloud explosions, sirens, and shrieking, 10 minute you tube videos where you stare weirdly in the camera, visibly frothing at the mouth while discussing goldman sachs and economic apocalypse is just too damn much.
You should check out Denninger if you haven't already
Hubris?
You're the most level-headed economics blogger out there.
And if the prices do drop in a couple of month the MSM will just change how they report the spin. It won't bother them a bit.
I doubt that prices have bottomed, and for many very solid reasons. Most solid of them: pricing is not arbitrary; there must be a buyer who is not just willing, but also able to pay. Their number is decreasing, not increasing. You have to remember: the big banks are bailed out, but at the expense of "Main Street"... because that's who gets the bill. And that's who buys houses. In all of the praise for Bernanke, I think a lot of economists have forgotten this fact - but the public opinion polls show that people are not stupid about this.
Can we start a hoocoodanode fund, a hoocoodanode community farm, and a hoocoodanode apocalypse shelter?
CR, I think a little hubris is allowed. As rapper T.I reminds us, "Errybody knows it ain't trickin' if ya got it."
I'm just glad this blog doesn't roll with a 'Fight Club' motif.
CR,
It's not just that the media got the story wrong. In at least one CS city the realtors are messing with the comps by not reporting certain transactions, which I suspect are very disproportionately the ones with big losses/markdowns. It is certainly more common in the high end homes, where there is less sales activity and a lot of price reductions. More Dallas home sales prices kept secret |
News for Dallas, Texas | Dallas Morning News
| Latest News
I'm going out on a limb here. Despite their good work, the people creating the CS index for Dallas show prices increasing here when in fact they are decreasing, especially at the high end. This is due to the increasing number of transactions with no reported price because the seller didn't want to be embarassed or the realtor doesn't want lower comps.
"CR, next time you go long or sell your longs I would sure appreciate getting the memo. Not that I would blindly go all in or anything, just a heavily weighted data point..."
Should use a pass phrase to provide plausible deniability.
Like, "The swallows have returned to Capistrano." for long, and "An African or European swallow?" for short.
Like, "The swallows have returned to Capistrano." for long, and "An African or European swallow?" for short.
with how many coconuts?
Thank you for being honest with us, CR. Not that you ever haven't been before, but it's nice to see you without the stiff upper lip from time to time.
I don't know if you meant for it to be, but that was a relatively brutal takedown of ZH!
+1
CR:
I wonder if you want to push your timeline for unexpected surprises to December/January reporting. I think the $8K first-time homebuyer credit (expiring around Nov. 1) is likely to create a bit of a last second rush to buy in those months.
Also, I haven't read the Rosenberg/Zero Hedge report, but Zero Hedge is more than some blogger. His website is pretty top notch and has broken some good stories...maybe he's strayed a bit out of his expertise with the report (he's more of a hedge fund/IB/quantitative guy), but that's why discussion blogs are better than newspapers.
Jesus guys Yom Kippur is September 27 at sundown to September 28th at sundown. The lunar calendar does the job with a triennial leap month.
Google before you doodle.
Shnaps,
Oh come on, you know when you look at Goldman Sachs, you mutter to yourself, "I felt like destroying something beautiful." followed by "I am Jack's smirking revenge."
Blackhalo: Or, for when predicting a top, a Hemingway allusion: "Hills Like White Elephants"
I don't have much time to comment this week but I wanted to add that I greatly appreciated this piece. CR definitely gets humble blogger points. A little book disclosure would be helpful -- I've been troubled by some of CR's headlines showing a bullish bias relative to the content of the analysis over the past several weeks (not at a CNBS level, but observable) and knew he was on the bullish side as a result, but didn't understand why. And I for one feel greatly aided by the reminder that trading difficult markets is about sentiment as well as fundamentals.
Poll results:
Economic Left/Right: -2.38
Social Libertarian/Authoritarian: -4.97
First of all how could the case- schiller data not show a jump givin the 13 trillion spent to stem the problems? If I sat down with this report and a bag of popcorn , I wouldn't have anything to eat or much less anyting to read. It reminds me of the Bank's stress tests, a bunch of skewed garbage to hopefully make every sideliner jump right out and buy the American Dream? Well the American Dream would be to wait unless you want to lose another 35%? Wow where did I pull that # from? It really is simple if you look at the sales that made up the report. Most of the sales were below the $300K mark and were either distressed property or real estate investors looking for a flipper or a rental. What is most disturbing about the report is the fact that most sales were 1 and dones. That means there were NO move up sales, only a single deal at the lower market levels. The reason this is disturbing is because the next wave of foreclosures are on jumbo mortgages and higher priced homes and these homes will either have to drop dramatically or will just collect dust until they finally get sold for 1/2 price. The stack of notice of defaults has skyrocket and the pile of inventory is only going to get bigger. When the 90 day mortgage moratorium laws took effect Banks started hiding the true numbers and putting off foreclosures. Now a huge glut of this inventory is about to hit the market causing the perfect storm. The selling season ends just as the supply shoots through the roof , along with federal programs ending and mortgage rates rising. Not to mention that if this whole crisis was started by the subprime meltdown we had better start running for higher ground because this next tsunami will dwarf the subprime crisis and cut million dollar home values in half. If you want to lose money just join the pep ralley and go out with your pom poms and BUY, BUY,BUY. However if you want to avoid disaster just wait a few months and see how big this train wreck is really going to be?
Jesus guys Yom Kippur is September 27 at sundown to September 28th at sundown. The lunar calendar does the job with a triennial leap month.
Google before you doodle.
Is that the one where we wear funny hats, or is it the one where we huddle inside a makeshift hut in our back yard surrounded by fruit dangling from little strings? I can never keep these holidays straight.
[I'm with Bill. i miss "Banker."]
Interesting Times (profile) wrote on Tue, 7/28/2009 - 1:59 pm
I expect the next leg down will be blamed on some completely unrelated event...
They will never connect it to a failed FED policy, toxic assets, etc again.
Anyone care to guess what it will be blamed on ?
Regardless of whatever trivial Baron is assassinated or natural disaster hits the Gulf or California or petty backwater uprising occurs the great derailment will ultimately be blamed on Chinese ruthless manipulation in the financial markets. This because evidence of ruthless manipulation of the financial markets will be blatantly obvious and the real manipulators will need an external enemy. We have always been at war with Oceania.
I went long oil in March, not because of any feelings of "sentiment", but because I saw Bernanke printing money like crazy to buy up the MBS market. Despite what the deflationists say, anyone could see that printing that much money in that short a time frame would have implications. Monetizing the single largest debt market in the world is going to lead to a weaker currency.
The fact that the stock market went up is a secondary effect at most, as rising commodities prices lift prices across the board. Also, given Bernanke's track record, I have no doubt he had a hand in manipulating stock prices higher.
As for house prices, we had a perfect storm of stimulus, and yet prices have barely stabilized, during the buying season!!!
And for this we get flat house prices (or slightly negative on a SA basis)?
Anybody who is long gold or silver should not get weirded out by days like today.
Sure, there's some manipulation. But the gold market is too big to manipulate for very long.
Somebody big is dumping gold at times, and maybe it's because they need cash. It happens.
What I've noticed is that there's relatively constant strong demand for gold, and it's not necessarily anybody big. Just "out there." It always bounces back. Remember that the biggest demand for gold comes from ordinary people, including poor people, in Asia. That kind of demand can't be manipulated.
Gold is just 7-8% off its all-time high -- when the stock market is still off 40% or so.
There's no way that weak dollar doesn't equal strong gold over time. Smart investors know it. Dumb investors know it.
It doesn't mean gold will soar. But I wouldn't worry too much with gold or silver. If you can handle the drops, it's like having your money in currency.
Real currency.
How's this for a sentiment indicator? The cover of my Newsweek
The Recession Is Over! But Not for You--Yet. | Newsweek Business | Newsweek.com
The fact that the stock market went up is a secondary effect at most, as rising commodities prices lift prices across the board. Also, given Bernanke's track record, I have no doubt he had a hand in manipulating stock prices higher.
I just came into a hellacious sum of money, and I figure oil and commodities are a good place to stash it to hide from the coming inflation -- I'm just waiting for the inevitable crash/pullback that I see coming in a few months to pull the trigger on oil.
Am I foolish to wait for such a thing?
"I think the $8K first-time homebuyer credit (expiring around Nov. 1) is likely to create a bit of a last second rush to buy in those months."
No way in hell the govt is going to let that tax credit expire in Nov. that will be a permanent feature of housing finance for at least the next 5 years.
Re: Am I foolish to wait for such a thing?
Absolutely not! Send it to me, I'll hold it for you until it's safe.
rich writes;
"Anybody who is long gold or silver should not get weirded out by days like today."
Agreed. But do take a look at the huge short interest. Expect volatility, and you probably won't be disappointed.
"I just came into a hellacious sum of".....hoopajoops?
but Zero Hedge is more than some blogger
Yeah, my guess is first-year MBA student.
"How's this for a sentiment indicator? The cover of my Newsweek"
Notice how EVERY story on the economy points to the stock market as an indicator of recovery?
Think Bernanke doesn't know that? Think he had nothing to do with moving the market higher?
Think again.
I knew CR didn't agree with the magnitude of doom and gloom in the comments, but I didn't think he was long.
Thank you though for providing such great data with integrity and the astute analysis that complements it. There's a reason why I've been coming here daily for almost 2 years now and I continue to recommend this blog for anyone looking for data driven analysis with the only agenda being getting the most accurate picture possible. As someone in his mid 20s just barely into his career, it is good to know there are people out there who have led successful careers in business but have maintained the intellectual curiosity and drive for truth that this blog represents.
So while I will probably be moving to Pakistan by the end of the year, I will continue to frequent the blog (and comments) just out of sheer curiosity and habit.
"I just came into a hellacious sum of".....hoopajoops?
Listen, they're as good as money, only better, because they multiply, see...
Hoopajoops LTD writes;
"Am I foolish to wait for such a thing? "
Assuming that you wanted a serious answer, I would recommend that you NOT try to time your entry in one swell foop.
Hoops you must atone for your biglaw work. And I for my capital gains from a corrupt system.
The hut is for Succot and can be a good party. One meaning associated with the holiday is to be reminded of those living in temporary shelters, as the tribe did for 40 years in the desert, according to the story.
I knew it! I knew it!
After watching and lurking for so long!
CR and Sebastian must be the same person!
Long B for ever!
It is important to recognize that the Case-Shiller HPIs are 3-month moving average measures. Given that fact, it is highly likely that the C-S composite 20-index, if it were measured just based on each month's transactions, increased considerably in both April and May.
E.g., the March SPCS-20 HPI, which reflects transactions from January through March, declined relative to the February HPI by 2.2%. The April SPCS-20 HPI, which reflects transactions from February through April, declined by just 0.56% relative to the March HPI, and the May SPCS-20 HPI, which reflects transactions from March to May, increased by 0.45%. Such a 3-month moving average pattern is difficult to get unless an April HPI and May HPI based just on the respective month's transactions increased considerably relative to March.
Of course, given the rather large decline in the share of "distressed" sales in April and May relative to January thru March, such gains are no surprise. After all, the SPCS index includes foreclosure/other distressed sale transactions, which on average have been sold at a huge discount.
In essence, these "super-motivated" sales "de-stickified" measured home prices in an unprecedented fashion, and the rebound in indexes that include such transactions in April, May, and almost certainly in June was perfectly predictable by folks who follow local sales trends/foreclosure sale share trends from local MLS.
Yours in "de-stickification",
Tom Lawler
Lawler Economic & Housing Consulting
PS: The June SPCS composite 20 is virtually certain to see a decent sized gain that will exceed the SPCS seasonal factors. It is virtually certain.
"I just came into a hellacious sum of money, and I figure oil and commodities are a good place to stash it to hide from the coming inflation -- I'm just waiting for the inevitable crash/pullback that I see coming in a few months to pull the trigger on oil."
My advice, and I am no expert, is to monitor the Fed's activities carefully.
I am not a proponent of "don't fight the Fed", but am a proponent of "don't fight the Fed on their turf". Bernanke, if given the political room, will absolutely destroy the currency in order to avoid further asset price deflation. He will monetize the debt to do it (while claiming he isn't doing so). He will buy every asset out there, creating new dollars the whole time. He will buy dirt from banks if that is what it takes to funnel them money.
If political pressure gets to him, though, and he has to back off, we could see deflation, and a significant pullback in commodities prices.
Bottom line: If allowed, Bernanke will destroy the currency (which will drive up commodities prices) to avoid asset price deflation, such is the power of a currency backed by NOTHING.
If pressured, he may back off, resulting in the deflation that should be happening.
There is no free lunch, either way you need to preserve your wealth from being destroyed by this maniac.
Hoops you must atone for your biglaw work. And I for my capital gains from a corrupt system.
Uhh, I'll be atoning for both of those. I hit it big last week - I suicidally invested a very large sum into a biotech that exploded, and got back a very, very, very, very large sum. I called everyone at my old law firm that was too frightened to give up the biglaw income and rubbed it in. Delightful.
People who seek investment advice are usually are gamblers wanting a tip on the ponies.
Yeah, my guess is first-year MBA student.
I would have guessed a cast-away tentacle of a certain vampire squid.
Good luck finding a safe stash for it Hoops!
Old money likes to break new money whenever possible.
"How's this for a sentiment indicator? The cover of my Newsweek"
When does Paulson's how I saved the world, book come out? Karma tells me it tanks after it goes to print.
Congrats, Hoops.
Yeah, my re broker buddy--the one that is still in business that is--says he sees bidding
wars too. At between 45, maxing out at 60k ish on stuff that sold for 3xs that much.
Color me underwhelmed.
"the great derailment will ultimately be blamed on Chinese ruthless manipulation in the financial markets."
Timmy got offended by the laughter at his unintended ironies?
If that doesn't fly we can always call the Fed a bad, bad bank, whose promises are unenforceable as they lacked Constitutional authority after all.
'We'll be good sports and give you Chinese new dollars worth a quarter, or you can take our new notes at a high introductory APR.'
(It's a nice con)
bearly:
CR, next time you go long or sell your longs I would sure appreciate getting the memo.
You might want to re-read the post and CR's comments.
"People who seek investment advice are usually are gamblers wanting a tip on the ponies."
Why, what do yo know? Who do you like in the 4th?
Low Ball!
" However if you want to avoid disaster just wait a few months and see how big this train wreck is really going to be? "
Oh yeah. There's a floor under the low end - shelter value as a rental. If the high end gets measured by that same stick everyone moving in now is sizing up the train wreck before the cars have stopped piling up.
Hi CR,
Perhaps you'll be interested in this - I maintain a blog where I calculate a Case-Shiller-like index for San Diego in real time, thus avoiding the three-month lag:
San Diego home price index
I actually predicted today's uptick two months ago. According to my current numbers, San Diego is up more than 5% since March, way in excess of any seasonal fluctuations. Expect at least a few more months of Case-Shiller reports showing increases.
Also, if things do turn sour in the fall, I'll be the first to know.
Housing bottom= home prices that equal sustainable incomes.
National median houshold income= 53,247
20% down with this income buys a house of $245,000
Without ALT A and option arms how will all the Mc Mansions go away?
Without any creativity how will any homes over $ 400k go away?
Do you wonder why the spike in low priced homes?
National median houshold income= 53,247
20% down with this income buys a house of $245,000
Simple supply and demand economics
But what about all the rest?
to be cont...............
CR - "I'm not trying to pick on or embarrass any particular publication or blogger. But it helps to know your sources."
Just thought you would like to know just in case you miss it. Tyler answered your post stating the analysis in question was provided by rosie. He also has nothing but high praise for your opinions and blog.
Fitch: Financial Companies Hold 99.7% Of All Derivative Contracts | zero hedge
If it's any consolation, I've never gotten anything close to the Case-Schiller numbers for the BWI metro. I have the CS methodolgy from S&P and I have access to the MD RE sales database, yet the curves are very different.
Daughter in Atlanta tonight for meeting at CDC tomorrow. I asked her if she would take the untested flu shot (whatever they develop) and she said she would rather take her chances on the untested shot against the swine flu. The time frame on the circulation of the flu around the world has shortened significantly - 6 months vs 6 weeks to circle the globe. Get ready folks. Also all over 65 years should get the pnemoccal shot.
There are old jokes among bloggers? I would think any jokes among bloggers would be relatively new jokes.
They don't need me to defend them but they did clearly say on page 2:
"We demand that readers question any and all assumptions presented herein (as well as everywhere else) on this most critical subject" --Zero Hedge
To tell the truth, so much of the ZH presentation was lifted from David Rosenberg that I didn't page thru the whole thing until I came across your reference. (Those Brown'ish graphs are right out of Rosenberg's missives.)
If there are more complaints about the 72 pages than disputing a definition on page 42 & a mis-attribution on page 44, I would love to read it. (I read Rosenberg regularly also. FWIW, I think (~50% confidence) the "sales outlook" comment & ABI description (70%) were Rosenberg's & not originated by ZH.)
CR should email Rosenberg to see what the story is regarding this "Tyler Durden" character and the use of Rosenberg's name in a report that apparently was not thoroughly reviewed. Then let Rosenberg respond to his clients as he sees fit. Zero Hedge has a lot of conspiracy theories and very little substance, and I wouldn't bother with them any further. PR firms that have tried to engage ZH in his public forum have found the hard way that no matter what the issue is, a conspiracy theory will be the first reaction to the firms' position.
I'm wondering what Rosenberg was thinking. But again, take it directly to Rosenberg and don't give ZH more fuel to bring attention to their convoluted agenda.
@OSR
If you like, I can run my tools on your database, see what comes up. I tend to reproduce San Diego numbers with good accuracy.
" It was some sort of weird mash up between the excellent David Rosenberg and some blogger." Some blogger? That was lame. Would you care to please explain your omission of TD and ZeroHedge?
Late to the party, again. What am I, post 261? While we are/were on the subject of housing bottoms, I would like to throw out a little snapshot of the last major downturn in southern california real estate:
1987 - Prices start to move up;
1988 - 1989 - prices really start to move;
Summer 1989 - Market peaks, everyone is rich;
1990 - 1996 - Market dives, and then eventually, bottoms;
1996 - 2000 - Market makes a very slow and measured move up.
You know the rest of the story. The part of this timeline that stands out for me is the fact that after moving up rather substantially, southern california real estate did nothing for the next 10 years.
When you look at the big contributing factor, it was loss of defense spending in our state. And the drop in housing was somewhat regionialized, not a full blown national crisis.
Compare that scenario to where we are now. I would like to believe that real estate in this country has hit bottom, and could even see some negligible apprectiation down the line. But I would be lying to myself. This is the second major correction in real estate that I have seen since being an active participant. What did I learn the last time around?
When I started buying back into the market in 1995, it was all about cash flow. Of course, that rule changed towards the end of this last cycle - there was no cash flow to be had. I was flipping at the end (thank god I called the top a year early).
If the last correction took 10 years, start looking for cash flow. If you are just looking for a place to live, strike your best price and enjoy your domocile. My two cents.
Don't try to be humble. You're not that great yet!
Carmen101 You obviously either just caught on to reading ZH or you do not have the mental capacity to grasp the material on his blog. That is not meant to be slight because his material is for the advanced. I suspect CAPTCHA is what discouraged you from being a regular reader. His material has great substance as does Calculated Risk. Tyler has been incredibly prescient on numerous occasions and has been at the forefront in terms of exposing some very relevant financial machinations within the industry (e.g. HFT Flash, AIG/GS debacle, etc) far ahead of the MSM. Personally, I believe if it wasn't for Mr. Durden some of the machinations would still be unnoticed today by the media. Mr. McBride was correct in his observation that a reading of the NHBA HMI index below 50 does not necessarily mean a contraction. However, the issue I take with his blog on the matter is the condescending way he presented it. It is my opinion Mr. Durden deserves a little more deference given his contributions. I also believe Mr. Durden and Mr. McBride could both benefit from reading one another's blogs.
Zero Hedge Responds:
Quick Note On NAHB HMI | zero hedge
http://www.zerohedge.com/sites/default/files/images/Rosie%20source.jpg
What say you?
I suspect many read both CR and ZH on a regular basis.