Posts filed under “Data Analysis”

One & Undone?

As noted, markets liked the soft jobs data, believing it makes an end to Fed hikes more likely sooner than later.

However, as much as investors are hoping for a "One & Done" scenario, history teaches us its more like "One & Undone for the markets."

There is a disconnect here; We’ve previously observed that once the Fed finishes, markets do not perform particularly well (See [1], [2], [3] and [4]). I have yet to see a convincing reason not to see that pattern continue.

Just in case you found these four prior discussions wanting (!), here are two more analyses along similar lines to digest:

The WSJ’s David A. Gaffen recently quoted an analysis from Bianco Research. Jim Bianco found that over the past 5 Fed
hiking cycles:

“Stocks do well during the tightening period, and mediocre
afterward. The S&P 500 index rose at least 6% in four of the five
tightening periods, with the February 1994 to February 1995 period being the
outlier, when stocks fell 0.5%. By contrast, in the four post-tightening
periods, Bianco says stocks have done well twice, and done poorly twice. The
two poor periods were late 1987, when the market crashed, and mid-2000 to early
2001, when it slowly deteriorated; the good times were in 1995 and 1989."

That is consistent with prior studies; it also make economic sense.  The Fed stops once they see proof of the economy slowing, which typically suggests weaker revenues and profits for companies. 

Next up, we go once again to TickerSense, where Paul and Justin look at the Average Performance of the average SPX during a full Fed cycle:

Entire_rate_cycle

Hence, the surprising reaction over the past year to any evidence the economy has slowed so much the Fed fears it must halt tightening. 

If you are a Bull, you should be rooting for ongoing hikes, which should mean a robust economy and ongoing earnings growth.

Once the Fed stops, the party is typically over for the macro economy.

Category: Data Analysis, Markets, Technical Analysis, Trading

Looking more closely at NFP data

Category: Data Analysis, Economy, Employment

NFP Day

Category: Data Analysis, Earnings, Economy

A few words about Microsoft

Category: Corporate Management, Data Analysis, Technology, Weblogs

Existing Home Sales Data (California Real Estate: On Sale!)

Sales of existing homes surprised to the upside yesterday. But one data point does not make a trend. This is the first rise (sequential monthly change) after 5 straight months of falling Home Sales. And that’s before we examine the data.

Before you declare the end of the housing slow down, consider:

- Existing Home sales actually slipped vs. last year by -0.7%; The reported gain was over last month’s data;

- the Inventory of unsold homes soared 7 percent in March, hittting an all-time record; There are now 3.19 million existing homes for sale, or  5.5 months’ supply; That’s the largest inventory since July 1998

- Existing homes edged up 0.3% last month to a seasonally adjusted annual rate of
6.92 million units; (we know that seasonally adjusted data is not always accurate)

- Year over year, the Northeast and Midwest gained, while the previously hot housing markets in the South and the West slipped;

- median home prices are still rising, albeit nmore slowly — up 7.4% year over year, to $218,000.

Here’s a data point that has me scratching my head:  Why are there different numbers for the year-over-year changes for seasonally and not seasonally adjusted?  Was this March somehow in a different season than last year’s March? I am perplexed.

Note that data for existing home sales comes from National Association of Realtors, a group that is certainly an interested party; Of course, as a homeowner, investor, and someone with a public bearish tilt for the second half, I’m hardly objective myself (hey, I try). But this oddity — down -0.5% for the not seasonally adjusted year over year versus down -0.7% for the seasonally adjusted year over year — is beyond my comprehension.

So much for the hard data on existing sales; Today, we get New Home Sales. Recall our prior admonishments that monthly New Home Sales Data are unreliable; look instead to a moving average.

Let’s move onto some anecdotal evidence.  A friend writes:

"Flop! Wow, KB running blue light specials in California. Not surprising,
Chico area was rated one of the most overvalued markets in the country. Houses
in the $200k space.  When was the last time you saw that in California? "

 
Oak Knoll Place Live Oak, CA

Oak Knoll Place Slideshow

Here’s the sales pitch:

"Oak Knoll Place in Live Oak is located in a beautiful
community near the majestic Sutter Buttes. With easy access to Highway 99, it is
ideally located for easy access to Sacramento, Lake Tahoe, Reno and a wide
variety of recreational opportunities. Yuba City and Marysville are
approximately 10 minutes south, Chico is approximately 35 miles north and the
Gray Lodge Wildlife area is approximately 10 minutes west. Live Oak has a
quaint, small-town atmosphere with many nearby recreational water activities,
including the Feather River, Yuba River and Sacramento River. Prices starting
from the High $200′s.
"

I don’t know Live Oak, but houses like that in California are hard to imgaine . . .

More after the jump.

Sources:
Existing-Home Sales Rise Again in March
NATIONAL ASSOCIATION OF REALTORS
WASHINGTON (April 25, 2006)
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/MarchEHS06?OpenDocument

Existing Home Sales  data
NATIONAL ASSOCIATION OF REALTORS
http://www.realtor.org/Research.nsf/files/REL0603EHS.pdf/$FILE/REL0603EHS.pdf

>

Read More

Category: Data Analysis, Federal Reserve, Fixed Income/Interest Rates, Real Estate

More evidence: Fed Pause Not Good For Stocks

Category: Data Analysis, Economy, Federal Reserve, Investing

Unemployment: Then versus Now

Category: Data Analysis, Employment

Do We Have Inflation?

Category: Data Analysis, Federal Reserve, Inflation

Will the US Economy Decelerate Rapidly as Boomers Retire?

Category: Data Analysis, Economy, Federal Reserve

Did the Yield Curve Send a “False Alarm?”

Category: Data Analysis, Economy, Federal Reserve, Fixed Income/Interest Rates, Inflation, Investing, Markets