Is the bottom in housing prices staring us in the face?

- by New Deal democratMany if not most times you will see me cite year-over-year trends in economic data. This is because prior research has been based on YoY trends, and also because many, many data series have marked seasonality. So, for example, with rail traffic you simply can't compare wintertime post-Christmas carloads with late summer or autumn...

Read More

Bonddad's Summer Vacation

I'm taking the rest of the week off along with labor day on Monday. NDD may or may not be around, but I'll be back next Tuesday. Have a safe we...

Read More

Double Dip Recession Looms

The Telegraph reports that the West is facing the threat of a double-dip recession; after key measures of confidence collapsed in both the United States and Europe, with Germany suffering the steepest one-month fall since records began in the 1970s. Whilst the USA is mulling a further round of QE, Europe is frozen like a rabbit in the headlights. Member states are bickering as to what should be done, the ECB has blundered by increasing rates this year and Germany is a house divided as the true costs of the Euro expiration are becoming apparent.Unlesds...

Read More

Housing price declines lessen further in August

- by New Deal democratHousing Tracker's final report of asking prices in 54 metropolitan areas for August is in, and it shows that the YoY rate of declines continues to lessen, now only -2.8% YoY. Here's the updated chart:Month2007 2008 2009 2010 2011 January ----7.5%-11.5%-5.8%-8.7%February ----7.8%-12.0% -5.2%-8.4%March ----8.3% -10.9%-5.0%-7.3%April -2.7% -8.6%-9.6%-5.0%-6.8%May -3.5% -9.1% -8.1%-5.0%-5.6%June -5.0%-9.8%-7.0%-5.0%-4.4%July -5.4% -10.4%-6.1% -5.1%-4.2%August -6.0% -10.6%-5.5%-6.1%-2.8%September -6.2% -11.1%-5.1%-6.6%---October...

Read More

The Economy is A Moving Target

Over the weekend, NDD posted an article titled, The Doomers Tell a Compelling Story... Until You Look At Their Record. He noted that despite continued prophecy of the end of times, their predictions have come up short on a regular basis for the last two years. This highlights one of the really annoying aspects of talking about the economy: it's a moving target and you have to let the numbers tell you where things are headed rather than thinking things are moving in X direction and finding data to support your claim.Starting a little over two...

Read More

Treasury Tuesdays

Last week, I wrote the following about the treasury market:Overall, the IEFS are looking over-extended in the short run; prices have moved through resistance in near parabolic fashion on high volume, largely as a safe haven play. However, there is still a great deal of concern regarding the overall economy, and the Fed is not raising rates anytime...

Read More

The data and renewed recession: update

- by New Deal democratA couple of weeks ago I wrote a summary called The data says: no double dip recession. No sooner had it come, out, though, then the data took a couple of steps closer to the dividing line between expansion and contraction.I noted at the time that spreads between BAA corporate bonds and treasuries hadn't widened. (this is one of...

Read More

Thoughts on Ben's Speech

On Friday, Bernanke made a very important speech, the last part of which has been under-reported. Consider the following:To achieve economic and financial stability, U.S. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. As I have emphasized on previous occasions, without significant policy changes, the finances of the federal government will inevitably spiral out of control, risking severe economic and financial damage.1 The increasing...

Read More

Economic Week in Review

Consumer Spending: consumer sentiment moved slightly higher in the last two weeks of the month, rising from 54.9 to 55.7. However, it's important to remember this reading is still extremely low and has been for the duration of the latest expansion, indicating consumers are still deeply concerned about the state of the economy.Manufacturing: durable goods increased 4%, ex-transport, orders were up .7%. Non-defense capital goods were up 2.4%. This report runs counter to the recent regional manufacturing surveys, all of which have been weaker....

Read More

Equity Week in Review and Preview of the Upcoming Week/Month

Last week, I wrote the following about the market:The good news is it looks as though the market found a temporary bottom. But we are hardly out of the woods. An upside testing of the declining EMAs is in order, followed by a retest of the 112 level. If the 112 level holds, we'll be in far better shape. But that bottom is new and still very...

Read More

Weekend rant: the Doomers tell a compelling story -- until you look at their record

- by New Deal democratA commenter has asserted that I rely on nothing more than post-WW2 data, and therefore my conclusions are bogus, totally ignoring the numerous posts I have written, including a five part series I wrote close to 3 years ago, looking at pre-WW 2 economic indicators. The alternative, presumably, is to rely on "fundamental analysis." As I pointed out last week, most of what passes for "fundamental analysis" consists of agglomerating charts and opinion pieces in support of an opinion that is already held. That sort of "analysis"...

Read More

Weekly Indicators: on the verge of a self-reinforcing downturn edition

- by New Deal democratMonthly data was mixed. New home sales were down slightly, but essentially have been flat all year. Durable goods orders were up by the most in 4 months, and new orders ex-defense - one of the 10 Leading Indicators - were up. This series continues to signal at least weak expansion. Final consumer confidence in July was largely...

Read More

Thinking About Ben

So, the Fed did nothing. Don't be surprised, because, frankly, there isn't much they could actually do right now.Consider this list of possible actions from Paul Krugman -- citing Chairman Bernanke:Back then, Mr. Bernanke suggested that the Bank of Japan could get Japan’s economy moving with a variety of unconventional policies. These could include: purchases of long-term government debt (to push interest rates, and hence private borrowing costs, down); an announcement that short-term interest rates would stay near zero for an extended period,...

Read More

The Washington Lobotomy Factory Proves Itself -- AGAIN

From the NY Times:In a turning of the tax policy tables, Democrats are increasingly hammering on Republicans who oppose the president’s proposal to extend for a year a payroll tax cut passed last year with bipartisan support. That tax cut — which reduces workers’ contributions to Social Security this year to 4.2 percent of wages, from 6.2 percent — expires in December. The White House would like to extend it for another year. But Republicans in Congress are balking, arguing that such a cut adds needlessly to the nation’s budget deficit,...

Read More

Friday Dollar Analysis

Last week, I wrote the following about the dollar:Until the dollar moves convincingly below the 20.9 area, we're still in a trading range.In addition, I noted on Tuesday that the dollar was nearing support levels:The dollar has been trading in a fairly tight consolidation range for the last 4 months -- between 20.9 and 21.7. The dollar is now approaching...

Read More

More Thoughts and Observations on Food Inflation

While energy prices get all the headlines, food inflation does not. I don't know why that is, but it does seem to be the way of things. Today I wanted to break down food prices in more detail, because, as I noted yesterday, food prices are spiking and are probably crimping consumer spending to some degree.First, let's review the big chart of the...

Read More

Not That We Actually Need to Repair Our Infrastructure

There are currently 875 water main breaks in the City of Houston. Wouldn't it be nice to repair the infrastructure of the city to actually make the city work a bit more efficiently? That's right -- that'd be a boondoggle of unnecessary spending on projects we don't need...... ...

Read More

Taking The Biscuit

The Telegraph reports that Sir Fred "The Shred" Goodwin was once so incensed at being served a pink biscuit with his tea, that he wrote an email (entitled "Rogue Biscuit") about it threatening catering staff with disciplinary action.The incident is highlighted in a new book to be published on 5 September, by Matthew Hancock and Nadhim Zahawi, called "Masters of Nothing: How the crash will happen again unless we understand human natur...

Read More

Thursday Oil Market Analysis

Last week, I wrote the following about the oil market:Fundamentally, we're at the end of the summer driving season when US demand spikes upward. In addition, there is concern about the pace of economic expansion in the rest of the developing world, leading to less upward pressure on prices. There is also now a tremendous amount of upward resistance...

Read More

Drought Tightens Wheat Supplies

From Bloomberg:A yearlong drought from Kansas to Texas has created the driest conditions on record for farmers preparing to plant winter wheat, dimming crop prospects for a second straight year in the U.S., the world’s largest exporter. Dry weather already has cut output of hard, red winter wheat, the most common U.S. variety, by 22 percent from 2010, government data show. If drought persists into the planting months of September and October, next year’s harvest will be even smaller, and prices on the Kansas City Board of Trade may jump 50 percent...

Read More

Housing and the double-dip

- by New Deal democratSuppose my analysis is wrong, and we actually have a "double-dip" recession? How bad is it likely to be?I wanted to put up a much longer discussion on this, but frankly I don't have the time right now. One important point, however, is to look at housing. Housing historically has been a long leading indicator ( 6 to 12 or...

Read More

Wednesday Commodity Round-Up

One of the reasons copper is such an important commodity is its correlation to the overall growth cycle. As the economy starts to heat up copper rises, largely because copper is used in practically everything. The above chart is the JJC copper ETF compared to the SPY. Notice the high degree of correlation.On the multi-year chart, copper is hanging...

Read More

Are Food Prices Signaling Recession?

Above is a chart of the YOY percentage change in food prices. Notice the last five times that food prices have advanced more than 7.5% on a YOY basis a recession has followed. You could argue that this time is more like the spike which occurred after the 2000 recession, when prices advanced quickly from an incredibly low reading, which exacerbates...

Read More

Dollar's At Critical Support Levels

The dollar has been trading in a fairly tight consolidation range for the last 4 months -- between 20.9 and 21.7. The dollar is now approaching critical support levels. Also note the technical, upside resistance the dollar faces in the form of three declining EMAs -- the 10, 20 and 50. Later this week, Bernanke will be at Jackson Hole, where he will...

Read More

Treasury Tuesdays

Last week, I wrote the following about the market:The daily chart shows a bit of a sell-off. However, prices are still above the 10 day EMA and looking to hit them for support. Also note the drop in volume. This indicates there isn't much selling (talking profit) in the current market, so traders are clearly waiting for something. After a strong,...

Read More

The biggest thing we have to fear is, fear itself

- by New Deal democratIn case you haven't already seen it, this video clip of CNBC anchors Jim Cramer and Simon Hobbs getting into a heated argument on-air about European banks has been going viral: Hobbs, Cramer, and Carl Quintanilla actually seemed to be in "violent agreement." Here are a few snippets of dialogue:Cramer:"We have a Lehman...

Read More

Economic Week in Review

Consumer Spending: There were no reports of consequence in this area last week.Manufacturing: The Empire State fell to -7.7 -- the third consecutive negative reading in this index. The new orders index was also negative, at -7.8 -- which, again, was the third straight negative reading. The future indexes also dropped sharply. The only good news in this index was the negative readings were just barely negative -- unlike the Philly Fed index, which dropped sharply to a reading of -30.7. The new orders component of the index dropped sharply as...

Read More

Downfall - Cyprus Hits Point of No Return

Cyprus has barely managed to sell Euro23.1M of government bonds.It achieved a "bid to cover ratio" of 1 (ie there were only just enough "punters" prepared to buy them), at a yield of 7% (the last auction in June achieved a yield of 6.25%).A yield of 7% is "the point of no return"; it is the level at which Greece, Portugal and Ireland went with their begging bowls to others asking for a bailout.Why is Cyprus having problems?Around 40% of its largest banks' exposures are to Greece.Meanwhile, Chancellor Angela Merkel from deep within her bunker in...

Read More

Equity Week in Review and Preview of the Upcoming Week/Month

Last week, I wrote the following about the market:The good news is it looks as though the market found a temporary bottom. But we are hardly out of the woods. An upside testing of the declining EMAs is in order, followed by a retest of the 112 level. If the 112 level holds, we'll be in far better shape. But that bottom is new and still very...

Read More

Weekend rant: the triumph of the Know-Nothings

- by New Deal democratIt isn't just the right wing teabaggers whose know-nothing, "keep the government out of my Medicare" worldview is ascendant. On the left, it's pretty clear that a large part of the activist base wants no part of actual, you know, facts.Last Wednesday the Pied Piper of Doom told his acolytes that:What if ”they” told you that many, if not most, of the “official” economic numbers that have been hyped by our government and our private sector over the past few years—the very core statistics that form the faux “basis” of our...

Read More