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Biggest Monthly Pending Home Sales Drop On Record As ISM Manufacturing Index Misses Big
Another big leg down into the recognition that i) the recession was really a depression all along and ii) we are smack back in it. The ISM Manufacturing index came at 56.2 on expectations of 59, previous was 59.7. And the stunner - the prices paid index came in at 57 on expectations of 70, with a previous read of 77.5. The crash in margins will be surreal and companies will have no choice but to raise prices. And just so there are no mistakes that the Great Depression 2.0 is here, pending homes sales plunged a massive 30% on expectations of -14.2, and a previous read of 6%. This was the biggest MoM drop on record. Deflation is here, as is a full blown economic contraction, coupled with the complete pull out of the US consumer, who, absent government subsidies, will contain purchases solely to the iPad. Ben Bernanke has no choice but to print money now, or it is game over.
The charts below say it all:
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3Y, 10Y, 30Y.
Nuff said.
What's the saying. When you see something inside out it's hard to hide that it's exploded.
The fx/equities mechanism seems to have temporarily decoupled. People pulling out of equities to cover euro shorts. This could get a little wierd.
Seriously odd, it seems like it's the euro running, the aussie is down...
Makes no sense to me. I am going to close out for the day, throw on some Beethoven and have a bourbon instead of trading.
VERY strange. It feels like Sept/Oct of 2008 when nothing made sense. That turned out to be wholesale panic and selling.
Are we seeing the beginings of PANIC 2.0?
nothing suprises me now, except for how much i love bourbon. To see a longstanding correlation not only break, but reverse certainly makes me nervous. I'm spectating now though, so it doesn't matter.
Ditto on the bourbon and spectating.
tequila and spectating
So, I guess you are long on bourbon and short on Coke (cola, that is)?
Wild Turkey, bitches!
When nothing makes any sense at all, that means nothing makes sense to anyone anymore, and that is probably a good indication of panic.
Remember, if you're going to panic, panic first.
Lot's of ZH veterans are having birthdays this week.
Happy one year ZH birthday SWRichmond
Good one, LMAO!
That's nice, I hadn't heard that one before. Very pithy.
Precisely!
... and if Ben prints like heck again then gold will shoot up to bust the LBMA's naked shorting @$$.
Print or no print, the same outcome - his Wall St. buddies going bust. What to do? What to do?
Vengeance is a bitch, baby.
agreed cheeky. Equity markets are egregiously overpriced compared to 3/10/30 Y levels. WHY???
decoupling; nothing else.
consider FI to be the best indicator at this point. Equities should be trading at Dow 8500-8700, SPX 870-900.
There is a deflation, and until either muni debt or non-agency securities get monetized and/or securitization and CDS market revive there will be deflation.
Im writing an article about that; will post on Saturday.
FYI those numbers denote US Government bond tenors; not equity market periods.
Also; if you are evaluating the equity market you have to adjust the current [or any other] value for inflation against the period you use as a evaluating "benchmark"
looking forward to it. Hey good thing you were supporting the Germans hey? The argies might be a different game though...
Those levels on the DOW and S&P are what I came up with, using back of the envelope values in line with long term historical levels. We'll probably overshoot to the downside though, no?
Yes; its one thing to quantify future values and denote them in probability percentages and another when one [somehow] prices in irrational exuberance and fear that will push the markets further into the red. My take; probably DOW crashing to 7700-8000, SPX 800-830. They will certainly be oversold.
Well, at least my boy Timmy will be able to stuff the new issue docket to the hilt-- while the rest of us pretend to panic.
I wonder to what extent Uncle Ben has an itchy trigger finger for money printing, though?
Insert descending bomb whistling noise ->
The sound differs, depending on whether you are the drop-er (from you helicopter, no less), or the drop-ee.
The depression is an open secret.
Yep, they've ran out of lipstick.
That's OK, Leo is on the board making more bullshit predictions.
Yea, I saw that already. Well, when you get paid to 'manage' other peoples money, I suppose telling them to hide under their bed and bury their cash isn't good for business.
"Housing has officially bottomed".
- Jim Cramer, June 16, 2009
http://www.cnbc.com/id/31388528
A man ahead of his time...
"ahead of his time..."
Don't mean to be the schoolmarm here, but didn't you mean "a head"
EDIT: A pop-up ad just told me I have won the new iDouche app for being the 1,000,000th person to use that joke. Sweet.
Perhaps the problem isn't in the time dimension; maybe he's on the wrong planet.
Cramer was correct.
However, that was the "other bottom".
Sort of like when you tell someone to turn left, but they turn right and you
have to say "no, the other 'left'".
That was a really funny read. Could not stop laughing for some reason.
Thanks.
ORI
http://aadivaahan.wordpress.com
So I guess the Alt-A and Option Only Arm resets ramping up over 2011 into 2012 don't matter? - http://commercialwatch.blogspot.com/2008/09/alt-loan-resets-continuing-through-2011.html
"So I guess the Alt-A and Option Only Arm resets ramping up over 2011 into 2012 don't matter?"
Some pundits would reply "the markets have already priced that event in".
But then again, they say that about all of the bad news.....
I see more strategic defaults on the horizon. With the end of forever-and-ever unemployment, all sectors of consumer spending (discretionary and otherwise) will take a hit - I think.....
The Euro has just had a crazy spike over 124. SELL!!!!
With equities way down and treasuries way up, why is the dollar falling against the euro?
I did just buy some EURUSD puts because once Europe closes, I expect that to reverse a bit.
well at least the european stock markets are going the other way; with the surging euro and pound, their exporters are screwed, not that there is much demand for their bmw and ... do the brits export anything nowadays to the US, besides oil spills.
That's a wrap! Say goodnight Gracie.
And the hits just keep on rolling....
ISM is still going above 50, inidcating EXPANSION in manufacturng activity. I have a feeling shorties will get creamed tomorrow.
You got some set of cahones to say that here Leo. I gotta give ya credit!
Give him credit?!?! For what, for making an ass of himself every time he posts?
It's hard to be a realist on the Bilda-bear website.
Did anyone with RE knowledge expect anything different than these numbers??
Yeah, bulltards like Leo did. Have you been hiding under a rock, or something?
And I have news for you, if you are not sitting on a stash of gold, guns and ammo right now......you ARE NOT a realist.
To me Leo's message is: You have to trade the moment, the now. I believe that Leo understands the lengths that .gov will go to in order to support this enormous pyramid that they have developed.
Does everyone here have subscribe to the group think. Diverse opinions lead to more information for everyone.
Long 5.56 and 7.62
He's a bull. He's gotta mooo.
http://www.youtube.com/watch?v=EMoEAfDJ8Iw&feature=related
I hear and agree with you BUT he knows the lashing he would get for that post and he still posted it. I still believe in the first amendment.
Well, that will make up for you bulltards getting creamed for the last month.
Somewhere, over the rainbow....
Leo, seriously, what's wrong with you?
I actually think he's some sort of sociopath, I mean, Leo's brain is NOT wired correctly.
You must be the Anti-matter of Robert Prechter. Nothing else could explain your ridiculous comments.
Clinging to his Chinese solars like Americans clinging to their guns and religion.
ReneSola (SOL) shares are trading higher this morning after the solar wafer company said Q2 results topped previous expectations.
Well you shouldn't get junked for that one leo
You're going to end up living under a bridge; and be saying "its all good; the lack of cracks on my cardboard box/home is an indicator I will own that 5th Avenue appartment by next month.".
No really; if you trade on your recommendations/beliefs; you will be living under a bridge in 6 months time.
Good luck finding space under a bridge as soon as the bow breaks. That will be prime hobo space.
Good luck finding space under a bridge as soon as the bow breaks. That will be prime hobo space.
While holding out that the solar plays will pay out "like they should".
GM Bastard!
I'm thinking about leasing out my 3 backyard sheds.
I'm frantically searching for companies that make cheap tents and knapsacks. That's a sure fire winner now.
'ISM is still going above 50, inidcating EXPANSION in manufacturng activity. I have a feeling shorties will get creamed tomorrow'
LMAO.. If only all the unemployed people knew about this.. They would sleep much better at night..
You are a clown. There is not a single fundimental reason for a positive outlook. I can't wait until reality sets in.. I hope you are man enough to come back on here and take the beating you deserve..
50 lashes for Leo, to be administered on PayPerView by the Magnificent Marla. Marla, if you need assistance zipping up your outfit, let me know.
ISM is a SURVEY. Do you think they are asking failed manufacturing businesses how business is going? I think this number being above 50 is like throwing out a monthly growth number after a horrible previous month.
I'm a manufacturer and business is pretty good but that's because we survived. Business is good because we have 3 or 4 competitors that just went under in the last year and 6 or 8 competitors that went under in the last 10 years. I don't think those guys are included in the survey.
As I stated in another thread, I work for a rolled roofing company. We make stuff that is great for patching holes making roofs last longer without reshingling and it is used on all new roofs as an ice/water shield. There are frickin' tornadoes everywhere and ice and snowstorms ruined a lot of shit this year, but after a pretty good first 6 months of the year we have hit the wall. Everyone that was restocking has restocked and no one in their right mind is building houses these days unless it's for people with money. That's getting to be a group that's smaller and wealthier every year. I know that I'm looking at our warehouse with 4 mil of finished goods collecting dust and I ain't gotta warm fuzzy feeling.
I'd think in these tough economic times folks would opt for your roof patch over a more costly totally new roof. Perhaps bucket sales are up?!
Leo - If this is expansion then it is a wagging pinky finger kinda expansion.
http://www.guardian.co.uk/business/2010/jul/01/diageo-tops-up-pension-fu...
Honest question here folks (from a rookie) - is ISM a leading or trailing indicator? Even if there is "EXPANSION in manufacturng activity"[sic], does that necessarily point to higher employment numbers? Getting the consumer (who is responsible for at least 60% of GDP) back to work should be the main focus.
I wonder what the ECRI index of leading indicators says now?
Do we get our -10 print tomorrow, or are we going to drag this out 1 more week?
Bank of America is taking a beating out of the gate.
Just 2 days ago, Obama came out and gave the all clear signal. It just shows what a clown he really is. I'm just glad he is being shown for the fraud he is.
How long before he fires Geithner and Bernanke and blames everything on them? At this point, that is his only option to save face.
What do you expect from a guy that touts strong employment numbers based upon Census worker hires? He has no clue about the private sector.
http://www.foxbusiness.com/story/markets/economy/obama-says-expects-strong-jobs-report/
Krugman and all the Keynsian-aholics will be calling for more spending. Clearly the stimulus was working!
For Christ's sake...if we're gonna blow another trillion lets get something tangible for our money. But I'm sure they will find a way to spin keeping Fannie/Freddie and the CDS ponzi scheme afloat as the best possible option. Lovely.
There is a possibility that a doctored NFP will be released tomorrow and confirm Leo's guess. Shorts beware. Just sayin'...
You bet:
- "Manufacturing" of gallows and noose in lower Manhattan and DC
- "Distribution" of hard-media advising all citizens of the coming show
- The "servicing" of food and beverage for all spectators
- "New job creation" for the people tieing the knots and pulling the levers
"Krugman and all the Keynsian-aholics will be calling for more spending. Clearly the stimulus was working! "
If you based this on the size of the Banksters bonuses this year, then it must be true!
Mr. Rogers: "Can you say, "we are freaking doomed"?
Won't you be my neighbor (in the tent city)?
The market should be down 200 to 300...
Evidently, they still have on at least one water wing.
Maybe be FX markets are providing some support via the carry trade. Great time to unload any longs if anybody still has 'em.
Could be. But down 9 handles on that depression bomb is hardly realistic. Something/body is trying to tred water here.
From those charts the housing market looks like it fell into a giant sinkhole.
Recession 2.0 is now available for download
Deep diving in to the abyss (the movie)
http://www.youtube.com/watch?v=QqrqrJERcIw
This is good too!
http://www.youtube.com/watch?v=uQITWbAaDx0&feature=player_embedded
awesome video!
Deflation, followed by (hyper?)inflation, here we come....
I thought Bernanke and Obama just agreed the other day that the recovery was going swimmingly and it was all puppy dogs and rainbows.
I believe the technical term is "unicorns and rainbows."
Don't forget gum drops and puppy dogs.
omfg, it's gumdrops and lollipops.
Or leprechauns and pixie dust which is clearly abundant in Obama and Bernanke's world.
-Michelle-
"I believe the technical term is "unicorns and rainbows.""
Yep, this guy knows.
http://www.exterface.com/unicorn/
LOL! I bet Obama and Rahm sneak peeks at that one throughout their days.
China’s Food Price Inflation Is Starting To Affect the Rest Of the World
Well, China has been printing a lot of money for a long time in order to keep the Yuan low which befitted their export sector. As a result of their policy they accumulated massive foreign exchange reserves, and had giant trade surplus. Since China over one billion people and since most of them where farmers up until the 1990's the money printing didn't cause wages to rise dramatically. (Money flows to places where supply is tight and China had abundant labour)
So the money went into commodity, real estate, and stock prices in China. But now something totally different is happening. China trade surplus is gone, food prices are rising and wages too. This, combined with weak exports, a weak euro is killing China corporations margins and we have a classic wage and price spiral.
China’s Food Price Inflation Is Starting To Affect the Rest Of the World
dan22
http://www.marketskeptics.com/2010/06/chinas-increasing-meat-demand.html
China's increasing meat demand
Wouldn't the alternative to raising prices be to throw even more people from the bus, cut pay and benefits further on the remaining, and again curtain capital spending?
Debt-deflation-spiral here we come...
HEHEHE
they are the best leading contrarian indicators there are!!:)
666 here we come!!
Weeeeeeeeeeeeeeeeeeeeeeeeee!!
dont u wanna try "322" this time ...."skull and bones" for me please/.....
Exactly!!!
SSSSHHHHHH, dont let the sheeple know.
Well good thing that the Administration has announced their summer of recovery!
They did, really ? That's amazing. It's getting to be like Saturday Night Live all week long.
These are encouraging signs...
Obama
the /es just broke the 38.2% fib retracement from the high 1585.23 to the low of 667.3. its augering in now. probably to late to trade it, but wait for the retrace to 1018 short it and set a stop loss, you could be a happy camper.
Should I cover my shorts now, or go fishing and cover when I come back in September? Please advise...
This boils down to pure stupidity on the part of Pelosi and the Democrats. The tax credit was popular and relatively inexpensive compared to all the other market supports. For them to end it arbitrarily like they did, it could end up being one of the biggest political miscalculations ever.
Say hello to Speaker Boehner.
but give the public a little credit.. they are actually planning and paying attention to the tax break for housing and when it is brought back we will see 300% gains MoM .. oh my god.. green shoots!!!
so let's keep that drop in context.. the carrot was put away.. it doesn't mean the sky is falling more than it already was.. the government is trying to figure out what are the last linchpins that have to stay in place and we will see that housing tax breaks will trump even keeping jails and schools open
trillion_dollar...
"Say hello to Speaker Boehner."
http://farm1.static.flickr.com/51/183896807_88fb3624b6.jpg?v=0
Yeah, I'm sure a Republican hack will do a much better job than a Democrat hack.
Don't take my statemet to mean I believe that would be the case cuz I don't.
Boehner, smoener, whatever. Speaker Hoody Doody will be fine, as long as its not Pelosi.
Keep selling that Euro boys, all the way up.
Yo.... your crazy man, your crazy.... I like youuuu,? but your crazy.
http://www.youtube.com/watch?v=Yr0_iCohyhw
Yessssssssss. That's awesome. You just took one in the jugular man.
Is that bad.
ZH please specify what you see Ben Bernanke doing for QE2. What assets will he buy now that would aid economic growth?
The FED is still unsure how to unload MBS holdings starting FY2010. The FED can only respond to the needed deflation QE amounts, approx = $2.7T under the pretense of crisis. It is clear that the politicians will not commit to any actions until after the midterms.
The only action the FED can do is openly buy Treasuries when auctions fail. It will be called another long term Treasury buy program, but there is no justification for it other than positive cash flow for Treasury.
My feeling is any extraordinary action from the FED #1 cannot be justified in light of previous actions, and #2 will kill any remaining trust in the US capacity for growth.
The FED has played its cards, and they are holding Aces and Eights.
Mark Beck
With the flight from risk assets Treasury auction funding should go swimmingly - in the near term.
I think I've had enough for today ahead of lucky dip NFPR tomorrow. covering half here. 1014 good buddy.. lets call it a gift to the gods, by all means take it lower boys.
Well I tried to cover but it just keeps falling.. so hard to trade these crumbling markets.
Tomorrow's NFP will be jiggered to some more positive sounding number that can be made to be believable - not saying it will be positive, just massaged upwards (right Mr. Gore?)
They can't have a week's worth of terrible news and a market crash going into the July 4th weekend.
wholeheartedly agree; that's the way game is played
Unless they don't believe Congress got the (Fin Reg) message yet... HAL giveth and HAL taketh away.
Why not ? You gotta love the irony.
Leo lives in Canada where there has been no drop in real estate, the banks are run by sane adults, the government is in good shape financially and the economy is doing pretty good.
So maybe he is not nuts or a shill just really, really nearsighted.
Canada is one of my focus countries. There is the danger of a housing price correction, but for the most part Canada is in good shape except for the relatively strong loonie relative to USD. The banking system is sound, but the leadership is weak in breaking from US initiatives.
The country per capita has huge natural resources, and the inter province transportation system is in very good shape (with a few minor exceptions). For a huge increase in trade, the question is when will the northwest passage open year round?
The shipping technology exists for "convoys" through the passage, it just takes investment.
Mark Beck
So when do we start invading?
Oh its begun!
Seriously, I think there's a lot to that. Just a normal human reaction to living in a country where everybody knows the banks are not fucked, and what have you could have a real positive effect on your outlook. I remember feeling when I crossed the border that this weird little cloud of paranoia and violence had been left behind.
May Pending Home sales roughly corresponds to June home sales right? If so we are probably going to see a collapse in Existing Home Sales similar to the one in New Home Sales, with new homes dropping well below 300,000. What will be the corresponding collapse in housing construction?
Excellent perspective. New home construction will get creamed because of supply of existing and loss of interest in RE as an investment class.
Residential real estate investors have soaked up much of what has been put on the market so far. They have done their improvements and are ready to flip.
Buyers are not interested in flips, rather bargain hunting the foreclosure market. The flips will drag down the prices of the foreclosure market as they end up taking net losses on what they thought was an investment.
The banks are going to really get pinched for the foreseeable future. CRE is a poorly performing asshat class. And residential is going to back them into a corner.
We've been studying the Atlanta, Buckhead McMansion area over the last few days in person. What is stunning is how many are empty and actively on the market. Some are no longer manicured. Some projects stopped at roughly 50% complete and have small trees growing in the rain gutters. 10,000 square foot McMansion's looking like slums. So close to Chastain park, who'd of thought.
The near future will be a very painful for this upper end market.
GA could just mimic FL's tax/homestead laws and capture the rich NJ crowd.
That'd sell some empty houses.
Right?
That would be a tough tax transition to make. Given Georgia's strong military background they might get the fed's help in the transition.
Anecdotally, I saw many, many military trucks, command center modulars, and camo'd 40 foot containers piggybacked on lowboys headed to Macon, Ga.
"headed to Macon, Ga"
or Warner Robbins (AFB)?
Tempting. If I picked one up, it would be very convenient to relive my high school pastime of getting stoned on the swingsets there.
Seems everyone in the RE market prefers to bleed slowly to death rather than take a loss and be done with it. Tons of new condo developments in Brooklyn are either standing empty, many unfinished, and many finished developments have converted to rental units.
Prices still have not reached the realm of reality. When they do, all this excess housing stock in cities will be taken up by people who have decent middle-class jobs and have been wondering how the hell other people afford them.
I live in Hawaii; and there's a huge frickin housing estate here; all single family, all one acre lots; and you drive around in this thing for a half hour and go by whole blocks of empty houses. People came over here and built spec. houses; and then. Well, and then they went away again. Very weird, like an after the bomb movie.
Ain't gonna be much of picnic for the lower end, or the middle end, either.
On an anecdotal level, I live in a neighborhood that is still under construction. Over the last month or two, the empty lots have been under construction with unsold specs.
I had to laugh at Yahoo's blurb this morning:
Since when does construction spending equal homes sold? I figure that the builder here is just trying to get done so they can lay off as much of their construction team as possible while they sit around and wait for their empties to sell. Or collapse. Hey, would they get reimbursed for that via insurance?
Only if AIG was the underwriter.
Locally in South Florida I see new construction ground being broken in a few areas. They are all beautiful Section 8 rental communities.... Being developed by very smart investors who understand if you provide the best units to the needy, they will come.
right. gotcha. what I failed to say above is there are hundreds of these fricken houses; and the real estate offices; (2) closed up; out of business. There's like, no activity, no nothing. The carpenter's union in the big town here has nine members on payrolls; nine. It's real quiet around here.
The Shark: master of her domain, top of the food chain. And yet the shark is far from omnipotent. She has to keep moving forward lest she suffocate. I know from watching Mutual of Omaha's Wild Kingdom when I was a wee lad. America has become the shark. We weren't always the shark. But over the past three decades, give or take, we have become the shark. As a society, our survival, our existence, has become bound to growth, to moving forward, to never standing still. We stand still, we die. Growth at all costs. The illusion of real growth at all costs. Double-or-nothing at the poker table, with nothing left in our pockets but trillions of dollars in IOUs, all to keep "moving forward", to keep expanding, to maintain our 4% per annum GDP growth. And then, of course, arrives the ultimate insult. Our addiction to unchecked debt-sponsored "growth" (Not growth at all!!) has in fact left us nowhere left to grow. The shark has found the end of the ocean. We are dead in the water. We have created simply too much debt to service. Virtually everyone’s balance sheets are upside down: every state, every city, every town, every business, every individual. The government continues to print and borrow and spend in an almost quixotic effort to save the day, but there is no way that we will ever be able to pay back our obligations. Simply the interest on our debt is too great to service. And the citizenry of a nation of debtors and morbidly poor will never, in the end, acquiesce to subsidizing the excesses of the gamblers and thieves who stole their futures. We are in the ‘buying time’ stage of decline. The bond speculators will milk the market for every last dime. They too know that the gig is up. Everyone will soon begin to hunker down. Like cows before the rain, an entire nation will settle in to try and somehow ride out the storm. But there can be no shelter from this gathering storm. We birthed it, we perpetuated it, and it will surely lay us low.
You know there is plenty of pain still coming because we have yet entered the main maw of the effort to cut pay and benefits for salaried professionals across the board.
They have to keep the system breathing, yet make it bad enough to allow the supperrich to come by and slash compensation by another 20-40%. And make it stick.
That, my dear bloggy friends, is what deflation is all about. It is about your paycheck.
The Depression ate my paycheck long ago.
I thought manufacturing numbers only counted when it's good news though?
Love the ipad/apple humor btw. Not sure if this has been posted, but i loled.
http://www.youtube.com/watch?v=FL7yD-0pqZg&feature=youtube_gdata
Witchdoctors summoned to the NY FED...; Ben orders tankcar loads of ink and railroad cars of paper, relief printing is commencing ASAP, expect deflation pressure to be considerably lessened and massively contained in August...
To be fair to Leo, the NFP report tomorrow is a bit of a wild card, and it's not clear how the market will react either way (meaning if it beats or disappoints expectations). Because there is such confusion, I wouldn't trade either side but if Leo wants to take a chance more power to him.
I guess the new policy of a chicken in every pot and a house for every living being inside the United States is forthcoming.