New Home Sales Fall 34%
Another month, another disasterous housing data point:
Sales of new one-family houses in April 2009 were at a seasonally adjusted annual rate of 352,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.3 percent (±14.5%)* above the revised March rate of 351,000, but is 34.0 percent (±11.0%) below the April 2008 estimate of 533,000.
The median sales price of new houses sold in April 2009 was $209,700; the average sales price was $254,000. Median prices of a new home decreased 14.9%
The seasonally adjusted estimate of new houses for sale at the end of April was 297,000. This represents a supply of 10.1 months at the current sales rate.
Note (once again) that the monthly data is statistical noise at 0.3% with a ±14.5% margin of error; the annual fall of 34% is statistically significant versus 11% error).
The usual headlines got it wrong:
• Bloomberg: New-Home Sales in U.S. Climbed 0.3% to 352,000 Pace
• Marketwatch: Home sales up a paltry 0.3%
• Reuters: US new home sales rose 0.3 percent in April
• Associated Press: April new home sales inch upward
• WSJ: New-Home Sales Rise as Prices Tumble
No, we cannot accurately state that home sales went up in April 2009. Yes, we do know that sales fell (between 23% and 45%) year over year.
Note the Non-seasonally adjusted pattern is typical; the sales data follows the historical trend.
Bottom line: Yet another bad RE number.
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via Calculated Risk
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Source:
NEW RESIDENTIAL SALES IN APRIL 2009
Manufacturing and Construction Division
MAY 28, 2009 AT 10:00 A.M. EDT http://www.census.gov/const/newressales.pdf
New-Home Sales in U.S. Climbed 0.3% to 352,000 Pace
Bob Willis
Bloomberg, May 28 2009
http://www.bloomberg.com/apps/news?pid=20601068&sid=a_syIHolWEnY&
May 28th, 2009 at 11:14 am
I wonder if some of the new tax rules are skewing the new home sales figures.
Also, does anyone remember what fixed mortgage rates were this time last year? I cannot.
May 28th, 2009 at 11:23 am
@ben22: I believe they were in the low 6’s, if I recall correctly. Since people are being allowed to use their $8K tax credit as a down payment (don’t even get me started), this is undoubtedly skewing the data here. Once that goes away (probably won’t for a long time), along with other manipulations/distortions, where does the housing market go? I think we all know the answer to that question, which means these distortions won’t go away any time soon, even if it hurts us in other ways.
May 28th, 2009 at 11:43 am
Green shoots. Must … have …. green …shoots.
.3% front page headlines. Margin of error + – 14.5%? WTF is that???? :>)
May 28th, 2009 at 11:44 am
You can check the rates here: http://www.bloomberg.com/markets/rates/keyrates.html
May 28th, 2009 at 11:47 am
Y-o-Y is the only number that matters. It excludes the monthly noise.
btw GM plans to file bankruptcy on June 1st.
May 28th, 2009 at 11:57 am
Our economy isn’t supposed to be based on new-home construction fueled by strange financial instruments and lax regulation.
So, who cares if new-home sales are way down? Shouldn’t they be?
How about wind, solar and other useful infrastructure investments…how are they doing?
May 28th, 2009 at 11:59 am
“. Margin of error + – 14.5%”
these statistics give Statistics a bad name..
past that, these:
http://finance.yahoo.com/q?s=OOCFU.X
at those prices ~.50, have to be a raging Sell. good thing there’s liquidity in that Mkt., as opposed to the ‘Housing’ Mkt.
May 28th, 2009 at 12:12 pm
Let’s see…
Oil at 64.40 today…
Mortgage refi’s…plummeting..
10 year bond..not performing as ordered…
another >600k initial claims
GM to close 14 more plants.
Costco has an upset stomach…Costco!
Taxes going up…
hmmmmmmmmm………
May 28th, 2009 at 12:13 pm
Oil is now up 100% off its lows. I think that is probably overdone.
Shorting today’s rally is probably going to be a good trade. Again…
May 28th, 2009 at 12:18 pm
My buzz is wearing off… can anyone pack up some more green shoots? I burned all mine.
I got five on it tho…
May 28th, 2009 at 12:19 pm
@BnT
10 yr note is back up to 3.71%
May 28th, 2009 at 12:20 pm
Here’s yer green shoots, I-Man. Smoke this lot:
http://www.calculatedriskblog.com/2009/05/mba-mortgage-delinquencies-foreclosures.html
May 28th, 2009 at 12:21 pm
Silver is shaping up to be a great short as well.
May 28th, 2009 at 12:23 pm
@amenRa (11:47)
They’d better alert the FDIC about the GM BK filing…
Since that will be the headline news over the weekend, it would give them [FDIC] a chance to run in stealthily and shut down about a dozen more banks or so without anyone really noticing…
May 28th, 2009 at 12:32 pm
I was thinking more along the lines of the OG Kush or Silver Haze…
But seriously…
It feels like the bulls are running out of happy pills here.
May 28th, 2009 at 12:39 pm
“New investor class actions include two filed on behalf of mortgage-backed securities certificate holders and one accusing a Puerto Rican institution of fraud. Two class action settlements were reached, and five cases against a mortgage insurer were consolidated into one. (May 28)”
“Investors of mortgage-backed securities led an increase in mortgage-related litigation, according to the First Quarter Mortgage Litigation Report. An increase in the number of foreclosure lawsuits also contributed to the rise in legal activity. (May 26)”
http://www.mortgagedaily.com/
May 28th, 2009 at 12:56 pm
@cvienne
The FDIC took over Bank United on Thursday last week. So much for FDIC Fridays. But remember the FDIC is setting up a satellite office in Florida. So more banks are on the chopping block.
btw the 10yr note just hit 3.74%
May 28th, 2009 at 1:01 pm
@AmenRa:
of all the goings on…I think the Fed’s inability to control interest rates is the most interesting…
May 28th, 2009 at 1:09 pm
as someone commented above about wind I have a response: what little research I’ve done on wind energy, well, it does not seem a very useful infrastructure investment. no.
May 28th, 2009 at 1:11 pm
@BnT
hmm Goliath is the bond market and David is the Fed. But this time David gets obliterated by Goliath.
May 28th, 2009 at 1:11 pm
This might be of interest, or useful for a good laugh:
http://www.nyiso.com/public/webdocs/committees/bic_icapwg_lftf/meeting_materials/2009-05-21/NYISO_May_2009_US.pdf
hope it works.
May 28th, 2009 at 1:14 pm
http://www.mercurynews.com/businessheadlines/ci_12462737?nclick_check=1
Report: Server sales declined 24.5 percent in first quarter
“The server computer industry took a huge hit in the first three months of 2009, when sales plunged nearly 25 percent and total revenue fell below $10 billion for the first time in more than a decade, according to a new report from a leading market research firm.”
May 28th, 2009 at 1:19 pm
Green shoots, Bruce. Green shoots. Recalling the disconnect in late ‘06/’07, this bizarre unreality can go on for quite a while and probably will.
May 28th, 2009 at 1:27 pm
Somebody please explain this to me. The 7yr note auction closed with a higher rate and lower bid-to-cover. The market is rallying. Is this a disconnect? Is this rally a subversive way to bring the 10 yr note back in line?
May 28th, 2009 at 1:29 pm
Mannwich @ 1:19
“Recalling the disconnect in late ‘06/’07, this bizarre unreality can go on for quite a while and probably will”
Yes. But the homebuilder stocks, at least, were facing reality by August of 2005.
No doubt there are indicators now that will become obvious in retrospect.
May 28th, 2009 at 1:29 pm
I-Man,
I hear Bride of Dankenstein is good.
May 28th, 2009 at 1:31 pm
Man… the bond market is coming off the hinges… what’s up with this Left?
May 28th, 2009 at 1:32 pm
@ben22: Thanks for the Moody’s link. They’re the same folks with the intelligence and integrity to rate bonds right? :>)
Looks good. Now all we have to do is cut social security and medicare and the national debt problem is all fixed. And we’re done. Great job everyone.
May 28th, 2009 at 1:33 pm
As long as our equity markets can find enough “greater fools”, this little charade will continue. And now that J6P is getting back in the game in greater numbers, assured by his broker that all is well, this could go on for months. That’s basis for much of our economy today. Look how long the housing ponzi game went on for years and years. Ditto the dot.com. It always ends badly and this time will be no different.
May 28th, 2009 at 1:35 pm
so . . . outside of crude- any observations on why the market bounced higher- especially NAZ-
my head is spinning- I can heads nor tails of direction anymore
May 28th, 2009 at 1:36 pm
@ahab: J6P is back in da house.
May 28th, 2009 at 1:37 pm
@ben22
The Chinese seem to see some potential in wind energy…they’re rapidly becoming the world leaders in wind energy investment.
I agree…housing isn’t going to come roaring back, and that’s just fine with me.
May 28th, 2009 at 1:39 pm
Check Macro-man’s insights on the bond market: http://macro-man.blogspot.com/
Seems as tho yields are returning to normalcy after being completely out of whack..
May 28th, 2009 at 1:39 pm
usphoenix,
As I’m sure you could, I could poke holes in that report all day. Did you notice the focus on how “stressful” the stress tests were. Clearly moody’s is very good at repeating administration or Fed talking points. Forecasting, or determining risk, well, not so much.
May 28th, 2009 at 1:40 pm
I have no idea what today is about – except program trading by black boxes.
Let’s see how the market closes. The last hour of trading is the tell. That’s when the humans are at the controls.
May 28th, 2009 at 1:41 pm
all is good in pleasantville-
http://www.cnbc.com/id/30984467
May 28th, 2009 at 1:41 pm
The S&P jump is freaking weird. Who’s dumb enough to jump in? A daytrader with a jones of some kind? This one is beyond a joke.
I was wondering where the sellers would come from in the next downdraft. There aren’t enough normal people in to make a difference. It’s only computers selling to computers and whoever is stupid enough to think they can beat the house. I think the next fall will come from a lack of speculators who see the market as a street hustle. In other words, nobody will be left to buy but computers. (Who will they sell to. Will it be a programmer death match?)
May 28th, 2009 at 1:46 pm
Franklin
People said the same thing about China and solar last year. Want to buy some ESLR?
Re: Wind and China.
LOL
Just a few thoughts that I stole from an OTB letter from John Mauldin:
During the presidential race, Barack Obama was heard to remark that he would bankrupt the coal industry. No one can doubt Washington’s power to bankrupt almost anything — in the United States. But China is adding 100 gigawatts of coal-fired electrical capacity a year. That’s another whole United States’ worth of coal consumption added every three years, with no stopping point in sight. Much of the rest of the developing world is on a similar path.
Cut to the chase. We rich people can’t stop the world’s 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach. We can’t even make any durable dent in global emissions — because emissions from the developing world are growing too fast, because the other 80 percent of humanity desperately needs cheap energy, and because we and they are now part of the same global economy. What we can do, if we’re foolish enough, is let carbon worries send our jobs and industries to their shores, making them grow even faster, and their carbon emissions faster still.
We don’t control the global supply of carbon.
Ten countries ruled by nasty people control 80 percent of the planet’s oil reserves — about 1 trillion barrels, currently worth about $40 trillion. If $40 trillion worth of gold were located where most of the oil is, one could only scoff at any suggestion that we might somehow persuade the nasty people to leave the wealth buried. They can lift most of their oil at a cost well under $10 a barrel. They will drill. They will pump. And they will find buyers. Oil is all they’ve got.
And in order to make this not too long, on wind:
Windmills are now 50-story skyscrapers. Yet one windmill generates a piddling 2 to 3 megawatts. A jumbo jet needs 100 megawatts to get off the ground; Google is building 100-megawatt server farms. Meeting New York City’s total energy demand would require 13,000 of those skyscrapers spinning at top speed, which would require scattering about 50,000 of them across the state, to make sure that you always hit enough windy spots. To answer the howls of green protest that inevitably greet realistic engineering estimates like these, note that real-world systems must be able to meet peak, not average, demand; that reserve margins are essential; and that converting electric power into liquid or gaseous fuels to power the existing transportation and heating systems would entail substantial losses. What was Mayor Bloomberg thinking when he suggested that he might just tuck windmills into Manhattan? Such thoughts betray a deep ignorance about how difficult it is to get a lot of energy out of sources as thin and dilute as wind and sun.
May 28th, 2009 at 1:46 pm
@ben: Yeah I got it. Someone somewhere passed a link to Michael Crighton’s thoughts on scientific consensus with a saying similar to “consensus is where all the rascals hide.”
Been there done that. Bus and Gov. No one has an open meeting anymore without first nailing the “consensus” down. Open dialog and debate? Dead.
May 28th, 2009 at 1:50 pm
One article stated that foreclosures would not abate until employment turned around. Another said that housing prices wouldn’t stabilize until foreclosures abated. Yet another declared that the economy wouldn’t pick up until housing prices stabilized. Finally it was postulated that employment wouldn’t turn around until the economy picked up. Should we shuffle and re-deal or play this hand?
May 28th, 2009 at 1:53 pm
dead hobo Says:
“The S&P jump is freaking weird. Who’s dumb enough to jump in?’
my thoughts exactly- as leftback said- let’s see what happens at the end of the day- do not see one catalyst to send this market higher
May 28th, 2009 at 1:53 pm
ben22 @ 1:46
I agree with everything you wrote. Add the fact that, if Obama gets his way, we’ll be looking at a “carbon tax” of $500B per year.
The “greenies” are incorrigible. And they’ll be in power for at least another three years.
May 28th, 2009 at 1:57 pm
“The S&P jump is freaking weird. Who’s dumb enough to jump in? ”
This is hedgies and the MM prop trading desks. All you can do is sit back and watch – then fade the big moves.
If it wasn’t for this action, there might not be any action at all in this market.
May 28th, 2009 at 1:59 pm
from Jesse’s Cafe Americain-
“Wax on. Wax off. Generate brokerage fees and skin the small speculators. The fundamentals continue to deteriorate but volumes are so light its a shadow puppet market slithering into the end of the month. ”
pretty good way to sum it up
May 28th, 2009 at 2:06 pm
usphoenix-
I agree with you and the rest of youse guys on this blog, “consensus is where all the rascals hide.”
Yours truly,
Spanky McFarland
May 28th, 2009 at 2:09 pm
this oil rally is a show-
bogus inflation play
May 28th, 2009 at 2:14 pm
Oil Schmoil,
Look at the Nat Gas stocks today.
May 28th, 2009 at 2:21 pm
ben22 Says:
May 28th, 2009 at 2:14 pm
Oil Schmoil,
Look at the Nat Gas stocks today
reply:
————-
Nat gas will be the canary in the mine. Since Nat Gas is in glut and expected to stay that way for years, any significant rise that is persistent, especially if it breaks $5, will be evidence of the return of junk credit. If that happens, Uncle Stupid may as well close up the rescue operation. He lost.
May 28th, 2009 at 2:21 pm
http://quotes.ino.com/chart/?s=NYMEX_SI.N09.E&v=d3
silver dollar
10-yr under ~116
http://quotes.ino.com/chart/?s=CBOT_TY.U09&v=d12
May 28th, 2009 at 2:24 pm
balderdash.
May 28th, 2009 at 2:29 pm
@Hobo: Agreed. The oil/nat gas rally is now the product of leveraged trading. Shorting the oils into the close.
May 28th, 2009 at 2:29 pm
call me ahab @ 2:09
“this oil rally is a show-… bogus inflation play”
Maybe, but my OIH is hauling ass today.
I’ll take it.
May 28th, 2009 at 2:33 pm
DL, as long as you are on the right side of the oil trade, it’ll make my pain a little more bearable… crude can tag 66 easy… i should have at least waited for 65…
May 28th, 2009 at 2:36 pm
Oh, and may i add, the inflation play is not bogus… eventually inflation will be hitting you over the head so hard you won’t be able to deny it any longer : )
May 28th, 2009 at 2:36 pm
@Bruce in Tennessee
Let’s see…
Oil at 64.40 today…
Mortgage refi’s…plummeting..
10 year bond..not performing as ordered…
another >600k initial claims
GM to close 14 more plants.
Costco has an upset stomach…Costco!
Taxes going up…
hmmmmmmmmm………
====================================
You for got to mention the DOW up over 100 points – I can picture Summers and Geithner smugly smiling at each other
May 28th, 2009 at 2:37 pm
hobo,
I don’t disagree. Look at the moves of the likes of XTO and CHK since late 08. Those are the two I follow the closest. I bought CHK late last year but I have clearly sold out way to early. That said, still had a nice gain on it.
I suppose one strategy lately is to find the dirtiest CEO’s out there, like that bastard Aubrey, who hauled in 112 mil last year and get long.
May 28th, 2009 at 2:38 pm
but franklin said costco was so busy?
What happened?
May 28th, 2009 at 2:40 pm
@DL: Nice going. I left this trade too early – although I still have PBR COP and VLO.
May 28th, 2009 at 2:42 pm
Just got in from mowing the lawn. Glad to see nothing’s changed.
May 28th, 2009 at 2:42 pm
It’s pretty rare that the tape pisses me off… but today definitely has my feathers ruffled a bit. Maybe I should step away and take another look at those weekly charts.
May 28th, 2009 at 2:43 pm
karen @ 2:36
“…may i add, the inflation play is not bogus…”
Agree. Skeptics should go back and look at the oil chart for the period 2002-2004; at the time, most people were saying that inflation was out of the question. Rising food and energy became abundantly obvious to “J6P” by late 2007.
May 28th, 2009 at 2:44 pm
about costco, last quarter costco was quiet in my area, even the parking lot was empty… however, the last 3 times i’ve been in 2 weeks.. it was bumper to bumper carts.. the kind that prevent you from just getting in and out of their quickly and efficiently.. and make you dislike other human beings with an intensity… lol.
May 28th, 2009 at 2:45 pm
leftback @ 2:40
You’re not like one of these MSM commentators who talks bearish but acts bullish….. are you?
May 28th, 2009 at 2:46 pm
it’s Things, not Paper, that are Still in a Bull Market
May 28th, 2009 at 2:47 pm
Karen-
so last year when oil was raging- what was the impetus for that? In hidsight most people have come to the conclusion it was maniulation of the market-
I’ll belive inflation when I see it- and I don’t see it- hard to believe in inflation when there are less and less people working and no wage pressures
May 28th, 2009 at 2:48 pm
there not their.. but i’m checking to see if they (costco) gave forward guidance. also, anecdotally, i saw some big ticket items being purchased… a pilates reformer, for example… not exactly an essential like my starbucks french roast…
May 28th, 2009 at 2:48 pm
MEF,
I don’t know, the chart of IP looks fine to me.
(just a bit of sarcasm, don’t mind me).
May 28th, 2009 at 2:49 pm
I agree. The inflation play is not bogus. That’s why I own TIPS and am short the 10-yr.
The extended run-up in crude probably is getting bogus now, in view of the gargantuan amounts of oil that have been stored. My suggestion is that a lot of the long crude trade is leveraged $ hedging and will eventually unwind.
Now if I knew when, I would be significantly less irritated. Meanwhile, the 100% rise in crude since the bottom will be slowly feeding its way into the PPI and CPI numbers. A certain amount of inflation is baked in the cake.
May 28th, 2009 at 2:49 pm
ahab,
DEFLATION in housing and wages. INFLATION in food and energy
May 28th, 2009 at 2:50 pm
@karen: How many of those people would you surmise have been living in their homes mortgage/rent free? Seems like in the OC it could be quite a few, no? Might as well go out and party with that extra cash while you can. Keep dancing on the deck until the ship sinketh.
May 28th, 2009 at 2:51 pm
@DL: I hedge against myself, at times, in case I’m wrong. It’s a useful technique in markets like this.
May 28th, 2009 at 2:51 pm
RE: Market
All, we haven’t touched the intraday highs from yesterday so until we do, who knows what this means but I wouldn’t read into it too much, if we break above we probably just move higher, if not, maybe just some noise today as the correction or consolodation continues from 5/8 levels.
I’ve got that Beyonce song in my head
It’s just emotions…..
Oh Karen,
I saw David Einhorn this morning, he looks like a mouse… you think he’s good looking?
May 28th, 2009 at 2:52 pm
FYI – my latest mortgage alert from WFC. Seems that rates are jacking quickly. Just a few days ago was under well 5.
30-year fixed1 5.500% 5.719% 1
May 28th, 2009 at 2:52 pm
“MSM commentators who talks bearish but acts bullish”
Let’s see…is that something like saying “I think like it’s time to short blueberries” and all the while you’re eating green shoots and looking for a cow to reflate?
BTW some nut was recommending a look at SID and TS last night, I call that nut ‘Jacarandá! ‘
E mais tarde do que acham.
May 28th, 2009 at 2:55 pm
ahab, i was well out of oil except to short above $100 (actually I did a quick short at $100; maybe i got out in the 80s and watched from there).. agree wholeheartedly it was a speculative and trading bubble, and a leveraged one at that… we just witnessed a bond bubble, cuz that’s where the money was running.. where the money goes next is what we need to figure out… maybe into equities! ha ha ha.
May 28th, 2009 at 2:56 pm
well wait, I’m not seeing inflation in food, least not where i’m at. I’ve seen in eggs and milk, for example, a fairly significant decrease in price in the last 3 months. Food prices have remained very sticky, I wonder if that is an early sign of a break.
Is anyone else seeing this?
May 28th, 2009 at 2:58 pm
Bubbles, bubbles, toil in bubbles. Maybe it’s me, but leaping from one bubble to the next doesn’t seem like a good way to build a structurally sound economy. Maybe nobody cares anymore in the mad rush to cash in on the next bubble. Heck, if you miss one or even two, you always have a chance at ringing the register if you have some capital (read: leverage) to score that one big hit and then it’s off to the beach! See, it’s so easy…..
May 28th, 2009 at 2:58 pm
full disclosure,
I’ve been long DBA @ 23.25
May 28th, 2009 at 2:59 pm
@ben22: I’m not either. Lots of sales on food here in Minny, even at upscale Lund’s, especially on healthy foods like fruit and veggies.
May 28th, 2009 at 2:59 pm
DL at 2:49 pm
“DEFLATION in housing and wages. INFLATION in food and energy”
I agree completely with this thesis over the long haul.
May 28th, 2009 at 2:59 pm
Manny,
I can tell by your posts lately you are pissed off buddy. Don’t fight the trend, you’ll have your day to go short.
May 28th, 2009 at 3:02 pm
Ben22:
Looks like, by owning DBA, you’ve answered your own question. Higher food prices may not be here now, but there on the way.
May 28th, 2009 at 3:02 pm
@ben22: I’m OK. Still 1/3 equities, 1/3 cash, and 1/3 short. Have gotten a bit hurt on some short ETF’s but they’re mainly a disaster hedge for us so I’m fine with it. I’m mostly just cranky about the way our so called leaders are responding to this mess and can’t stand the glib denial and resistance to actually fixing what’s broken. It’s why I left Corporate America three years ago. Denial runs deep there too.
May 28th, 2009 at 3:03 pm
Ben, i think i said i was in love with him, not that he was good looking.. mm, and i do like his mouth and what comes out of it. lol. nothing wrong with his looks either.
May 28th, 2009 at 3:06 pm
Berkshire’s Sokol not seeing “green shoots”. Someone better tell him to get with the program quickly…..
http://www.calculatedriskblog.com/2009/05/berkshire-hathaways-sokol-no-green.html
May 28th, 2009 at 3:06 pm
i had an arugula salad for breakfast : ) arugula from my neighbors garden.. so yum . but, let’s not talk about food as it makes me hungry.
May 28th, 2009 at 3:06 pm
http://www.foodbusinessnews.net/markets/ingredient.asp
well wait, I’m not seeing inflation in food, least not where i’m at.
you’re Not seeing the Price declines that *could be..
May 28th, 2009 at 3:06 pm
ben22 said:
I’ve got that Beyonce song in my head
It’s just emotions…..
Nurse — fetch me my walker!
http://en.wikipedia.org/wiki/Emotion_(song)
The BeeGees, boy, The BeeGees!
May 28th, 2009 at 3:07 pm
Good point, Hoffer. Hadn’t thought of that.
@karen: No wonder why you’re hungry. Anyone on an all-arugula diet would be!
May 28th, 2009 at 3:11 pm
Anyone want to still argue that news moves the markets? Any explanation for today’s reversal, other than the MM’s wanted it that way?
May 28th, 2009 at 3:12 pm
Mannwich Says:
May 28th, 2009 at 2:58 pm
Bubbles, bubbles, toil in bubbles. Maybe it’s me, but leaping from one bubble to the next doesn’t seem like a good way to build a structurally sound economy.
reply:
————
Agreed. I don’t think this kind of market action is covered in the textbooks. I’ll buy at the bottom of a range or buy and hold for a reasonable period of time if the market looks stable. This market is NOT for mom and pop. Anyone who confuses this with investment is going to learn the difference the hard way unless they are lucky.
I honestly don’t understand why Uncle Stupid allows so much junk credit to screw up the markets. Only an idiot or a speculator would put cash in this market. This economy will not see any real investment if the easy way to make money is in commodity or stock market pumps. Uncle Stupid is just jumping to another bubble. The government is run by idiots who are apparently influenced by thieves.
May 28th, 2009 at 3:12 pm
@Manny,
I hear you man.
@ Mark,
that link requires a sign up. I see your point though, and I should say, a decline from what really. I should add that I buy organic Milk, I like the way it tastes.
@DL,
I bought DBA what I was convinced inflation was the real problem so really I was just lucky, I’m def. still not ready to state it’s hear, despite some smart people here thinking it might be closer than I suspect. Kudlow thinks it is too fwiw.
@Transor,
My bad, I wasn’t even an idea yet when the BeeGees were in! Speaking of looks, Beyonce is much better looking than those dudes.
May 28th, 2009 at 3:15 pm
Jeff,
two things: any One of us can’t think of Everything, and, the whole World begins in the Commodities Mkt.
as an aside, it is why “Wall St.” scares All of the ‘new’ investors away from La Salle St…Chicago Owns New York..
May 28th, 2009 at 3:15 pm
damn my spelling and grammer is dreadful
May 28th, 2009 at 3:17 pm
ben22,
try http://www.foodbusinessnews.net/markets/ingredient.asp
May 28th, 2009 at 3:17 pm
Karen-
i’ll take a steak salad- followed by a steak- sometimes- when I am eating light I’ll have a pork chop-
also- I am not buying the inflation angle- and I do believe that oil is being forced up w/ no reasonable catalyst present
May 28th, 2009 at 3:18 pm
OIC, sorry, just sign in, it’s a good Guide
May 28th, 2009 at 3:18 pm
@hobo: Couldn’t agree with you more, which is the main reason why I’m so cranky these days. It’s depressing. The realization that we are “led” by idiots and thieves is disheartening.
May 28th, 2009 at 3:19 pm
Most of the alleged “green shoots” have come from easing of the credit markets. This rate jump is not good news:
http://globaleconomicanalysis.blogspot.com/2009/05/mortgage-market-locks-up.html
May 28th, 2009 at 3:19 pm
ben22 @ 3:12
“I’m def. still not ready to state [inflation is] here”
Obviously, as an investor, you’ve got to act long before something is obvious to J6P.
(As for Kudlow, there are actually some good things I can say about him. But good economic predictions are definitely not among them).
May 28th, 2009 at 3:20 pm
Re: Food Prices
One of the reasons that you’ve not seen inflation there is because the pullback in ethanol demand…
In ‘08 with the previous run-up in corn prices, a lot of dairy & hog farmers were having to cull their herds because the “feedstock prices” were too high (leading to scarcities)…
2nd – even though it has nothing to do with the meat in the supermarket, al lot of people cut back on hog & meat purchases since the outbreak of swine flu…
Just a couple of anecdotes…
Lastly, with oil prices down from last year, the transport costs for getting stuff to market (as well as packaging) is less…
May 28th, 2009 at 3:21 pm
DL Says:
May 28th, 2009 at 3:19 pm
(As for Kudlow, there are actually some good things I can say about him. But good economic predictions are definitely not among them).
reply:
————–
Minty fresh breath?
May 28th, 2009 at 3:23 pm
DH,
Yeah, that’s it.
May 28th, 2009 at 3:26 pm
DL,
I think that is my hang up right now. I don’t think this market is for investing, only renting/trading, and I think it will be this way for some time. I just don’t think you can buy and hold right here waiting for the inflation to come which is why I’m not so worried about setting up for it right now.
On that note though, TIPS, which I have added to lightly over the last month, aren’t a bad place to be today imo.
I’m using the TIP for that. Nice and easy to remember.
May 28th, 2009 at 3:26 pm
@dead hobo
The finance and economic textbooks WILL be rewritten after this.
May 28th, 2009 at 3:26 pm
All: Just got off the phone with my mortgage broker (brother’s brother in law) and he says that he thinks he’ll be out of work in the coming months assuming rates keep going higher. FHA’s hit 6% today.
He also said he lost a big re-fi with a client after Citi refused to subordinate a second mortgage for one of his clients. This is the same Citi that we’re bailing out and should be done for by now. Now they’re sticking it to the very people who’ve bailed them out. How can we all not be irritated by these developments? Everyone has gone insane or maybe it’s just me that has?
It looks like a lot of these mortgage re-fi’s aren’t getting done. Too complicated for many of them to go through, which means more pain ahead for the housing markets.
May 28th, 2009 at 3:31 pm
David Sokol, chairman of Berkshire Hathaway Inc’s MidAmerican Energy Holdings and a contender to succeed Warren Buffett, warned that the U.S. housing market still has a ways to go before bottoming out.
…
“As we look at the economy, I have to be honest: we’re not seeing the green shoots,” Sokol said … “We think the official statistics of 10 to 12 months’ backlog is actually nearly twice that amount,” …
…this is from CR this afternoon…apparently Warren didn’t get the memo out to everyone…
…..ooooohh…I hope David doesn’t have to stay after school….
May 28th, 2009 at 3:31 pm
ben22 @ 3:26
“I don’t think this market is for investing, only renting/trading … I just don’t think you can buy and hold right here”
You be preachin’ to the choir, bud.
May 28th, 2009 at 3:32 pm
Mannwich,
Refi’s:
Lot’s of people are going to get stuck with that. If you tried to get a refi recently most of the banks, at least I know the local WFC, was telling people 45-60 days to get a simple refi done.
May 28th, 2009 at 3:34 pm
@ben22: Which means the bloodbath in the housing market will continue. I can’t see any way around this. Seems like common sense. Does that not apply anymore?
May 28th, 2009 at 3:37 pm
might be a chance to buy back MON here.
May 28th, 2009 at 3:49 pm
One of the many problems with refis is that nobody currently trusts the appraised value of the home, even in the cases where they trust the income of the mortgagor.
This “refi boom” is a bit of a mirage as far as I can see, like the Hope Now loan workout program. Pure politics. Only one way to fix the housing market – let prices fall to their natural level.
May 28th, 2009 at 3:50 pm
The 10-yr has been up and down like a yo-yo today. Bizarre.
May 28th, 2009 at 3:51 pm
I’m not worried at all….I’m sure this is all going to work out swimmingly. I mean c’mon…let’s face it….Big Ben nuked the mortgage market to temporarily force rates lower in order to stimulate sales….
If they couldn’t jump start sales with those kinds of rates, what the hell is going to happen with rates ticking higher? There must be some amount of disappointment in the learned Halls of the Federal Reserve and Washington….
YOU CANNOT MAKE PEOPLE BUY THINGS THEY NO LONGER WANT TO BUY, NO MATTER HOW “CHEAPLY” YOU OFFER IT!
Perhaps we’re in the middle of witnessing a great tragedy, in the Greek tradition… the foremost expert on the causes of the Great Depression becomes the Chairman of the Federal Reserve as the largest Credit Bubble in history deflates. Using all of this mighty intellectual power (hubris), he does everything he can to prevent another huge Depression, only to realize that everything he thought he knew was flawed (hamartia). You can’t make this stuff up.
May 28th, 2009 at 3:53 pm
NAZ is heading straight for 5000- good days are here again- hallelujah- praise the lord
May 28th, 2009 at 3:56 pm
any guesses at what the GDP revision ends up being tomorrow?
May 28th, 2009 at 3:58 pm
Andy-
you are raining on my parade dude- it’s all blue skies from here on out- we have the oil bubble we can invest in at the moment- and of course NAZ- can’t keep that down- a no-brainer- just invest and walk away- the rest will take care of itself- independently wealthy in no time-
it just get’s better and better
May 28th, 2009 at 4:00 pm
@ben22: Will definitely be better than expected.
May 28th, 2009 at 4:03 pm
Added to my short positions into the close. A US$ rally is brewing and this short squeeze is getting old.
Green chutes.
May 28th, 2009 at 4:06 pm
This undoubtedly won’t get any play on CNB-Green Shoots…….
http://www.calculatedriskblog.com/2009/05/ata-truck-tonnage-index-declines-22.html
May 28th, 2009 at 4:10 pm
Mannwich,
$Tran tells the story.
May 28th, 2009 at 4:10 pm
The bottom is in. Jimbo Cramer says so.
http://theburningplatform.com/economy/aint-no-rest-for-the-wicked-1
May 28th, 2009 at 4:17 pm
Jim Cramer is a God- take his advice and make millions- biggest no-branier in history
May 28th, 2009 at 4:20 pm
Hope there are no special bunnies to be pulled out of the magician’s hat tomorrow.
May 28th, 2009 at 4:26 pm
ben22 Says:
May 28th, 2009 at 3:56 pm
any guesses at what the GDP revision ends up being tomorrow?
reply:
———–
prior -6.1% Revised +100% (subject to revision later.)
May 28th, 2009 at 4:28 pm
Cramer is an idiot, we shouldn’t even bother discussing him.
That said, this is my favorite video of that bald fool.
http://www.youtube.com/watch?v=_nkZ3eHeXlc
May 28th, 2009 at 4:33 pm
Brand new offices available. Sounds like the regulators came down on Pequot rather unexpectedly…
http://dealbreaker.com/2009/05/anyone-in-the-market-for-27000.php
May 28th, 2009 at 4:41 pm
AmenRa Says:
May 28th, 2009 at 3:26 pm
@dead hobo
The finance and economic textbooks WILL be rewritten after this.
reply:
———–
Right.
Part 1 will be the basic theory and the math.
Part 2 will describe new finance: How concentrations of capital and junk credit, applied correctly, can take control of anything, while even 10 years ago that would have been considered a paranoid fantasy.
Part 3: will describe how to get cash out of people (behavioral finance and the sales pitch).
Part 4: How to get government bail outs and how to look like you learned your lesson.
Part 5: How to control a market that is low valued and has low volume, using government money.
Part 6: How to control the media and how to make them think you are heroic.
Part 7: Enjoy!
May 28th, 2009 at 4:45 pm
The chart for the UUP looks constructive, signs of the $ forming a bottom around UUP 24, USD 80.
A strong move up by the $ should be good for patient Bears, and a few impatient ones as well…
May 28th, 2009 at 4:50 pm
leftback,
I see the exact same and bought UUP via a limit order at 24 today with a tight stop. This is only for a trade as I think the real dollar strength comes after this countertrend rally is finally over, and I don’t think it is yet.
May 28th, 2009 at 4:51 pm
I thought there could be downside on the USD index to 77 so I set the stop accordingly in case it breaks through that.
May 28th, 2009 at 4:55 pm
I never trade the UUP. I just short everything in sight – it’s a “deflation, deleveraging, dollar rally” trade.
Took a beating today. On the wrong side of the oil trade. Serves me right for hubristic posting last evening.
May 28th, 2009 at 5:01 pm
I refi’d in late Dec to a 15 yr fixed at 4.25 plus a point, soon after the initial Fed talk about getting rates down. I thought I might have jumped the gun at the time and would regret the lower rates that might come. But it appears that’s not an issue. I didn’t follow rates closely over the last 5 months but I don’t think I missed the bottom by much.
And since then it’s apparently been a real pain in the butt to go through the process with most lenders, from what I’ve heard (long waits as the banks, et al were swamped with too little help on hand). Mine was painless. 2 weeks from applying to close. At least I’ve done something right lately.
May 28th, 2009 at 5:24 pm
So Left,
Would you be scaling out of DBA on a impending USD rally?
That DBA has had a nice run off that breakout from 25… trend still strong to me, but the dollar could throw a wrench in that no? Dont want to overthink it though, if the trend is up, its up.
USO keeps throwing me for a loop tho- after bailing on my SCO last week, I’m thinking we are just in consolidation mode, and that the uptrend still has some juice to 45. (That’s USO 45) I dont have conviction on that just yet, but it might be a good hedge on my equity shorts to get long some USO.
May 28th, 2009 at 5:33 pm
The HIW post of the day award goes to Andy T at 3:51pm.
– Take away: Truth is stranger than fiction.
Yesterday’s post of the day went to Karen for comments on kids, family, pets, and TV watching.
– My take: I’d prefer a war on TV, to a war on drugs. TV does more damage.
May 28th, 2009 at 7:05 pm
Here’s the cause for the sell off yesterday
http://globaleconomicanalysis.blogspot.com/2009/05/mortgage-market-locks-up.html
May 28th, 2009 at 8:52 pm
[...] Ritholtz exposes the state of journalism Jump to Comments All this mockery can’t help prop up today’s journalism: The usual headlines got it wrong: • Bloomberg: New-Home Sales in U.S. Climbed 0.3% to 352,000 [...]
May 28th, 2009 at 8:52 pm
@thetanman 7:05
If nothing changed in the mortgage rate market today, why did we have a reversal this afternoon?
May 28th, 2009 at 10:11 pm
The mortgage market unlocked and the bond auction was normal. If we had a spike like yesterday, the stock market would have been way down.