Case Shiller Index Falls 17% for May ’09; Monthly Improvement Seen
Home Price Declines are slowly abating.
So says the S&P/Case-Shiller Home Price Indices. Data through May 2009 shows that the annual rate of decline (2nd derivative) improved for the fourth consecutive month in 2009.
The year over year data is still negative, but less so:
>
Source: Standard & Poor’s and Fiserv
>
In terms of annual declines, the numbers remain relatively somber with all metro areas and the two composites in negative territory, and 16 out of the 20 metro areas are reporting double digit declines.
There were marginal improvements in the [NSA] monthly data [UPDATE: This was NOT Seasonally Adjusted]. This is the first time this has occurred in 34 months:
Annual versus Monthly Changes:
>
Here is the breakdown of all 20 regions
via Tim Iacono, The Mess That Greenspan Made
>
Prices have now returned back to mid 2003 levels:>
Source: Standard & Poor’s and Fiserv
>
Source:
S&P/Case-Shiller® Home Price Indices
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,2,1,0,0,0,0,0.html
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July 28th, 2009 at 9:48 am
No analyst wanted to declare that July 06 was the top either. Hopefully this will be good for the consumer in due time. Is this what the banks have been hoping for? If they can hold out a little while longer their m2m may actual be credible. BUT it did take 3 years to get to this point.
July 28th, 2009 at 9:52 am
Third derivative is positive; Green Shoots, Green Shoots ;-)
July 28th, 2009 at 10:01 am
Not to be picky but your headline would be very different if you had used SEASONAL ADJUSTED NUMBERS
July 28th, 2009 at 10:03 am
Prices fell slightly in May (compared to April) for the Composite 10 and Composite 20 indexes.
Seasonally adjusted, prices fell in 12 of the 20 Case Shiller cities.
July 28th, 2009 at 10:03 am
Just about the time you published this, Barry, S&P issued the seasonally adjusted number for the C/S index. Guess what: prices went DOWN on an SA basis. Unfortunately, like you, the MSM jumped on the NSA number–and I expect they will be loathe to issue an update/correction/contradiction.
Do you suppose if the results had been the other way around–SA increased, but NSA decreased–the order of the press releases would have been the other way around?
And why, oh why, do you need to press releases to tell one story? Even NAR can give all the data (such as it is) in one press release.
July 28th, 2009 at 10:04 am
What happened greenshoot bulltards? Consumer confidence went down again.
The consumer confidence index fell in July, marking the second straight monthly decline, the Conference Board reported Tuesday. The index now stands at 46.6, down from 49.3 in June, and was below expectations of economists surveyed by MarketWatch. Both the present situation index and the expectations index declined in July.
http://www.marketwatch.com/story/consumer-confidence-falls-for-second-month-in-row-2009-07-28-100380
July 28th, 2009 at 10:17 am
Dollar rampin’ up…gold selling off…light crude selling off.
Hmmm? What comes next? :-)
It’s always funny to me how ‘the news’ seems to follow the fractal signals. Used to think it was eery. Now it’s just chopping wood and carry water.
July 28th, 2009 at 10:27 am
@manhattan: Ah yes, of course. We’re about midway through summer and the consumer can plainly see that things aren’t getting better for him/her on the job search and/or job security front. By fall consumer gloom will be omnipresent once again. Spring and summer are a time for optimism. Fall is a time to get the firewood ready for a long, dark, cold winter.
July 28th, 2009 at 10:33 am
Is it not a foregone conclusion that home price stats will begin to rise, if not now, then very shortly as the mid-upper level homes start to sell ? Recent sales have been driven by lower end homes, foreclosures, etc., while the mid-upper segment has been stagnant/frozen due to unrealistic sellers, jumbo loan problems, etc. Doesn’t this have to end at some point with the mid-upper mkt clearing at lower prices, but resulting in an upward drag in the overall px stats? Whilst this may be healthy for the overall housing mkt, it is not bullish (even though it will be reported as such) as looked upon by the public/headlines/media?
This is a hybrid question/statement. What am I missing?
July 28th, 2009 at 10:38 am
I’ve never understood why this index does not include Philadelphia, and, haven’t, yet, heard an explaination..
It isn’t like the Phillies moved to Kansas City, that was the A’s..
Last I checked, there were, still, a gaggle of Peep that call Philly, Home..
~~
uno,
as an aside, have you seen anything that puts Fractals “to Music” ?
July 28th, 2009 at 10:43 am
The SA numbers still show a +1.14% for the 10 city and +1.03% for the 20 city composites.
YoY (10 city) Apr -17.96% May -16.82%; (20 city) Apr -18.08% May -17.05%
So using either NSA or SA will still show a slight improvement in the YoY.
July 28th, 2009 at 10:47 am
@boatdrinker: Me-thinks this is will ultimately be a head fake. Higher end homes are starting their price descent only right now. Only until prices of those homes bottom and settle will we see the true bottom in the lower to middle end. This is one giant head fake for the knife catchers.
July 28th, 2009 at 10:48 am
@MEH: Somewhat arguably, it’s the other way-around –> music is fractal.
July 28th, 2009 at 10:48 am
boatdrinker; I think you are missing that the $8000 for new home buyers will have particular strong effects in the entry-level low-price part of the market. That is also where the new “invest-to-rent-out” group is getting most of their action. At least for the next half year I expect that the increases in the low end will outdo the increases in the mid to high end.
July 28th, 2009 at 10:53 am
BTW, Ken Wilber has another term for fractal, that I personally find more accurate: “holon”
July 28th, 2009 at 10:57 am
uno,
that’s cool, either way, though, have you come across any Music that has been related to Fractals?
also, re: Ken Wilbur y “holon” (s), be helpful, blow some links, leave a trail.. ~
July 28th, 2009 at 10:59 am
@MEH,
I asked why Philly wasn’t part of the Case Schiller on here months ago and never got a response, I don’t get that either.
As for the consumer confidence dropping, I posted a video here just a few days ago that shows that slowly social mood is starting to build on the negative side, it will get louder the more main streeters lose jobs and the bigger the GS bonus pool gets. And while this rally should still push us higher, this will eventually drive the markets down again.
July 28th, 2009 at 11:04 am
Calculated risk is reporting that CS did not release the SA numbers until later this AM. Accordingly “Prices fell slightly in May (compared to April) for the Composite 10 and Composite 20 indexes.
Seasonally adjusted, prices fell in 12 of the 20 Case Shiller cities.”
http://www.calculatedriskblog.com/2009/07/case-shiller-prices-fall-in-may.html
Maybe someone can check it out and determine which report is correct the 1st one reporting an increase in MOM or the last one reporting a decease in MOM.
Hard to figure out what is going on out there on main street.
July 28th, 2009 at 11:06 am
@DeDude: Perhaps.
But as one sample point, I live in a relatively unaffected part of the country, on a nice lake, in a nice condo, which I rent. I have no neighbors on either side, and managed to recently rent my place for $1,000 (no typo: one thousand) per month less than my next-door absentee owner is asking for his place. About 10-20% of all the condos are empty, awaiting renters or buyers. Typical purchase costs are such that my next-door neighbor’s rental price is pretty much the monthly mortgage rate were one to buy and move in today.
Result: There is no incentive to buy until values start to move substantially up, and as indicated by my lease that just ain’t a-happenin’ yet. Low mortgage rates and $8K welfare checks do not equal higher prices, yet dropping prices equal greater pressures on people and ultimately banks…of which six (6) went belly up last week if I caught the news right.
Just the facts.
July 28th, 2009 at 11:09 am
Amen Ra said:
“The SA numbers still show a +1.14% for the 10 city and +1.03% for the 20 city composites.”
Great! If this isn’t the proof for the bottom and that prices are going to go back to levels at which they were before the crash, what is?
I would like to know what the margins of error for the month to month changes are.
rc
July 28th, 2009 at 11:10 am
In an attempt to find reality in some of the MSM reports moving forward I only had to read down three paragraphs in this morning’s CNN headline to find this.
“While acknowledging that the report was good news, Mark Zandi, chief economist for Moody’s Economy.com, downplayed the importance of a single month’s statistics.
“I think it’s a temporary respite,” he said. “It reflects the recent decline in foreclosure sales, and prices will continue to fall over the next several months.”
I find these kinds of things a lot in the articles I read in the MSM. I certainly have a tendency to see things I might have a bias towards (MSM is painting too rosy a picture) but when I make a conscious effort to dig deeper sometimes (emphasis on the sometimes) find something different.
July 28th, 2009 at 11:14 am
@MEH:
Ken Wilber and his Integral Institute
Holon
July 28th, 2009 at 11:17 am
” Low mortgage rates and $8K welfare checks do not equal higher prices, yet dropping prices equal greater pressures on people and ultimately banks”
“There is no incentive to buy until values start to move substantially up”
—
“There exists a set of inertial reference frames relative to which all particles with no net force acting on them will move without change in their velocity.”
July 28th, 2009 at 11:20 am
@uno
What are Wilber’s thoughts about Pee-on’s? – jk
July 28th, 2009 at 11:22 am
@AmenRa:
“The SA numbers still show a +1.14% for the 10 city and +1.03% for the 20 city composites.”
And it wasn’t even true what you said here. Are you a home owner under water whose wishful thinking for prices to come back to pre-crash levels, clouds his perception?
I recommend reading this posting at CalculatedRisk:
http://www.calculatedriskblog.com/2009/07/case-shiller-house-price-seasonal.html
The first graph is very instructive regarding the seasonally adjusted data. It suggests that all the crowd that cheers the slight increase in the not-seasonally adjusted data today will get some reality check later this year.
rc
July 28th, 2009 at 11:23 am
@cvienne: He thinks that, all things considered, we’re all very kind to GS.
July 28th, 2009 at 11:23 am
If people haven’t seen the DR note via Mauldin in the Think Tank it’s worth a look if you have some time today. DR has been putting out some great papers every single day lately. I still can’t believe I can get for little more than a few minutes of my time.
July 28th, 2009 at 11:24 am
I agree completely with Mannwich. The mid- and upper-levels will get hammered over the next couple of years IMO. Rates will eventually rise. Unemployment will continue to rise. Green shoots will be stomped out. I have a good friend who lost 400K in a matter of months in the mid-nineties in LA. Bought the house next door before he sold his own house. The market turned so viciously that he couldn’t sell. This was in Pacific Palisades, which a pretty nice area. He made the mistake then that many are making now, believing that location location location mantra that realtors spew out. Areas like it are going to get slaughtered. I was home in the Palisades a few months back and could see the stagnation beginning. In one of the nicest areas of town, Santa Monica Canyon, there was a construction site that had been abandoned (cement bags burst open from rain, bent boards, etc.). This is an area where the average home sold for 3 million during the boom. I sense with the low rates that people are making purchases based on monthly nut, not on long-term affordability. They’ll regret their decision to buy just as my friend did. (He rents now.)
July 28th, 2009 at 11:30 am
Here is one for all you chart jockeys. This run from the lows in March looks very similar to the run up from the lows in March 2003 which was the start of a bull run which had multi year legs. This is the closest chart I can find. I started looking for historical bull runs which looked like this one because I couldn’t really make out a wave count on the weekly chart. It even hard to make out on the daily. It just seems to keep on going up. The big difference is the setup before March in each case.
July 28th, 2009 at 11:31 am
@uno
I figured as much :-)
July 28th, 2009 at 11:32 am
@MEH: Googling for fractal music has lots of links. Most of it is childlike; not to say childish…just kind of la-dee-dah. But it’s honestly accurate to say that music is fractal. I would encourage clarity on that point, as looking at our current understanding of fractal models for music, say, and then concluding that this isn’t Mozart somewhat throws out the baby with the bathwater.
P.S. For the record, I bought back into some MCO puts for a 50% discount this a.m. when MCO popped up to .618 Fib. Is this a great country, or what…?
July 28th, 2009 at 11:35 am
@ MEH… y uno
Re: Fractals and Music.
Here’s some nuggets for you to snack on:
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=beethoven+and+fractals
July 28th, 2009 at 11:35 am
Uno; the issue is not what is smart (and you are probably doing the smart thing) the issue is what people do – and there is often a disconnect between the two. Some very powerful forces want prices to stabilize and people to start bying homes again. They have gotten and will continue to get numbers that they can use to pump up sales. The vultures (waiting in the trees for more housing victims whose bones they can pick) are likely to get disappointed for now.
The fall in volume is clearly flattening out (y-o-y on existing homes (=90% of all sales) was positive last month, and had been negative only by a few % for previous 6 months). Although it may be a decade before we see 2005-06 numbers again, I think we are within 10 % of the lowest total (seasonally adjusted) volume. If the pump works we are probably also close to the current low in prioces although we will probably get another dip even lower in the next 1-3 years.
July 28th, 2009 at 11:36 am
This one in partic:
http://classes.yale.edu/fractals/Labs/FractalMusicLab/StrScaling/Beethoven.html
Fascinating. Ta Ras.
July 28th, 2009 at 11:39 am
@hope: I think you’re comparing apples to oranges. What we’re facing now doesn’t resemble one bit what we faced in ’03.
July 28th, 2009 at 11:41 am
http://www.marketwatch.com/story/treasurys-gain-after-home-price-data-2009-07-28
Treasurys Gain After Home Price Data
July 28th, 2009 at 11:43 am
@rootless
Nope.
from the .xls file on the SA S&P Case-Shiller Index:
10 city composite
Apr 09= 151.455194 Apr 08= 184.6174163
May 09= 151.132274 May 08= 181.7011605
20 city composite
Apr 09= 140.2755324 Apr 08= 171.2361503
May 09= 140.0520896 May 08= 168.8425103
So YoY Apr (10 city) is -17.96% and May (10 city) is -16.82%
& YoY Apr (20 city) is -18.08% and May (20 city) is -17.05%
Or did I do the numbers backwards?
July 28th, 2009 at 11:47 am
@Mannwich
The clue for hope should have been: “This is the closest chart I can find…”
Amazing to see NYC still hanging on to its stratoshperic prices, although the data shows it finally flattening out.
July 28th, 2009 at 11:49 am
@I-Man: Thx.
Great quote via that linkfest: “I asked Mandelbrot about fractal music, his reply was simply: “Beethoven, Beatles, and Bach”.”
July 28th, 2009 at 12:12 pm
@hopeImwrong:
Is this supposed to be serious evidence that a new bull market started in March like the one started in 2003, or do you want to make the reader aware that wishful thinking and (auto-)suggestion can make one see evidence in patterns, in which there isn’t any? If you compare the rally since March with the big bear market rally after the initial crash of 1929 you will see that latter one was even more ferocious, lasted longer, and went higher up than the recent rally so far, see:
http://www.debtdeflation.com/blogs/wp-content/uploads/2009/07/IMG0016_6684562.PNG
published in:
http://www.debtdeflation.com/blogs/2009/07/04/debtwatch-36-july-2009-its-the-deleveraging-stupid/
Of course, this similarity doesn’t prove either the market is going to play out like during the Great Depression. However, the economic context today (credit bubble, years of de-leveraging to probably come) is more similar to the Great Depression than to the year 2003.
rc
July 28th, 2009 at 12:21 pm
Rootless
I was just trying to get opinions (like yours). So thanks for your response.
July 28th, 2009 at 12:22 pm
@ uno:
Are you in the Tribe?
July 28th, 2009 at 12:30 pm
Rootless – Great link article!
July 28th, 2009 at 12:30 pm
[...] The Big Picture has also some excellent charts and analysis on this report. [...]
July 28th, 2009 at 12:39 pm
@I-Man: No, but have attended meetings and know Ed fairly well…better than he knows, even.
Ed is onto several major things in terms of insights, but like many of us he has a lot of personal issues he’s dealing with. My suggestion for those interested is to listen to what he has to say, but don’t drink the Kool-Aid, and all-the-while hold him at arm’s-length. There is notable wisdom there, but also some very raw pain that has yet to heal. A good (female) friend put it thus: “Ed’s still dealing with a lot of primal issues.”
Having said that, many great healers become what they are simply because they are so very driven to find “healing” (BTW, the etymology of which is: “wholeness”). I admire Ed in many ways, and think of him as a dear uncle who just needs some TLC to find his own, perhaps well-deserved, peace on earth. Who doesn’t…?
July 28th, 2009 at 12:48 pm
Good post rootless, on the ’03 comparison.
Yes, context is everything when comparing chart patterns. It’s folly to find that one that validates your hopes and wishes and use it as future guidance. It’s endlessly more complicated than that.
It may be helpful to understand what the market is capable of doing, on the upside and downside. That’s what the ’30 comparison does for me. To see what the market did in that time frame given the deteriorating economic conditions tells you that it can be incredibly irrational as people delude themselves with hope and denial, even in the face of very harsh evidence of future pain. Fascinating really.
July 28th, 2009 at 12:51 pm
@uno,
I’m in on that MCO trade as well, like that a little better than your SBUX idea. Should be a winner.
July 28th, 2009 at 12:55 pm
What Tribe? Who is Ed?
July 28th, 2009 at 1:07 pm
[...] Thanks to Barry Ritholtz for the [...]
July 28th, 2009 at 1:11 pm
@ben22: The amazing thing is how MCO ran up this a.m. on bad earnings from S&P’s leash-holder. Whatever…!
July 28th, 2009 at 1:11 pm
If Barry is still keeping track of Cover stories as a Contrarian indicator
“The Recession is Over” according to Newsweek cover story.
http://www.newsweek.com/id/208633
July 28th, 2009 at 1:16 pm
Uno,
No doubt, though I’m less and less amazed lately by all the madness going on in stocks, now I just expect it and try to make money off it. Soon enough the real trend will resume so for now, like you said, some of the puts got really cheap this morning, gotta take advantage when you can.
I’m also starting to wonder if instead of trying to short CRE, which everyone seems to still want to try, it would be better to just find the regional banks that are heavy with CRE exposure and short them instead.
July 28th, 2009 at 1:20 pm
@ uno:
Many thanks. Always seeking the whole… I-tinually.
@ hope:
Ed Seykota, Trading Tribe. http://www.seykota.com/tribe/Contact/index.htm
July 28th, 2009 at 1:23 pm
CRE’s too in the spotlights for my taste, but I understand the opportunity. Obvious shorts rarely work out well, though I still revel in the thought of having bought GM puts when it popped up in price at one point last year. I laughed out loud as I did it, as I recall…it was just damn funny at the time. MMs and their games…
July 28th, 2009 at 1:24 pm
@manhattanguy,
I’m sure he still is however there is a potentially a very long, or very costly lag that occurs with cover stories from what I can tell. While we can always point to articles/books at the turn that were completely wrong, it seems to me that social mood will tend to drive these types of cover stories earlier than the actual turn itself as the authors catch the new social mood but always lag behind the reflection of that social mood in the marketplace which is our only real time measurement of mood. Over two months ago there were articles about how 90% of economists in one survey stated the recession would be over in the second half, this was back when the S&P was in the mid/low 800′s so maybe they are a good contrarian indicator but many months out.
Can’t you invision that if things turn down again that after the fact the cover stories will come out about why X (stimulus, TARP, whatever) failed and we didn’t recover, by that time it won’t be an indication of what is coming in the market, the market should already reflect that.
Then again, maybe I’m wrong about all this, just seems like I can find an awful lot of positive covers since around mid May and here it is almost August and we are still rallying.
July 28th, 2009 at 1:28 pm
“seems like I can find an awful lot of positive covers since around mid May and here it is almost August and we are still rallying.”
Yes. But has there been any cover story (not to mention from a national magazine) that claimed “Recession is over” before? I haven’t seen one. It is a little presumptuous for Newsweek to claim that this is all over.
Also stock market performance has nothing to do with health of the Economy in this case. We already know they both are painting different pictures.
July 28th, 2009 at 1:29 pm
GTG. Peace, out.
July 28th, 2009 at 1:42 pm
Newsweek has also become a far less reputable magazine over the years (not that it ever was). I cancelled my subscription to it last year – every other cover story was by Fareed Zakaria who I think is one of the most blatant headline grabbing journalists of our day.
July 28th, 2009 at 1:47 pm
I think there is a bit more to the “Recession is Over” claim.. I’m seeing: The Recession is Over! But Not for You–Yet. A bit misleading..
also this headline: Why It’s Worse Than You Think
For months, economic Pollyannas have looked beyond the dismal headlines and promised a quick recovery in the second half. They’re dead wrong.
when i look at the CA real estate market and unemployment situation, my guess is we aren’t even half way to the bottom–yet.
July 28th, 2009 at 1:48 pm
@manhattanguy,
No, I can’t think of any other major with that article so I can’t argue that one, however, that was the same title given to the most recent BAC/ML RIC Report fwiw.
Another example to try to make my point was the “new frugality” cover from TIME not long after the March lows. That article would have been far more telling as a contrarian indicator back in October 2007. I think that writers are tending to capture, in general, much more of the current social mood, not the change in mood that is coming.
Any new ideas on Oil?
July 28th, 2009 at 1:49 pm
karen,
correct me if I’m wrong but I get the sense lately based on your posts and recent trades you are growing more bearish every day the rally goes further.
July 28th, 2009 at 1:54 pm
Waaaaay OT…
But I’m bored out of my mind here (with the markets this week)…
…and I wondered (tis the season) if anyone (mostly kind of the REGULARS, I suppose), are in to Fantasy Football?
I usually am in a half dozen on any given year (and ‘commish’ one or two)…
I was thinking it might be fun to have some people in this blog involved in one together…
@BR
I realize that I’m risking being “uncool” even bringing this up…Put your foot down right away and I’ll withdraw the idea if that’s the case…In any case, I respect the content of this blog too much to “muddy” anything up with fantasy football smack (or anything of that nature) going forward, so my promise is that if this thing flies (and we can get about 10 or so in a League), the “League banter” will be isolated to that forum, and not bleed into TBP…
July 28th, 2009 at 1:54 pm
“Any new ideas on Oil?”
Double top at $71-72/barrel is a big possibility if/when S&P reaches 1000. Technically, markets are getting good support on 9 ema. We need to break that first and foremost to see a real breakdown.
July 28th, 2009 at 2:01 pm
@ben22 re karen ‘correct me if I’m wrong ‘
Here’s my theory: she’s making bearish observations about the economy, while, as far as my limited powers of recall and analysis will go, she makes her ‘bullish’ (sorry for the oversimplification, karen) claims about the market. As we can all see, and much tothe pain of the shorts lately, the market and the economy don’t necessarily track each other.
karen, am I even close?
July 28th, 2009 at 2:03 pm
ben, no need to correct you.. but, we’ll see.. if the economy would even flat line we’d all be thankful..
July 28th, 2009 at 2:04 pm
Cvienne,
BR can remove this if he needs to be but I’m waaay into FF. I’ve taken 3rd in my league back to back years. I’d jump in one here if other people wanted to. We could set it up through sportsline easy. I love nothing more than Sunday’s in the early fall with the computer set up so I can watch my FF scores while the games are on. My draft is about a month away and I can’t wait. I’m a huge PSU fan as well.
July 28th, 2009 at 2:05 pm
@cvienne: I would be interested in that. Maybe that game will be a little less rigged than this one? ;-)
July 28th, 2009 at 2:09 pm
ben22 I’m, “uh”, game for that,as my Fall Sunday afternoons are already similar.
July 28th, 2009 at 2:09 pm
s/ben22/cvienne/ on the “game fo that” post
July 28th, 2009 at 2:11 pm
@ben @Manny
OK so that’s 3 of us so far…
If we can get 10 pretty simple & painlessly, that would be nice…I don’t want to clog up TBP threads with FF talk (in respect to the others who frequent the site for more serious topics)…
I feel kind of awkward even POSTING this kind of feeder onto TBP, but since it feels like a ‘community’, I like to be involved in Fantasy Leagues that I know the other owners…
July 28th, 2009 at 2:13 pm
Curious what you traders are thinking of the action today.
We are well off the lows, and buyers seem to be accumulating on the dips as has been the trend since last week. However, there has been downward pressure, news flow has not been particularly positive and we are forming a double hang-man candlestick on the S&P.
July 28th, 2009 at 2:13 pm
karen,
yeah, count me in that camp, flatline, I’d look at that as a win at this point. I’ve taken three short positions in the last 2 1/2 weeks after selling almost all the rest of my longs once my target was hit, roughly 15% of my accounts are short right now. I plan on starting to buy a lot more shorts once we reach 1k, which I think is inevitable before this is all over, but not before a quick sharp correction down here, I don’t know that we can do 1k on this leg up.
In any event, was just curious where your mind is, you are money on the trades, I have a lot of respect for your calls, either that or I only selectively remember the one’s you get right.
Have you read the new Grantham?, it’s good as usual, made me think that BO has basically bet the farm that we will have real recovery, not leaving it up to his third year which I was reminded of reading the letter. If he doesn’t get it right he’s already lost the next election. Seems far away but that will be here before we know it. I’d also note that he again lowered fair value on the S&P to 880 sighting, among other things, changes in book value, which led to the new number. He went on to talk about how prices were only cheap on stocks for five months, after being overpriced for about a decade. The more I thought about that line I just could not wrap my head around it. I don’t think people are so much smarter today that they were able to see all the “value” and that’s why the window to buy was so small. After all, the allocation survey showed a big move to cash in March and we know lots of those folks, if they did get back in, were late to the party in most cases.
July 28th, 2009 at 2:13 pm
ben, i had an order in for fxp at 9.39.. i don’t even care that i didn’t get it by a penny.. lol.. probably not a game i should attempt to play.. i was rooting for gld to get to 91.50 today.. held 91.65 so far.. could be a big rout coming if the dollar gets off this bottom ever…
i’m putting a lot of weight on goog as a tell, btw.. bearish candles on $wlsh, too. if nothing else, the indices need to take rest.. i won’t hold my breath for the fundamentals to ever matter, though. (i think that answers pmorrisonfl’s question.)
July 28th, 2009 at 2:16 pm
Today could be the first time since July 17th we have not made a new high in the S&P – again not sure how much weight these data points carry…
July 28th, 2009 at 2:18 pm
@CC,
I’m paying much closer attention to the dollar right now than I am to stocks. To me that’s the action right now. I stopped caring about stocks as much once my target was hit last week, at this point we could go to 1162 as some have called for, who knows. The dollar should tell us what’s next for stocks.
July 28th, 2009 at 2:19 pm
@ben
I liked that Grantham letter…It’s funny, I was going to ask you if you’d read it…
July 28th, 2009 at 2:19 pm
I should say “ironic” not “funny”
July 28th, 2009 at 2:19 pm
ben22.. need to read the new grantham still.. i part skimmed it.. so i have some shorts that are not in the money srs, dto, and faz.. tried for more faz yesterday under 16 but didn’t catch it.. just waiting those trades out for now.. wanted to go long gld for a quick bounce but see more pain coming for all those new gold bulls.. if i have one more person talk to me about gold or silver, i’ll jump on your 600 train (only kidding!)
July 28th, 2009 at 2:21 pm
I’d be in for FF.
July 28th, 2009 at 2:22 pm
karen,
I bought FXP again here in the 9′s, I’m up on that lot, however, solidly red on the first batch I purchased around 11 so still down overall so far. I’ve just concluded I have to hold, I didn’t set a tight stop on it. It really helps wake me up in the morning when I don’t want to get out of bed, I flip to bloom, see the HS has jumped another few hundred points while I was sleeping and I wake right up. I had been playing fxi long since december but clearly I got out and to the wrong side of this trade way early.
July 28th, 2009 at 2:24 pm
ben, I have been following the dollar as well and see it is up today. Treasuries up slightly, and I was hoping to see 4% on the 10 yr to put another ceiling. We got as high as 3.72% so people might be getting ahead of the game?
The action on the dollar I can only describe as skipping along the bottom, I have been waiting for the dollar to rally. I suspect the administration is not concerned about the dollar for the moment as part of a longer term bet against China where a weaker dollar would be favorable. We could be waiting a while longer…
July 28th, 2009 at 2:25 pm
cvienne, i had to return to the shop and buy the remaining two pieces of fortunata pottery in the special blue glaze. i literally drool over them. http://fortunatainc.com/index.php?page=catalog
color doesn’t show well on my laptop.. i have the first, third (2 of) and sixth pieces.. how’s this for an OT post. also, i’ve never even heard of fantasy football. so count me out. : )
July 28th, 2009 at 2:26 pm
Does anyone else get the feeling the market wants to go higher but is getting tired???
July 28th, 2009 at 2:28 pm
cvienne,
I check the GMO site all the time to see if he’s got an update out. He’s the most boring guy in the world to listen to but he’s smart as they come.
karen,
all the buzz about gold has to make you at least worry a little. I see more gold commercials now than I do for anything, plus, all my retail clients ask about gold and the coming inflation in almost every meeting which gives me pause. I had a few people that I bought some FCX for late last year and you have no idea how hard it was for me to get them all to sell it after it doubled. My biz partner had a guy that bought some calls on a few gold miners that were way in the money and the guy would just not sell.
Too crowded.
July 28th, 2009 at 2:31 pm
@CC,
I’d like to see the dollar index go below $78 before I got real bullish, I’m long UUP right now but really small. You are right, we could be waiting a while longer.
July 28th, 2009 at 2:31 pm
Ho hum. Yet another late day push. I have no doubt we’ll be in the green by day’s end. Wake me up after Labor Day (when unemployment will be officially over 10% in honor) when the real fun begins.
July 28th, 2009 at 2:38 pm
@karen
…ooh those ceramics are decadent…I think I said once that Deruta (which is actually “Umbria” not “Toscana” is arguably the capital of the world regarding that stuff…Deruta is right outside of Perugia…I was “bummed” I couldn’t really bring back to the USA all the stuff I’d accumulated over the years…I kept trying all different ways and there was no way to risk not breaking something in shipping…
FF?…don’t worry…It’s kind of more a “guy” thing…
Let’s see…I’ve heard from Manny, pmorrisonfl, ben, I-Man, cvienne so far…This may fly!
July 28th, 2009 at 2:39 pm
excuse my typo.. i meant tried for more srs under 16. agree, gold looks crowded.. but you know it will eventually be $1k plus.. people are viewing it as a store of wealth now.. you can’t trust governments with their printing presses. that is becoming evident to anyone not wearing blinders…
July 28th, 2009 at 2:45 pm
@CC
I was kind of making a hypothesis the other day that the “grand experiment” is to ratchet down these auctions a quarter point at a time (10y benchmark) and see how they behave…
At 4% it was a roaring success…
This time, it’s around 3.70 – 3.75
It may be a stupid idea, but that’s where boredom takes me…”an idle mind……..”
July 28th, 2009 at 2:45 pm
cvienne,
you’ll get 10 no problem, your half way there in less than 60 minutes.
July 28th, 2009 at 2:49 pm
@ben22
That would be cool…
I’ll wait for an “open thread” moment, to try and link all the interested parties together…
July 28th, 2009 at 2:53 pm
I know we’re just going to close at the highs… so excuse me, while I vomit and admit defeat.
To all the peeps who tried to save me from myself… Jah thanks. To all the shorts that covered at 880 and got long this maniacal face ripping beast, congrats on a great swing trade. May your trend be long, and defined.
You might not see me around for a couple of days… I and I must lick wounds and walk the halls of shame for a spell.
July 28th, 2009 at 2:56 pm
FF? Frequent Fishing? Finally Farming?
Interesting that we see a shallower Treasury curve of late. That’s usually indicative of weakness ahead in the economy. Not sure if the $ has finally found its lows, the next week or so will be interesting.
LB reports from Maine – this market is boring the arse off him and is going to sleep for three more days.
July 28th, 2009 at 2:57 pm
Hang in there I-man, it will break some day. When it breaks, it will come down so fast that it will make your head spin. You will regret not having load of short positions at that point.
July 28th, 2009 at 2:59 pm
ben
I thought you would find this interesting:
“And, remember: The news isn’t just about the cold hard data. It’s also about the way the data is interpreted. In this regard, keep an eye on Obama’s poll numbers. They should serve as a good proxy for social mood; they’ll give us clues as to whether economic data will tend to be perceived positively or negatively.”
Have We Reached a Top?
He’s pretty much nailed things lately and decided to start scaling out of his longs a bit lower.
July 28th, 2009 at 3:03 pm
Hang in there I-man, it will break some day. When it breaks, it will come down so fast that it will make your head spin. You will regret not having load of short positions at that point.
I’ve thought about this to and wondered before, will it even be safe to short during the next drop? Just a thought.
@onlooker,
I just commented on that link in the other thread, thanks for that. I never really thought about looking at those polls in that way.
July 28th, 2009 at 3:03 pm
@cvienne
I like that theory. Something I’ve been kicking around:
The actual result of inflation or deflation will be opposite to the market expectation making prediction nearly impossible. Deflationists like Bill Gross, will try to get ahead of the curve and buy up treasuries and in-effect support low interest rates attributing to inflation. If the heard anticipats inflation, then higher rates will shrink credit and force deleveraging creating deflation. Third outcome is an uncertain balance as the forces of inflation/deflation work against each other and both sides lose.
July 28th, 2009 at 3:04 pm
ben
You can sign up for an email subscription at GMO to get the update alerts delivered; no charge. Just FYI.
I was a good letter. Even keeled and wise, as usual.
July 28th, 2009 at 3:08 pm
@ben: will it even be safe to short during the next drop?
Safer than it has been the last couple of months. LB doesn’t see the system breaking before you can get your “winnings” out of the casino.
@onlooker: I like the MV guy’s position that “this is a top” but “I’m prepared to be wrong AGAIN..” LB’s trading view also. Of course, LB prefers to think in terms of the Hunt for Red October Part Deux™ scenario…
July 28th, 2009 at 3:09 pm
I-Man – walk not in the halls of shame; you have earned your wins and your losses through your convictions. There is no shame in that. Mourn the losses, maybe regret choices, but feel no shame.
July 28th, 2009 at 3:11 pm
Canuck
Interesting thoughts. The forces of deflation and inflation are in a huge battle in the middle, making all appear calm, not realizing the power that lies within. If one gives way a bit, the momentum would probably swing quickly and overwhelm the other. How long can the virtual stalemate continue? That is the trillion dollar question, eh?
July 28th, 2009 at 3:22 pm
thought people might find this interesting since some of us were discussing CFC yesterday:
http://money.cnn.com/2009/07/28/autos/clunker_mpg_switch/?postversion=2009072811
July 28th, 2009 at 3:22 pm
Onlooker: The dollar is the barometer of deflation v. inflation, since it drives oil and oil drives the CPI.
July 28th, 2009 at 3:24 pm
@ben22: LOL. Sounds eerily familiar to that uber-effective loan mod program by the Feds. High comedy and tragedy all at once.
July 28th, 2009 at 3:29 pm
@ben, manny
Typical Government run SNAFU = “situation normal, all f***** up”
July 28th, 2009 at 3:33 pm
@cvienne: This also happens all the time in big corporations. Some genius comes up with a plan to solve a problem but the details aren’t sufficiently thought out. This is usually followed up by poor execution and the discovery that other problems have been caused by this so-called “solution”.
Keeps people busy running around “fixing” problems while causing others and then “fixing” the ones they caused. Lather, rinse, repeat. It drove me batty when I was a corporate slave. I now marvel and laugh at it on the outside.
July 28th, 2009 at 3:35 pm
Speaking of tragi-comedies, or is it comi-tragedies………CRE bldg owners playing a little “jingle mail” themselves…..
http://www.calculatedriskblog.com/2009/07/cre-office-building-owners-walk-away.html
July 28th, 2009 at 3:37 pm
There are so many reasons the CFC is a joke. All this tinkering with the market to try to change supply/demand balances just leads to unintended consequences, misallocation of capital/resources, and tears.
People will buy cars if they need them and have the money to do so. What the hell is the matter with just leaving that alone? I know, I know, we need to subsidize the giant jobs program known as the auto industry. How’s that been working out?
July 28th, 2009 at 3:39 pm
We’ve so screwed up the basic goods markets over the years that people spend more time and effort trying to figure out if there’s some govt subsidy, penalty, or outright giveaway associated with it than on which product is the best value, etc. all on it’s own merits. It’s just out of control.
July 28th, 2009 at 3:40 pm
Mannwich
Sounds just like working in the military headquarters bureaucracy environment too. What a boondoggle!
July 28th, 2009 at 3:42 pm
guys,
that’s exactly what I thought when I read it, typical the government can’t even get this going without some major clusterf*ck.
Also, did people catch the jab at BO put out there by Abelson in this week’s Barron’s:
For that matter, why all the print and air time devoted to President Obama’s pitch for his health-care proposal? All it demonstrated (again) is that Mr.Obama is big on rhetoric, not exactly generous with details and short on action. So what else is new?
Perhaps we should be watching those polls for a guage on social mood.
July 28th, 2009 at 3:44 pm
@ben22: The whole “details” thing wasn’t W’s forte either. I’m beginning to think it’s just an Ivy League thing. Come up with grandiose plans that likely don’t work in reality (but makes you sound/look smart for a while), let the state school and non-Ivy leaguer minions “work out the details” and then blame them when the plan falls well short in reality. We saw it in Iraq and we’ll probably see it again on the economic and the health care policies.
July 28th, 2009 at 3:45 pm
Onlooker,
I think we are living through the 3rd outcome. We have the gold bugs betting on inflationary result and the deflationists buying up t-bills. Not much of a return for either asset class this year, but one will start to look like the better bet until it becomes a crowded trade.
July 28th, 2009 at 3:49 pm
Nice little ramp up AGAIN at the close. Seems like it happens nearly every day now for what, 4 solid months? Pretty amazing. Shorts are obviously scared shitless to stay short overnight so everyone covers at the close these days.
July 28th, 2009 at 3:52 pm
8 minutes left…and I’m waiting for that final boost to positive territory.
July 28th, 2009 at 4:02 pm
Computers ramping it up and down, what new.. my gold short is green, finally. Trading according to Gartman rules for a while here – never add to a losing position. We’ll see how the $ goes for the rest of the week.
July 28th, 2009 at 4:15 pm
Just saw a CNBC clip online from ~3PM where the lady being interviewed called this “a typical recovery of the business cycle.” WTF? I’m guessing that she would also refer to WWII as a typical war…
HCF
July 28th, 2009 at 8:17 pm
HCF, that’s pretty funny considering this is one of the strongest rallies ever so you can hardly call it typical. As for the real economy, well, it’s not recovering, just declining slower, so if she was referring to that I’m still lost. What would you expect though from someone implying this was just a regular old business cycle recession.
August 1st, 2009 at 7:25 am
[...] Il n’en faut pas plus pour que le Président Obama, suivi comme un seul homme par une large partie de la presse mondiale, s’empresse d’annoncer la fin proche de la récession économique. Il est vrai que ces chiffres pas trop mauvais s’ajoutent à d’autres qui peuvent également paraître rassurant comme un tassement dans le rythme d’augmentation des licenciements aux États-Unis ainsi que ce que certains interprètent comme la fin de la chute des prix immobiliers aux États-Unis. [...]