Case Shiller Falls 13.3% for July 2009
By Barry Ritholtz - September 29th, 2009, 10:41AM
S&P/Case-Shiller data through July 2009 shows U.S. home prices are still negative, but slowing in their rate of descent.
Home prices increased a seasonally adjusted 1.2% in July from June, but fell 12.8% for the 10-City index and 13.3% for the 20-City Composite. The monthly improved readings were improved for sixth month, beginning in early 2009. The monthly gains were the most in almost four years.
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S&P/Case-Shiller Home Price Indices
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More charts after the jump…
S&P/Case-Shiller Home Price Indices
via S&P/Case-Shiller
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Breakdown by City
click for ginormous chart
chart courtesy of Calculated Risk
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September 29th, 2009 at 10:42 am
This is BS. Everybody knows housing never goes down in value.
September 29th, 2009 at 10:50 am
I’m continually amazed by the way the market and media focuses on housing volume data to the exclusion of price..
It’s like saying the stock market had a good day because the number of shares traded was up even though prices went down..
If the prices of houses continues to decline, even a couple % year/year the balance sheets of the banks will continue to deteriorate…
As long as the line in this chart stays below zero the slow motion train wreck continues and the banks get more and more fucked by the month.
September 29th, 2009 at 10:55 am
The S&P/Case-Shiller composite index of house prices in 20 metropolitan areas rose 1.6 percent in July from June, more than triple the estimate of a 0.5 percent rise found in a Reuters poll. This index rose 1.4 percent the month before.
Looks good to me.
September 29th, 2009 at 11:02 am
It is a race to the bottom between housing and incomes with incomes taking the lead. And down the stretch they come.
“Median income fell last year from $52,163 to $50,303, wiping out a decade’s worth of gains to hit the lowest level since 1997.
Poverty jumped sharply to 13.2 percent, an 11-year high.
‘No one should be surprised at the increased disparity,’ said Richard Freeman, an economist at Harvard University. ‘Unemployment hurts normal workers who do not have the golden parachutes the folks at the top have.’”
I’ll trade you 1000 green shoots for 1 golden parachute…
September 29th, 2009 at 11:15 am
Time to get out of the SM and into housing speculation, right? To infinity and beyond!
September 29th, 2009 at 11:17 am
Let’s see what happens when the 1st time home buyer bonus is taken out of the mix. The index started going up after the bill was signed in February.
@Winston Munn
Since there are 6 unemployed persons for every one job available, it is reasonable to assume that wages will be severely impacted by the oversupply of labor for years to come. The implications from this fact alone are staggering as median income will continue to fall, home prices will continue to fall, and deflation will be the boogey man we will still be fighting. Anecdotally, I know more people than I care to admit who are unemployed, have exhausted their benefits, and now are exhausting their savings.
September 29th, 2009 at 11:18 am
Do they ever break down these numbers to show what’s selling? How much of the 1.4% gain from last month is coming from higher end market foreclosures and sales?
September 29th, 2009 at 11:39 am
From a report I read, the low end is moving quite well, anything above 700K is stagnant.
September 29th, 2009 at 11:41 am
Winston Munn – Do you have a link for the numbers you used above? I believe they are true I would just like to see what the break down is, how are they definingin median, the poverty level and what not.
Thanks
September 29th, 2009 at 11:53 am
Low end moving well due to distortions by our gov’t. Low end will resume its downward movement once that ends and once the high-end sellers realize they’re screwed and those prices come way down. This is going to take a while, folks. Be patient.
September 29th, 2009 at 11:56 am
@franklin,
AP story. It didn’t contain the breakdown but I believe it quoted census bureau statistics.
September 29th, 2009 at 12:02 pm
@franklin,
Perhaps this will help: The 2008 figures come from the Current Population Survey and the American Community Survey, which gathers information from 3 million households
September 29th, 2009 at 12:05 pm
Winston – Thanks kindly.
September 29th, 2009 at 12:05 pm
I want to know why there’s always one perma-bull flack assigned to post on TBP.
I guess it’s a no-lose proposition for the flack-masters. It disrupts constructive discussion and deflects attention from developing nuanced and thoughtful analysis on given topics. People let themselves get baited into wasting valuable brain CPU dismissing obviously flawed talking-point positions.
Dumbs the whole thing down to sports talk level. It’s a shame.
September 29th, 2009 at 12:09 pm
Housing data is useless in the aggregate. Case Schiller uses MSA data pools which are huge demographic areas that have way too much variance in both demographic and geographic factors. Likewise the 10 city moving average is a further watered down statistic. I wish that S&P would release analysis based on a zip code pool and pricing segment, which would give a better picture of both the relative strength and basis of the housing recovery (or is that stabilization?). This winter will be interesting with the expatriation of the 8K credit and perhaps the release of some of the bank owned properties. But the elephant in the room that no one wants to talk about however is what will happen when the Fed starts to raise rates and the cost of financing starts to rise….
September 29th, 2009 at 12:12 pm
“Foreclosure-driven price declines, low borrowing costs and government tax credits for first-time buyers have lifted home sales for much of this year, helping to slow the decline in prices. Stability in real-estate values and rising stock prices may help prop up spending as American consumers fret over mounting joblessness.”
Home Prices in 20 U.S. Cities Rose by Most Since 2005 (Update3)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1rwpx5RvEFg
Stimulus + stimulus + more stimulus will eventually make consumers consume.
What a bunch of nonsense.
September 29th, 2009 at 12:14 pm
Franklin420d,
Your tax dollars at work from the Census Bureau: http://www.census.gov/prod/2009pubs/p60-236.pdf. The median income figures that Winston cited from the AP story are on page 5.
September 29th, 2009 at 12:16 pm
To Thor who wonders: “Do they ever break down these numbers to show what’s selling? How much of the 1.4% gain from last month is coming from higher end market foreclosures and sales?”
Good questions, but the Case-Shiller index is designed so that the mix of home sold (low-end vs. high-end) doesn’t have much of an impact. The index tracks sales of the same home over time, so it’s really more of an apples-to-apples comparison than you get in the realtors’ median price figures.
Case-Shiller does have some good data on how different segments of the market are doing. In Atlanta, for instance, homes in the bottom third of prices (below $142,000) rose 0.3%. Prices in the middle tier (below $235,000) rose 3.4%. Prices in the top tier (above $235,000) rose 1.7%. You can find this data for any of the 20 cities.
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,4,0,0,0,0,0.html
September 29th, 2009 at 12:18 pm
@Transor Z: That’s what happened in ’06/’07 too. It always happens during the Fool’s Gold Rush. They all disappear when the Gold turns to dust. It will happen again. Mark it down.
September 29th, 2009 at 12:26 pm
Observation (micro level)
Many immigrants (green card/H1-B, ect) are begining to buy short sale houses and buildings. Many are being purchased in (long standing) poorer areas (with historic high vacancy in comm buildings).
This occurance was experienced in Portland/Seattle (and other smaller towns), which has the RE agents wondering (in amazement) what is going on!
The buyers are buying in cash (or with 30-50% down) properties from 250k to 5m.
Again, this might just be a annomaly…but multiple (random) occurances in both cities have me wondering ‘what is going on’.
September 29th, 2009 at 12:36 pm
Cowboy – immigrants know a bargain when they see one – one of those things which is helping housing mkt
I’ve seen em buy many properties and hold em and make big $$$
September 29th, 2009 at 12:38 pm
Cowboy,
This is from 2008, I wonder if it is still going on.
http://articles.latimes.com/2008/dec/07/business/fi-chinahomes7
September 29th, 2009 at 12:58 pm
This Fannie Mae mortgage delinquency chart looks promising. I’ve been worrying for nothing. The “mini-boom” is upon us………in foreclosures and lost jobs.
http://3.bp.blogspot.com/_pMscxxELHEg/SsIa-mMAeFI/AAAAAAAAGc0/ZNwtJvtask8/s1600-h/FannieMaeDelinquency.jpg
September 29th, 2009 at 1:12 pm
John – thank you for the census pdf, I got a smile when I saw Gary Lockes name, he used to be the Governor of Wa St.
Mannwich – ONLY 4% of Fannie Mae loans are delinquent……And climbing……
September 29th, 2009 at 1:19 pm
Sept. 29 (Bloomberg) — Home values in 20 US metropolitan areas climbed in July by the most in almost four years, a sign the housing slump that led to the worst recession in seven decades is abating.
Sales improved in the Sept. 26 week according to ICSC-Goldman’s tally which rose 0.1 percent for a 0.9 percent year-on-year gain that compares with plus 0.6 percent the week before. The report said traffic is improving.
Redbook, like ICSC-Goldman, reports strength for store sales, at a minus 2.2 percent year-on-year pace that extends an improving trend.
Looks like some good news today once again.
September 29th, 2009 at 1:20 pm
It’s all good as long as you don’t make eye contact with the 800 lb. gorilla in the living room. The gorilla’s name is “Shadow Inventory.” Those buying now will regret it when the gorilla awakens — hungry, groggy, and irritated — from his tranquilizer dart induced nap and thrashes them.
As Manny says, “mark it down.”
September 29th, 2009 at 1:22 pm
Time to expand the home-buyer credit to anyone and anything with a pulse ad infinitum. Anything less and it all falls apart again. Even to those who buy/sell multiple homes as “investments”.
September 29th, 2009 at 1:28 pm
Mannwich @ 1:22
Why not just have the Chinese government write a check to anyone in the U.S. who wants to buy a house? That would cut out the “middlemen”.
September 29th, 2009 at 1:39 pm
@DL: Excellent idea! I could actually see this being proposed (by the Chinese).
September 29th, 2009 at 2:01 pm
@HW: What about Consumer confidence number?
sorry but Real estate is still in decline in NYC.
September 29th, 2009 at 2:04 pm
The most important component of Consumer Confidence – Expectations, was strong. That’s why the market digested it and moved immediately off the lows.
September 29th, 2009 at 2:17 pm
How long until local governments start to force foreclosures to collected delinquent property taxes to shore up shortfalls in local govt budgets? Unlike the Fed except CA (IOU’s), they can not print their own money to pay the bills.
September 29th, 2009 at 2:22 pm
Trans-z: It is interesting how there is always one pollyanna assigned to comment. I’m thinking Harry is more of a realist. A “Don’t fight the tape” type. The proof will be how he handles a down market. After analyzing price action in the market, it is all rationalizations.
I also, unlike many of you, I welcome the opposing point of view. A one sided cheerleading session does nothing for me. I have even looked for a “bullish” site with thoughful commentary and analysis. I haven’t really found one. CNBC kind of covers the bullish argument I guess, but in such a superficial propagandistic patronizing way. Not much intelectualism there.
Anyway, I have found it curious to see a token bull pop up just as the last one fades away. I have thought maybe Barry is putting someone up to it just to provoke conversation, and therefore page hits. Or maybe, altruistically, he it trying to help with the critical thinking on the site by providing debate.
Anyway, I like the bulls. I don’t care if their arguments are hollow or cogent. I want to hear them so I can think for myself.
September 29th, 2009 at 2:28 pm
Wanger’s so smart, he can ascribe the market’s every tick to some reason that he makes up in his mind. He should be writing headlines for Bloomberg.
September 29th, 2009 at 2:29 pm
It also amazes me how many commenting on this site profess to use technical analysis, yet they are bearish in the face of an obvious bull run. How ever you slice it, rick assets are being marked up. So how can anyone who is professing to be long this market be dismissed so rudely?
I know there are others who are looking at the economy and fundamentals, and value. And it’s hard to look at the systemic issues of the economy and believe in stocks. That makes sense. But technicians who invest successfully are usually very close to momentum traders in terms of when they are invested. In both cases it is price action that matters. So, unless you are trying to catch the turn from a technical standpoint you are catching the wave. From what I have seen, catching the wave is much easier than catching the turn.
September 29th, 2009 at 2:31 pm
@hopeImwrong:
To paraphrase Rick from Casablanca:
“I don’t mind a parasite. I object to a cut-rate one.”
September 29th, 2009 at 2:39 pm
Transor – You are funny. I’m laughing.
September 29th, 2009 at 2:40 pm
Housing boosters have forecast turnarounds repeatedly since the market peaked in 2006, only to be proven wrong by plunging prices. And skeptics say they’re wrong again now. They argue that a deeply indebted consumer, a weak job market, expiring incentives and rising foreclosures spell a quick end to any housing rebound.
Read more.
http://www.housingnewslive.com/us-housing-news-articles.php
September 29th, 2009 at 2:41 pm
@Transor: LOL. Too funny man.
September 29th, 2009 at 2:49 pm
hopeImwrong: Consider this from the bullish side: In the second quarter, 72.3 percent of S&P 500 companies topped the average analyst profit estimate, matching the highest proportion even in Bloomberg data going back to 1993. The Economic Cycle Research Institute’s gauge of U.S. economic growth surged 24 percent in the week ended Sept. 18, the fastest increase in data stretching back to 1968.
This is what I’ve been referring to as the economic mini boom that we are entering. It’s obvious from the Sept. 18th data.
It’s good to see someone wanting to hear the other side of the story for a change. Here, no matter how good or strong a report can be, you always seem to get the “well, just wait until (fill in the blank) happens next month/quarter, then you’ll see”. It’s too bad because the reality is there is a lot of money to be made in this bull run and many have missed a big portion of it.
September 29th, 2009 at 3:04 pm
Harry,
Why post here with all the flack you get?
And, I can see reasons to be skeptical of the data from ECRI, and maybe even the outlier of beating the much lowered estimates of the second quarter. Can you see any reason to be cautious?
And, do either of these data points have a historical record of predicting a bull market? Is there data?
As I said eariler, catching the cusp of a move is very hard. So right now, bearish bets on the market are “fighting the tape.” That’s a good way to lose money.
I don’t mind anyone playing the long side to make money. I congratulate them. But, I also said, after looking at the price action for market clues, most arguments are rationalizations. So, I’m convinced the market is going up (has been) for now, but I can’t see how to predict it will continue (but it could).
So, from a long the market posistion, I would understand raising stops over time, booking profits, maybe adding to positions at levels of support on pullbacks, but I don’t quite buy the “economic data” and rational for a new bull market. Could be, but I’m a skeptic.
September 29th, 2009 at 3:09 pm
@Hope – Thank you for your 2:29pm post and this one they are well written, to the point and make sense. There is a lot of information and as many of your posts are very well worth reading.
I for one appreciate that you use a thought pattern and are willing to support what you say and not use wild unfounded conjunctions.
September 29th, 2009 at 3:12 pm
@hope: Just because some of us may be “bearish” doesn’ t mean we’re short. Why do people continually make that mistake here when being advised over and over and over against it? And I, like many others, have been long on various plays (and still are), so it’s not like those who are bearish (especially in a fundamental marco sense) are always shorting the crap out of the market. Many of us just hate the bullshit and the spin (and willful ignorance) and our comments reflect that.
September 29th, 2009 at 3:16 pm
hopeImwrong:
I post here to give the other side of the story. Like you have done, I’ve also searched for bullish sites but it seems that every forum you see, it’s usually with a negative bias. I think it’s because so many bears got caught and are still angry about that.
Yes, be cautious. I am. I keep moving stops up as the market continues its rise. I believe it will continue its run just based upon the mini boom we’re starting to enter now with inventory restocking, consumer spending (now expected to rise for the holidays), housing stabilizing, pick up in manufacturing, etc.
What I don’t understand is why these numbers are always ignored here or spun to be negative. As I stated, it seems like it’s always wait until next month/quarter, that’s when the shit hits the fan attitude here I can’t grasp. You’d think after months of improvement, that would change some minds.
September 29th, 2009 at 3:18 pm
OK Manny – I get your point about BS and spin.
September 29th, 2009 at 3:20 pm
hopeimwrong says-
“CNBC kind of covers the bullish argument I guess, but in such a superficial propagandistic patronizing way. Not much intelectualism there.”
and HW is the personification of this- my guess is no light is going on over your head because of the “wisdom or insight” being uttered by Mr. Wanger-
thought provoking he isn’t
then this-
“I like the bulls. I don’t care if their arguments are hollow or cogent. I want to hear them so I can think for myself.”
a bull presenting strong arguments will be dabted- not ridiculed- and that HW refrains from even touching on the macro picture as a possible limiting factor in stock values only discredits anything he has to say
September 29th, 2009 at 3:24 pm
Harry,
You say, “What I don’t understand is why these numbers are always ignored here or spun to be negative. ”
That’s something worth my time to think about. Especially since I fall into the camp of skepticism and negative interpretations.
There are really some interesting dynamics (interactions) on the comments sections of blogs, and they are very revealing of human nature and how humans err. Maybe this is one example?
September 29th, 2009 at 3:25 pm
ahab: Do you read anything I write?? Obviously not or you wouldn’t make ridiculous statements like “HW refrains from even touching on the macro picture as a possible limiting factor in stock values only discredits anything he has to say”
I give my macro view several times daily in my posts with numbers to back it up. I’m sorry if it doesn’t fit your gloomy view of the US but at least read before you post nonsense.
September 29th, 2009 at 3:31 pm
Wanger-
i do- thus my observation- however- you are free give me the macro views to support your bullish position-
feel free to set me straight
September 29th, 2009 at 3:38 pm
Ahab – There are always two sides. I’m with most posters here believing the macro picture is crap, and this should result in an extended period of a poor economy, so if the stock market were to reflect that, it would be lower than it is now. But, I’m also trying to see what I’m missing, I’m obviously missing something if this market move makes no sense to me.
One thing about the macro picture, it’s been a mess for a few decades. It has gotten progressively worse for a few decades. It seems like investments, assets, stocks, and the economy are only occasionally overwhelmed by the macro picture (like last year). So, are they decoupled from the macro factors we see for a few more months, or a few more years, or a few more decades? What are the other factors at work here which will counter the macro issues? Stimulus, consumer confidence, banks flush with cash and leverage, carry trade, FED… ??
I’m just trying to get a better read on what’s going on here in the world. I need bull arguments to balance my own bearish tendencies. I don’t have the answers. I just have lots of questions. I’m willing to even entertain “lame” bullish arguments as an exercise in thinking and understanding. That’s just me.
I’ve seen lots of awesome discussions at TBP. There’s lots of smart thoughtful people commenting here. I perfer debate to backslapping. The best discussions have been very thoughtful debates. Thanks all for your contributions. That’s Barry for the site.
September 29th, 2009 at 3:41 pm
We all know that another hit off the crack pipe is a cure for the symptom, not the disease. The “recovery,” such as it is, is based on dishonesty and chicanery, comes at taxpayer expense (the crack head is buying his euphoria from the sale of the family silverware), and is advanced by the local pawn shop/crack house. Withdrawal might kill us, and if it doesn’t, the misery index will be epic. The last thing we need is another crack head telling us that everything will be okay if we just keep hitting that pipe. What could go wrong?
September 29th, 2009 at 3:44 pm
ahab: ummm….you may want to just look a couple of posts above.
September 29th, 2009 at 3:46 pm
Thanks F420d – I appreciate the comments.
September 29th, 2009 at 3:47 pm
@Marcus:
The problem is that the we have Dr. Bernanke, our certified crack dealer. He’s the one they call Dr. Feelgood; he’s the one that makes you feel alright….
HCF
September 29th, 2009 at 3:48 pm
hopeImwrong: Your observation is correct regarding stocks and the macro picture. Only now, we have a rising market AND an economy starting to grow. So the macro view that so many bears keep putting out there really doesn’t have legs when considering all the economic indicators are/have turned the corner. That’s the part I don’t get. I’m willing to entertain the “lame” bearish arguments only because it baffles me in the face of what’s happening right now that there would be such a strong camp.
September 29th, 2009 at 3:49 pm
and let me add one more observation-
everything being done right now has been tried before- very recently- historical low rates and an easy money policy- to further indebt an overly indebted populace-
where did that get us exactly? how will it help now? why is it different now? what you have never answered for me harry- and i have asked specifically before- is what is your vision of America? can we continue on the same path w/ no adjustments in our borrowering and spending? can trade imbalances continue indefintely? are we positioning ourselves for the future with true wealth building industries? are we able to pay down the burgeoning debt with an aging poulation and recored deficits as far as the eye can see? is 1.5 trillion dollar/yealry deficit sustainable-
so Harry- if you cannot see these problems- you are exactly like everyone who has come before you- you know- the dot com investors and the house flippers- the “so easy a child could do it” crowd- and i have zero respect for people who are of that ilk
September 29th, 2009 at 3:55 pm
HCF:
Exactly (actually, it’s BB and the fascist cabal).
Irrational exuberance never hurt anyone.
September 29th, 2009 at 3:58 pm
The economy will not grow until our debt is paid down, and that’s not happening. It’s easy to to “make money” when you ignore the ever increasing debt.
September 29th, 2009 at 3:59 pm
@Hope – Not a problem, I am also 100% in agreement with (especially) the last two paragraphs of your 3:38 post. I believe most people are here for reasons similar to what you laid out and although they may not be swayed one way or another by some of the arguments, but sometimes they can cause reflection and that is were growth takes place.
Then unfortunately there are the attention whore, boorish trolls who come here just to pick fights and cause dissent – YES DIPSHIT WAGNER I MEAN YOU!!!!!
Comments like yours and many others and some of the insewing arguments have helped to give me (and I am sure others) a bigger, broader view of things not just economic, but the world in general
September 29th, 2009 at 3:59 pm
hopeImwrong
“But, I’m also trying to see what I’m missing, I’m obviously missing something if this market move makes no sense to me.”
I don’t think you’re missing anything, some people will do whatever it takes to inflate a bubble, no matter what the cost will be down the road, this time round, it will a cul de sac.
September 29th, 2009 at 4:00 pm
hope-
dude- nothing wrong with seeing the other side- no issues with that whatsoever- and to ride the trend- perfectly acceptable and rational decision- however-
when someone’s idea of the macro view is the “economy is turning” that should tell you all you need to know about their ability to grasp certain concepts-
and that the economy is turning- so what? perfect for short term plays possibly- just as someone could have ridden the infamous “Bush Boom” for some $- but alas- what was the ultimate verdict on that?
September 29th, 2009 at 4:02 pm
@Marcus:
Very astute observation about debt… Short term, anything can happen, especially if we just pretend everything is fine. Long term, the chickens come home to roost in regards to debt. It either has to be paid off, or defaulted on. There really isn’t any other option.
HCF
September 29th, 2009 at 4:04 pm
Harry,
The part of the macro picture which is hard to rationalize with a “recovery” right now is not so much the mild improvement in the economic numbers. That’s just a stabilization of the economy right now. We are still far from where we were in many important areas economically. I know jobs are a lagging indicator, but continuing to lose jobs at this current pace is not good from a macro perspective. Then there is the issue of credit. Credit is used as the engine for our economy. It funds everything. Private sector credit is contracting. So, even if unemployment wasn’t reducing consumer spending, credit contraction would. Small businesses can no longer get the loans they need. Then there is the huge amount of credit which needs to be serviced (paid off). This will be a drag on currrent and future consumption. The amount of debt in our economy is bigger than ever before. It’s like having a mortgage bigger than you can afford. It’s not a good macro number. The US moved from manufacturing to service to finance as the engines of our economy. We are losing power economically in the world due to our limited production of real goods anyone will want going forward. I summarize this four points here:
1) Jobs
2) Credit contraction for consumers and small businesses
3) Enormous amount of debt for the economy to service.
4) Economic production by the US for world consumption.
There are obviously some compensating factors to these big issues. Or, these issues are as relevant as we think. Harry, this is your queue to weigh in on the relevance of these factors, or the compensating elements of the economy. I look forward to your thoughts.
September 29th, 2009 at 4:04 pm
ahab:
here’s what’s coming (scroll down to: The Taxman’s at the Door):
http://sareloberholster.blogspot.com/
September 29th, 2009 at 4:07 pm
HCF:
The link for ahab might also interest you.
September 29th, 2009 at 4:10 pm
MA-
thanks marcus- will have to look at it when i get home- some sites are blocked at my office unfortunately- kind of hit or miss on what i can access-
September 29th, 2009 at 4:12 pm
ahab: Answers
Vision of America: Leader in technological advances in energy and implementation exported worldwide. In addition to the US is the leading coal producer. As cleaner technology advances so does the export of a precious resource and the infrastructure associated with obtaining, processing and exporting.
Can we…no adjustments in our borrowing and spending? No. we can’t and we’re seeing absolute evidence that this is changing. A necessary component is saving. We’re seeing that shift dramatically.
Can trade balances….? No but they can continue long enough to create the shift in technological advances stated above.
Pay down burgeoning debt….? Eventually. Again, it’s not imperative at this time that we do. That’s the problem with the whole “borrowing and spending” side of the story that people don’t seem to comprehend. We currently needed to stimulate the economy with government spending and intervention to create what will undoubtedly become a self sustaining and rather wealthy country that our children and their children will reap the benefits.
September 29th, 2009 at 4:12 pm
@ahab –
“so Harry- if you cannot see these problems” He can and he does, but he is an attention whore, who in my humble opinion should be ignored.
You, I and most people who have had “the pleasure” of reading his posts realize his agenda is to cause problems, that he tries bait very good posters into senseless arguments “The indices will lead the way” is his inane rallying cry.
Yet refuses to give any facts. Hopefully soon he will get the picture that he is truly not wanted here and take his act back to Yahoo messenger.
Plus, he a LIAR!!!! “Yes, people from The Big Picture send me emails all the time thanking me for my advice…….. Bahahahah He lies.
September 29th, 2009 at 4:16 pm
@Marcus:
All the charts look like the steep climb on a very scary roller coaster… The question is, is there any track on the other side, or do we fall off a cliff?
HCF
September 29th, 2009 at 4:24 pm
HopeImwrong:
1) Jobs (pace of job losses has slowed considerably. No denying that. Job creation will take some time but will certainly face a potential boom on energy innovations poising US as world leader.
2) Credit contraction for consumers and small businesses. I own a small business and am getting more credit offers now than I have in the past two years. I don’t agree with that at all and find that bears use this argument aping what other bloggers say. My business has no, repeat no, problem getting credit.
3) Enormous amount of debt for the economy to service. It is enormous but it is certainly serviceable near term as the economic shift becomes more of a reality.
4) Economic production by the US for world consumption. US will lead the world in technological advances concerning energy – most importantly coal. I’ve covered that earlier.
September 29th, 2009 at 4:24 pm
HarryWanger Says:
“We currently needed to stimulate the economy with government spending and intervention to create what will undoubtedly become a self sustaining and rather wealthy country that our children and their children will reap the benefits.”
_____________
And that self sustaining and rather wealthy country will be China. You cannot reap what you have not sown. There is no “other side” to borrowing and spending. The path to long term fiscal security is one of discipline, debt reduction, and investment in REAL growth (not financial derivatives that will explode in your children’s faces). No one has ever borrowed themselves into prosperity.
You are a dishonest man.
September 29th, 2009 at 4:26 pm
HCF:
We pay for Harry’s “profits” through increased taxation.
September 29th, 2009 at 4:27 pm
HarryWanger,
I see your poster above. Thanks for your pointing out a possible outcome out of this. But I am more interested in seeing you bringing in more data, hard-cold data and hard-code analysis without “We currently needed to stimulate the economy” kind of wishful thinking. More specifically,
1. technological advances in energy and implementation exported worldwide—>Data/Statistics please!
2. A necessary component is saving. We’re seeing that shift dramatically.—> How long will such “more saving” trend to continue and why? How will “more saving (meaning less comsumption)” impact a 70% comsumption-driven economy going forward?
3. No but they can continue long enough to create the shift in technological advances stated above. –>This is a claim or speculation unless you can back up this with more data and sound argument with them.
4. Pay down burgeoning debt….? Eventually. Again, it’s not imperative at this time that we do. —>What’s the chance that US may be forced to “pay down ” the big sum of debt in forseeable future (say in 3 years) either in inflation way or currency crisis way (like south east asia)?
On the other hand, I have to admit that I am taking advantage of “being a critics” that I do not have to give data and rigorous analysis since I can get away by “just questioning” like Socrates.
Once you hit us with cold-hard data, we can engage in a more meaningful discussion.
September 29th, 2009 at 4:28 pm
OMG-
also-
Marcus- love that analogy- maybe the USA needs a 12 step program (-: possibly administered by Bhutan- where instead of GDP they use GNH-
Gross National Happiness
September 29th, 2009 at 4:30 pm
franklin420: I have never referred to any poster on this forum in a disrespectful way. I, on the other hand, have heard many juvenile name calling from many posters here. That’s not my way.
I have never said “the indices will lead the way”. Still don’t know where you got that or why you continue to post it.
I always give facts based upon the economic news of the day. I don’t find obscure perma bear blog sites however to support my position rather the economic numbers.
I don’t lie. I don’t like being called a liar but I understand the maturity level everyone on this blog cannot be up to the standard of the classy posters here.
September 29th, 2009 at 4:31 pm
Harry,
I’m glad to hear credit is becoming more available. I assume you also witness when it was not available early in the year. And stories about that?
Can you be more specific about the energy innovations? Are these government initiatives? Are these private sector? What are the leading research companies for these innovations?
Coal based energy innovations? I’m very interested in what you think these will be, or what the capability is these innovations will supply?
September 29th, 2009 at 4:32 pm
HarryWanger Says:
“1) Jobs (pace of job losses has slowed considerably. No denying that. Job creation will take some time but will certainly face a potential boom on energy innovations poising US as world leader.”
A: BS. We’re already sucking hind teat on energy technology and we’re behind the curve on implementation. Name an energy innovation where we lead the way. Coal? That should make for a nice clean country (but as lng as we make a profit, who cares?).
September 29th, 2009 at 4:33 pm
man everyone is way faster on the keyboard than I am -
to be clear- my OMG comment was supposed to follow H Wanger’s 4:24 response to HopeImwrong- and it was as superficial and meaningless as I imagined it would be
September 29th, 2009 at 4:33 pm
@hopeImwrong Says
The technical picture is not necessarily bearish. While I exclusively use TA, I am not bearish, but then I am not wildly bullish, either. The indicators that I use are giving mixed signals , with a bias toward more rally. There are not enough divergences to make a bear case. You cannot catch a wave until the turn occurs, and if you know what to look for, the turns are not that difficult to predict. There are several indicators that I look at that are very good at calling longer term bottoms. Tops are always much more difficult to predict.
I was very bullish at the March lows because my indicators told me that the bottom was very near. I remain neutral at this time, but I can easily see the last high be met or exceeded.
September 29th, 2009 at 4:35 pm
Marcus Aurelious: “You are a dishonest man.” Huh??
NiceCriticalThinker: Thank you for that post and understanding the role of the critic. It’s kind of like believing in a deity – the burden of proof is on the believer. So I accept that burden.
September 29th, 2009 at 4:35 pm
You don’t have to lie to be dishonest. Intellectual dishonesty fits the bill.
September 29th, 2009 at 4:36 pm
1) Jobs (pace of job losses has slowed considerably. No denying that. Job creation will take some time but will certainly face a potential boom on energy innovations poising US as world leader.
^You seem to hang your argument that US’s energy innovation will lead us out this mess. Please more data and references!
2) Credit contraction for consumers and small businesses. I own a small business and am getting more credit offers now than I have in the past two years. I don’t agree with that at all and find that bears use this argument aping what other bloggers say. My business has no, repeat no, problem getting credit.
^ up to 2005 and 2006, even 2007, every home buyer-to-be was able to obtain easy (or frauluent) mortage. Does this fortell what would happen the year(s) after? In summary, is this backwards-looking in a nutshell? Have you thought why it is the case you can obtain “easy” credit now? Is it because Fed Reserve pumped about 1.3T $ into circulation and 400-500B more until next March via MBS, Agency debt, and Treasury buying? Can Fed Reserve continue to do this? for how long? If there is a limitation that how far Fed Reserve can go along this line? Where is the limitation? What will force their hand by them?
3) Enormous amount of debt for the economy to service. It is enormous but it is certainly serviceable near term as the economic shift becomes more of a reality.
More data to support your “servicable” argument please!
4) Economic production by the US for world consumption. US will lead the world in technological advances concerning energy – most importantly coal. I’ve covered that earlier.
^ 4) is repeating 1)
September 29th, 2009 at 4:38 pm
@HW: Certitude + smugness = annoying = ignore.
September 29th, 2009 at 4:38 pm
I am with HopeIamWrong. I can live with anybody who can argue sensibly.
September 29th, 2009 at 4:39 pm
@MA: I don’t think he’s being dishonest though. I think willful ignorance is more the tune here.
September 29th, 2009 at 4:41 pm
Ignoring the negatives of our situation while painting a rosy picture of the future is dishonest.
September 29th, 2009 at 4:42 pm
Mannwich Says:
@HW: Certitude + smugness = annoying = ignore.
__________
Best comment today.
September 29th, 2009 at 4:42 pm
@MA: Not if you clearly don’t know any better.
September 29th, 2009 at 4:44 pm
Manny:
Not “being ignorant of”, but outright ignoring.
September 29th, 2009 at 4:47 pm
dss – thanks for the comments. I’d be very interested to know what indicators you use. A reference to a method would be fine also. What is the timeframe you look at for your analysis? What is your average holding period on a successful trade?
September 29th, 2009 at 4:51 pm
HarryWanger,
“the burden of proof is on the believer. So I accept that burden.”
And when are you going to finally start to deliver on that instead of just permanently throwing out bold claims and predictions?
BTW: The burden on proof for a claim is rather on the one who makes the claim. Everyone has his/her burden with respect to that.
rc
September 29th, 2009 at 4:51 pm
@Ahab – If you are still around, I have a couple questions for you.
I honestly refuse to address this attention whore, but if a jackass stated.
HarryWanger Says:
September 28th, 2009 at 5:17 pm
“Hence, the indices should continue their upward momentum.” AND many just like this
Could that be paraphrased as “The indices will lead the way”?
As far as I know there is NO exchange of emails on this form, except through open communication through post. So if some states they are receiving emails from TBP posters and is unable to back up this claim, does it not make them a LIAR!!!!
“People from this blog and MW.”
harryWanger Says:
September 28th, 2009 at 4:37 pm
leftback, Mannwich: I’m not parading the trade. I’m giving my insight to market moves. I actually receive a lot of email from people who thank me for the trading ideas. If other people choose to use my calls to make money that’s a good thing, right
franklin420d Says:
September 28th, 2009 at 5:29 pm
Harry – just how is it you “actually receive a lot of email from people who thank me for the trading ideas” Are these people from this blog? And if you have your own finacial company why are you giving out free adivice here…….. Hey you aren’t really Eric Tyson are you?
HarryWanger Says:
September 28th, 2009 at 5:36 pm
franklin: I didn’t really see how you refuted the article – that’s all. Like I said, the article addressed the consumer shifting segments (you seemed to agree to that). People from this blog and MW.
Also do you HAVE to call someone a name to be little them, but isn’t elevating yourself to deity even worse then name calling?
HarryWanger Says:
September 29th, 2009 at 4:35 pm
Marcus Aurelious: “You are a dishonest man.” Huh??
NiceCriticalThinker: Thank you for that post and understanding the role of the critic. It’s kind of like believing in a deity – the burden of proof is on the believer. So I accept that burden
September 29th, 2009 at 4:52 pm
Marcus, Mannwich, et al. Ignorance is not a bad word it describes a state of knowledge. One could easily say the ignorance lies with those who fail, in the face of improving economic numbers, to see anything outside of the realm of their steadfast convictions on the direction of the economy. Again in the face of undeniably stronger data.
Regardless, I owe Critical and HopeIm some info regarding future growth. I will get at that a bit later and provide data/sources to back up this view. I have to run now but I will post on whatever current thread is up at the time.
Thanks to Critical and Hope for thoughtful discussion and refraining from the juvenile name calling that is rampant on this forum.
September 29th, 2009 at 4:58 pm
I see Harry’s moving the goalposts. Again.
September 29th, 2009 at 4:59 pm
HarryWanger said:
“I will get at that a bit later and provide data/sources to back up this view. I have to run now but I will post on whatever current thread is up at the time. ”
Of course, HarryWanger has to run now and will back up his bold claims later.
rc
September 29th, 2009 at 5:06 pm
@rootless – Part of that is because he is an attention whore – part of that is because he has no back bone, but mostly it is because he is a LIAR!!!!!!!
September 29th, 2009 at 5:07 pm
420d-
i don’t even know if HW is for real- but if so- then he is a poor representative for the bull case- we can only hope that someone with better arguments will appear-
it always seem that way on this blog though- going back the year or so that I have been posting here- the bull that is posting is always the gullible market player with zero concept of why they’re bullish- so maybe it’s just me- what do i know-
rc-
did you expect anything different
September 29th, 2009 at 5:34 pm
ahab – There have been a couple time in recent weeks that even Mr. Ritholtz got some grief for his beliefs the market still has an upward push to it, but he always supports his case, there are also a couple others like hopeiamwrong who believe the market will go up a little more, but they lay out their case and if someone challenges them they defend their stance.
This attention whore distracts from the constructive discussion, perhaps he should start his own blog, but I hope he soon realizes what a fool he has made of himself and go back to Yahoo.
September 29th, 2009 at 5:51 pm
If the rate of descent continues to slow, we will soon hit bottom.
September 29th, 2009 at 5:52 pm
Harry – It would appear that you are not liked, respected, agreed with, or listened to on this blog. People have explained to you over and over and over and over in excruciating detail why you are so reviled yet you continue to come here, day after day after day after day.
I have to ask you, why? I think it should be painfully obvious to you that you have not, nor are you ever, going to change any minds.
September 29th, 2009 at 6:16 pm
over and over and over and over in excruciating detail
and
day after day after day after day
Love it.
He is attention whore – he does not care about any thing except inflating his fragile ego……That way his mommy will be so proud of him.
September 29th, 2009 at 6:47 pm
@Paul Jones
So true, so true.
btw I’m bearish on the future because economic numbers have been manipulated so long I don’t know what’s right. Someone brought up shadow inventory. That’s going to kill any recovery in housing. The indicators I use still have the market going up until a reversal is triggered. So I’m currently long the market until I’m not.
September 29th, 2009 at 6:56 pm
Speaking of shadow inventory, I can’t remember who it was who turned me on to Dr Housing Bubble, but I’ve been an avid follower for months now. So whoever it was – thanks!
September 29th, 2009 at 7:20 pm
@hopeImwrong Says
I do analysis on all time frames. And each indicator group works for each time frame. Nothing fancy. One of my favorite old fashioned indicators is the McClellan Summation Index. Study this on a weekly time frame and you can easily spot the divergences such as the October 2008 – March 2009. I have to caution is that the use of the indicators takes a lot of study time and some people don’t have the patience to do the work.
I use quite a few of the longer term indicators together to confirm what I see. I then use daily or intraday indicators to time the purchase, and I never go all in on one day, unless I sense it is a climatic low. Last week the McClellan Summation Index registered a new high for this move off the March lows, based upon past action, I believe that we can either meet the last highs or exceed them. Timing tops is far more difficult to do, my best advice is that I sell a bit on strong rallies as the months go by, either using moving averages, OBOS stats, or what ever. I am always happy to take a profit at certain % gains.
The first time I used my indicators to buy in this fashion I was scared to death, but it was incredibly calming to realize that I was buying at a low point, that I was buying at wholesale prices, and that the methodology I was developing actually worked. Still scary though to be jumping in when it feels so wrong based upon market action, psychology, and conventional wisdom, unless you listen to CNBC or HW as they are always bullish. It is certainly buying when there is blood in the streets and selling gradually when things look rosy. I have graduated from stocks to futures, but I like to use ETF’s SPY, etc. for ease of entering as I manage 18 accounts.
For shorter term swing trading I use a methodology using the advancing and declining volume that works very well in picking great spots on a daily basis, I then use intraday analysis to pick a good spot to enter. I also day trade but that involves another whole set of tools and analysis.
I have a data base that I have kept since 1989, and I use that to daily enter the market stats, then I can analyze the market using the raw data. It is very precise. And I always use stops, because no one is smarter than the market.
September 29th, 2009 at 8:00 pm
HopeImWrong and NiceCritical: I have a bit of time to address some of your questions regarding my optimistic outlook. First, lets start with the US debt that seems to scare the crap out of everyone. Here’s the reality from Paul Krugman:
“But what about all that debt we’re incurring? That’s a bad thing, but it’s important to have some perspective. Economists normally assess the sustainability of debt by looking at the ratio of debt to G.D.P. And while $9 trillion is a huge sum, we also have a huge economy, which means that things aren’t as scary as you might think.
Here’s one way to look at it: We’re looking at a rise in the debt/G.D.P. ratio of about 40 percentage points. The real interest on that additional debt (you want to subtract off inflation) will probably be around 1 percent of G.D.P., or 5 percent of federal revenue. That doesn’t sound like an overwhelming burden.
Now, this assumes that the U.S. government’s credit will remain good so that it’s able to borrow at relatively low interest rates. So far, that’s still true. Despite the prospect of big deficits, the government is able to borrow money long term at an interest rate of less than 3.5 percent, which is low by historical standards. People making bets with real money don’t seem to be worried about U.S. solvency.
Even the Fed Reserve Bank states: higher productivity or just stronger productivity than our trading partners will allow us to pay back debt without sacrificing today’s consumption. We’re seeing signs of that productivity shift now.
Regarding jobs near term: Now that the recession is over the people who are employed have a lot more buying power. We saw this happen at the end of the Depression and unemployment was much higher. This fueled the economic rebound.
Longer term job growth will come from infrastructure development with money scheduled for projects throughout 2010. And, also of note, many private projects have been placed on hold, not scrapped. As we see improvement in the next few months, many of these large projects will resume.
Many economists are expecting a boom in the growth of smaller companies in biotech and stem cell technology with the US being a leader.
Economists see a wave of technology consumption that has created tremendous pent up demand. Again, as the economies improve this will create the need for more jobs. And not just a few but large numbers of hiring.
Green technology companies are springing up all over the US. These companies are growing rapidly. As our dependency on oil wanes, we will already be in the position in this country to lead the world in new energy. The potential job creation in this arena is enormous.
Sorry for the long post but a lot to say.
September 29th, 2009 at 8:08 pm
You guys are pretty bad some times. I tried being tentatively bullish a few months ago and got mugged.
September 29th, 2009 at 9:04 pm
HarryWanger,
Thanks for a large post. I would like to do one thing at a time. Let focus the debt part of your post.
1. Currently total US gov debt is standing at 11.7 T, see http://www.brillig.com/debt_clock/
1.1 About 60% held by public and 40% held by gov agency, see http://en.wikipedia.org/wiki/United_States_public_debt
1.2 Maturity-structure gets short—more and more debt is borrowing short: see http://energyecon.blogspot.com/search?q=treasury
2. Current GDP: 13.84T
Now, private sect
3. Family debt, mostly mortage: 11T
Now, to service this (11+11.7=22.7)T, how much income do we need to serve this sum of debt? How big this debt-service will eat the income pie?
Remeber mortage is non-productive investment. Govnment debt is non-productive investment essentially (borrowing the money and feeding the hungry) either.
Another point I want to make from (1.2) is that borrowing shorter and shorter most likely will get burned.
Now, I will to see your facts and arguments how we can grow our way out of this 22.7T (still growing at pace of $3.78 billion per day, see http://www.brillig.com/debt_clock/) debt burden quickly with “leading technology”.
September 29th, 2009 at 9:08 pm
Guys, how many of the personal infighting above do you tink is interesting for other reader?s Please don’t drag this blog down. Exchange emails, and you can fight it out all day long without wasting space here.
It’s not about you personally being right or wrong. Nobody is interested if someone said he had a close stop on RIMM when he “recommended” the stock here or not.
Other readers come here to get fresh ideas and to lern, not to listen to this hick-hack. Please don’t let this degrade into a Yahoo message board!
On real estate: go to “the” authority, Mark Hanson: http://mhanson.com/blog (each time I go there I come back depressed…). Look up his old youtube videos – he laid everything out before anybody in the market smelled a rat.
September 29th, 2009 at 10:37 pm
@gloeschi
Thanks for the link. Good read. More
green shootsweeds baby!!!September 29th, 2009 at 10:38 pm
dss – I appreciate your response. Is there any way we could work something out so I could get more details?
cmagliozzi@yahoo.com
September 29th, 2009 at 11:12 pm
HarryWanger,
The total domestic debt in US isn’t 9 trillion US dollars. It was almost 51 trillion US-dollars (more than 41 trillion US-dollars of this is private debt) as of Q2 2009.[1] That is, the total debt to US GDP ratio amounts to about 365% (private debt to GDP ratio almost 300%), higher than before the Great Depression. Now tell, how is the US economy going to create enough income so that this debt can be paid off? I already provided an estimate in a previous post that not even the interest can be paid on this mountain of debt from any GDP growth that can be reasonably expected in US. I haven’t seen anything by you so far that would have falsified such an estimate.
It’s easy to paint a rosy picture, if one presumes convenient, but wrong numbers.
[1] see http://www.federalreserve.gov/releases/z1/Current/z1r-2.pdf, Table D.3
rc
September 30th, 2009 at 2:27 am
The beauty lies in the eyes of the beholder. Isnt it? I saw the same article at Marketwatch and wsj and both had the headline nos as “prices increase MoM” and only within the article did they find it useful to put the greater truth that prices were still down >10% on year :)
I have updated a few article on my site covering China, US and EU.
1. China activity stabilizes Read …
2. Next Bubble is the Bond market: Read..
3. The US dollar is next PESO: Read ..
4. Another sovereign fund and another ridiculous loss $41 bn: Sovereign Fund Loss
Fresbee
September 30th, 2009 at 8:09 pm
Basic calculus dictates that we will not see a bottom in housing until the derivative crosses the x axis, thereby indicating a local minimum in the associated integral function.
http://en.wikipedia.org/wiki/Maxima_and_minima
i.e. wait to buy a house until the squiggly line hits the flat line(I’m assuming that rates will remain favorably low due to the destitute economy when that happens).