With Rosie now gone from Merrill Lynch/BofA (new research here), let’s see what his replacement, Neil Dutta, is up to:
>

Leading measure of commercial real estate market heads south

cre-leading

>

Neil  notes that Commercial construction contracting, as demand for architectural services (a  leading indicator for nonresidential construction) is still contract as of March 09, as the Institute of Architects’ Architectural Billings Index dropped to 42.8 in April from 43.7 in March.

Category: Economy, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

168 Responses to “CRE Faltering”

  1. ben22 says:

    JD,

    got that, just saying she probably didn’t need to say it. +, she’s an inflationista so why would she hold CD’s : )

  2. Wes Schott says:

    deflation first, inflation second

  3. karen says:

    Several things… first I completely misinterpreted Bruce’s question and answered too broadly. Bruce wanted me to name “one investment to stabilize to my finances assuming the day of inflation returns.” Of course, I already picked that investment years ago and it was gold… i bet on rising gold and rising oil (until it went parabolic.) Today, in an IRA that was 100% precious metals, I moved 10% to emerging markets… this will either be exactly right or exactly wrong in the short term… Intuitively, and perhaps wrongly, I think we can see a 20-50 -100 dollar down day/move in gold again.. I do believe in gold as a store of value.. and, gold bugs will be all over the three white soldiers (candlesticks) in $gold.. but gold trades nearly 24 hours and we don’t have that visibility on our charts. So, looking at the $hui (almost an antique now that we have the gdx!), i see a correction coming.. Further, I always sell a bit on fat moves up, or regret it later : )

    As an aside, I use a cash rebate Amex for costco as well. Did have an odd experience with amex lately that made me question their exposure to credit problems in the pipeline.

    Ben, I never did that well with SRS.. it’s been frustrating.. if it gets in the teens, I will be a buyer.. just like FAZ in the 2-3 range…

  4. karen says:

    ben22, not only boring, but low return.. i can sit in a zero return MM and make it up on a market opportunity. That said, this is my day job.. if I were a brain surgeon, a cd for some of my cash might be my game.. especially in one of those Everbank foreign currency CDs…

    fun and interesting day, all in all.

  5. matt says:

    Not as fun and interesting as that quadruple top day :D I’m still laughing about that one.

  6. ben22 says:

    karen,

    are you ready to go with that 680 gold call I was blabbing about a few weeks ago? I was way too early on that. You should write out a little more often, but you are probably busy or having a salad. It’s good analysis. I’m looking for the same in SRS before I try again. Third times a charm. Never did FAZ, don’t plan on it. Don’t really feel like I’m missing the party though. CD’s have a place, no doubt. I like as much liquidity as possible myself so I never use em.

  7. ben22 says:

    Chris Whalen’s comment is hilarious.

  8. Wes Schott says:

    Karen, you are the Queen of this lair.

  9. Wes Schott says:

    ben22 @8:31 where is the link?

  10. karen says:

    ben! 680! no way! ha ha ha… that is a bit of main stream money manager baloney… can’t believe you’d buy into it : ) may be gone for a bit.. big happenings here in southern california.. the sun sets in 2 hours.. i need to get ready…

  11. Wes Schott says:

    Elliott Wave guys are talkin’ about that level

  12. call me ahab says:

    chris whalen left a comment- pretty sure that’s what b22 is talking about

    http://www.ritholtz.com/blog/2009/05/cre-faltering/#comment-174499

  13. Wes Schott says:

    Chris Whalen Says:

    May 21st, 2009 at 4:38 pm
    Faltering?? Barry has been taking nice pills again. CRE is dead, muerto, kaput. There are buildings withing walking distance of TBP HQ that are trading at 40% of last valuation. And the party is not even hot yet. This is why I am so negative on the banks. When 2/3 of the financing for the US economy DISAPPEARS and all that is left are the banks and the Fed, the only place prices can go is down. This goes for non-conforming RES in NY/CT/NJ/CA etc. Stick a fork in it. NEXT!

  14. Wes Schott says:

    I thought mark to market was resended?

  15. call me ahab says:

    rescinded?

  16. Wes Schott says:

    thank you ahab

  17. ben22 says:

    karen,

    the only person I saw call that number was Steve Hochberg who writes for Elliot Wave International. Anything but a main stream money manager.

  18. Wes Schott says:

    EW guys = deflationist….”but a buy at that level”….deflation first, inflation second

  19. karen says:

    ben, well, i know a money manager or two.. what’s the McClellan report calling for these days, do you know? I have someone I can ask, but it’s not important to me.. just trying to come up with names that may be very negative gold…

  20. Wes Schott says:

    Ben Bernanke
    Timmy
    Lord Brown(e, or not)

    shall we go on with the list?

  21. ben22 says:

    karen,

    don’t know, I’m not subscribed, don’t know anybody that is. I do know that oscillator was recently at a recored high though for the S&P.

    prechter is bearish on gold as well and his description of why is interesting.

    I can’t think of anyone else that really is, oh I suppose WB but he’s never made any calls like that.

  22. Wes Schott says:

    “McClelland” Oscillator – be sweet Ben.

  23. karen says:

    Prechter has been WRONG ever since I learned his name. The ONLY elliot wave person I’ve ever liked is Andy. Prechter was bearish on gold at $300.. $400, $500. $600, $700, $800, $900. $1000.

  24. cvienne says:

    @ben22

    I’ve talked with you about gold b4…You know my stance…I’ve owned the bullion (investment quantities) since 2004 so you know I’m bullish…But I’m in the camp for a pullback here (no breakout yet)…

    Gold peaks or troughs the week before or after a HOLIDAY (either when US or Europe has a closed market)…Look at the length of the bars on weekly charts…

    3/17/08 week going in to Easter
    4/28/08 trough (May 1 is Labor Day holiday in Europe, US is open)
    7/14/08 Week past July 4 (no holiday in Europe – except July 14 bastille day)
    9/8/08 Labor day US (no holiday in Europe)
    10/20/08 that was no holiday, just cash raising during bank crisis
    2/16/09 Presidents Day (no holiday in Europe)

    you could even call “minor” reversals (like MLK day in January)

    Gold does REVERSALS on holiday weekends when ONE of the markets is closed (either Europe or USA)

    So I expect either a massive breakout (doubtful), or a REVERSAL (probable) to initiate by Tuesday…

    My target on the downside would be $750, where it would find support around August 15th (holiday in Europe – not in US)…Right at that time, you’re going to get a big S&P selloff so people won’t be paying any attention to gold…

  25. cvienne says:

    By the way…Easter is always interesting cause they close the markets HERE on Friday & in Europe on Monday…

  26. Wes Schott says:

    cv @9:35…..and then the price of gold goes….?.

  27. karen says:

    cvienne, did you see my post @ 7:59? perhaps we are in agreement with gold here… I only see 850-60 as a low.. depends on the timing.. that was a very good post, btw.

  28. cvienne says:

    UP…

    I’m in the camp for GOLD trading 6x the value of the S&P before all is said and done…

    It may take a couple of years and I can’t say where the cross will be…

    S&P 400/gold $2,400
    S&P 600/gold $3,600

    I can’t say…

    There is only ONE THING that worries me even in the slightest about gold in the long run…That would be if Obama does an FDR and confiscates everybody’s gold before it reaches full fruition…

    Anyway (BTW2)…The “holiday” sequence was something I picked up from Hugh Hendry when I was in Europe and used to watch hime there…

  29. cvienne says:

    @karen

    I’m fully with you on $850 as well (maybe that would be a “4th of july” target)…I basically keep 680-750 in my head only because the WHOLE thesis would be broken UNDER those levels (not that I think gold will necessarily trade there)…

    And you can’t credit me fully for these ideas…I picked up the idea from Hugh Hendry…It’s worked a good % of the time…

  30. ben22 says:

    did you guys see the paper that was published here maybe 6-8 months back “The Shadow Price of Gold”

  31. Wes Schott says:

    …deflation first, inflation second….

  32. cvienne says:

    @ben22

    No, I’m kinda new to this blog, but I just googled it and will be interested to read it…

    Other interesting facts:

    Did you know the US has more than 8x the gold reserves vs. China

    &

    that the GLD has 25% more reserves than China?

  33. cvienne says:

    @Wes

    I think we all agree with that…I’m just not TRADING gold because I own the bullion…

  34. ben22 says:

    cvienne,

    that was here you can probably find it by using the search at the top.

  35. cvienne says:

    So if it breaks out over the weekend…I’m happy…

    But if it CORRECTS, I’m happier because I want to accumulate more…

  36. Wes Schott says:

    GLD may be a bit of a fraud…ownership of the physical could be by more than one….trading vehicle only

  37. cvienne says:

    Most likely some “Degaulle-Nixon” moment will arrive in the future (without warning)…

    The Chinese, wanting to bring their reserves up to US levels, will demand transfer payment from the US using its gold reserves…

    Either the US will have to comply, or the Chinese will float their currency…At that point, the YUAN would immediately replace the USD as the worlds reserve currency and the dollar would collapse…

    But that day is aways in the future…

  38. Wes Schott says:

    Not possible. USD not tied to gold. FX is all relative.

  39. call me ahab says:

    cvienne-

    good analysis and true- possible outcome- assuming they can find another way to sell their goods without an artificial value for their currency-

    obviously their goods would become much more expensive around the world

  40. cvienne says:

    @Wes

    Who really knows? All I know is one thing: Paper currencies don’t have a brilliant history

  41. Wes Schott says:

    cv@10:14, totally agree. it is only a matter of time.

  42. cvienne says:

    @ahab

    What China needs is a good World War (that they can stay out of) but be the manufacturing base for the countries fighting…

  43. MexicaliBlues says:

    Prechter wrong? At times sure, like all of us.

    Show me someone else out there who has been able to spot turns in major markets like he has in the last 30 years.

    Prechter did “pretty well” with his call to short the S&P in Oct 2007, and to lever up if inclined to be more aggressive (e-minis). That trade was covered earlier this year if you followed his forecast to the letter.

    He had a Pretty good call in 1982 (bullish) as well as a couple weeks before the ’87 drop. None of us are infallible, Prechter included (he would be the first to admit that). That said, he has called some truly enormous market turns over his career.

  44. call me ahab says:

    and a follow up-

    that would not necessarily be a bad thing- Chinese goods become more expensive- American goods become less expensive-

    it all works out- with some adjustments to our standard of living of course- and-

    it would finally stop the other economies around the world from depending on the USA as their lifeline- all dependent on USA consumption for their livelihoods

  45. Wes Schott says:

    OK, between Mexicali’s exhaultation of Prechter, and cv’s war to support China’s manufacturing industry (man, I hate to get political, but this sounds like the Establishmentarian Party TM), what do you think the value of gold will do – up or down, what say ye?

  46. Wes,

    you’re on the right track, GLD is Not Gold.

    ben22,

    hear karen on this, as lb has said: AT, how to do EW better than Bob Prechter..

    AT is, really, the best I’ve ever seen–his, again from lb, is Top Witchcraft.

    Though, if you, really, want to dive into the arcana, dial up Arch Crawford .. http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Arch+Crawford

    also, more down to Earth, see: http://www.amazon.com/Martin-Zweig-Winning-Wall-Street/dp/0446672815 and, note the books by Schwager + Lefevre

    feel free to order any of those books, if you don’t like them, I’ll 2x your Cash back, in exchange for them..

  47. ben22 says:

    MexicaliBlues,

    Take it easy on Karen, I think she was just referring to Prechter’s more recent stance on Gold not any market calls.

    You are right though in what you say. Prechter, imho, is brilliant.

  48. karen says:

    okay, okay, we are all on the same page… just don’t believe the CB reports of gold sales.. the gold has already been leased out and cannot be bot back.. it’s a paper play.. just as PE is : ) In other words. It’s Old Mother Hubbard looking in the cupboard… lol.. i grew up on english nursery rhymes.. (otherwise, i would abhor LB, lol.)

    http://en.wikipedia.org/wiki/Old_Mother_Hubbard

    Quote of the day, week, year, ten year…: Paper currencies don’t have a brilliant history. (Cvienne @ 10:14.)

  49. ben22,

    to be clear, this: “Prechter is brilliant.” is, to me, True, too.

    Wes,

    Long-run, the Paperback, as we know it, yon’ FedRes ‘Note’= Null.
    http://www.thefreedictionary.com/null

    yes, def.s # 1, 2, 3, & 4

  50. cvienne says:

    @MEH

    yeah, I wonder what will go to zero first…

    The greenback? or FAZ?

  51. cvienne says:

    Did any of you read Prechter on Bloomberg a few days ago?

    http://www.bloomberg.com/apps/news?pid=20601103&sid=aKYrBQ3gr6Q4&refer=news

  52. karen says:

    Oh, LOL, we have a lurker… Mex. LOL.. short late 2007! anyone with a brain was; and we were EARLY and WRONG! Talking about turns…. laughable. Richard Russell, was right 50% of his turn calls! Prechter, less. You wanna follow somebody? Listen to Jim Sinclair… on the BIG calls. He guaranteed my 20 oz gold purchase… when he makes that call again, i’ll be a buyer.

  53. karen says:

    YOU guys are nuts… Prechter is no genius… I’m gonna be ill now.

  54. Wes Schott says:

    James Dines? You guys got there yet?

  55. karen,

    you’re 2x correct re: Jim Sinclair.

    and, in the Behaviorial Econ.-Frame, yes, Prechter is brilliant.

    cvienne,

    good Q: , that FAZ has butchered many a peep. I was fading FAZ Puts b4 Apr opex, would up Short a lot of FAZ in the mid-/low- teens..still had my Fuzz, so I blew it out.. O, Hindsight~ Better to see a Tomorrow..

  56. call me ahab says:

    Karen-

    don’t let your own preferences cloud your judgment- here is Prechert telling folks to close their short positions 2/25/2009

    http://www.youtube.com/watch?v=4SG7XGcL7JE&feature=channel_page

  57. Wes Schott says:

    MEH @10:32 oui. -95% since 1913

  58. ben22 says:

    karen,

    make yourself a nice salad and watch these in order, he is right in pretty much every single one.

    notice that he says cash is actually ideal all along the way, though as mentioned above, he recommended some trades in the last 18 that would have made you lots of money. For lots of fun, map these videos over a chart of the DOW during the same period. It’s a very pretty picture.

    10/19/07

    http://www.youtube.com/watch?v=SjS60TaD_J8&feature=channel_page

    11/2007

    http://www.youtube.com/watch?v=WJnMia2rARI&feature=channel_page

    2/27/2008

    http://www.youtube.com/watch?v=KQUcKHRb2ME

    03/2008

    http://www.youtube.com/watch?v=9KbMFlSDGmw&feature=channel_page

    05/2008

    http://www.youtube.com/watch?v=2Yzb4ilsrzg&feature=channel_page

    06/25/2008

    http://www.youtube.com/watch?v=n-I1Mv4DCYY&feature=channel_page

    08/20/2008

    http://www.youtube.com/watch?v=76P-6P9dVcQ&feature=channel_page

    10/28/2008 (still pushing cash or cash equivalents here)

    http://www.youtube.com/watch?v=NIko3758xCM

    02/25/2009

    “not a bull market, but cover your shorts”

    http://www.youtube.com/watch?v=4SG7XGcL7JE&feature=channel_page

    I don’t know, that’s about as accurate as anyone I’ve seen during this bear market.

  59. I enjoy reading Prechter, but you have to admit he was dead wrong throughout the entire 1990s bull run. Indeed, his call for crash in 2008 is the same call he has been making for decades.

    I can say that, and also point out that Prechters Perspective is a fascinating and readable book.

  60. ben22 says:

    Barry,

    No doubt. I find his comments on Socionomics most interesting.

    I would have hated to miss the 90′s.

  61. karen says:

    Ben, all those videos are from late 2007… please… a blind squirrel could find those acorns.. Barry is absolutely right in his post above… But, I will certainly refrain from future commentary on Prechter…

  62. ben22 says:

    karen,

    you really don’t like him do you. Only two of the videos are from 07. Anyway, you know I respect your opinion. I think we’ve beat this into the ground enough.

    the main problem with wave is that if you are on the wrong count, you will just be wrong.

  63. karen says:

    sorry, ben I meant the videos begin from late 2007… seriously i haven’t followed him in many years except for his gold calls.. he turned me off hard a long time ago. and, of course, as you know i struggle mightily with the wave thing..

  64. ben22 says:

    yeah, I’m just getting into it now (wave). I see what you are saying though. Have fun trading today. Should be interesting watching the bonds again today.

    you are right about late 07 though, it seems especially easy to say it now, but if you were paying attention it was easy to see the, uh,… problems.

  65. karen says:

    Ben, what i should have been saying… Prechter is no market genius… but he may be a marketing genius : )

  66. I-Man says:

    Clarification… My bad folks, I did not mean to impart false information on Costco’s payment practices. I always thought they didnt take credit cards, but here is the real deal from their website FAQ:

    What types of payment does Costco accept?
    You may pay by cash, Amex card or Costco Orico co-branded card. We do not accept other credit cards because their fees would increase the costs to us and our members.

    I-Man is cash money anyways. :)

  67. ben22 says:

    karen,

    you may be right. I just went to the Elliot Wave international site and it looks like they have over 100k subscribers. At $40 per month + if you buy extra’s and the ad’s on there that’s a decent amount of revenue each year.

    Perhaps his background in psychology did make him a marketing genius

  68. [...] there is the CRE market. As both Zero Hedge and Barry Ritholz write today, it is the commercial real estate market that now seems to be in trouble.  This will [...]