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Two Completely Irrelevant And Fabricated Numbers Offset Each Other
We just had two completely irrelevant and largely fabricated numbers come out and offset each other: on one hand the UMichigan confidence number printed at 74.3 on expectations of 72.4, courtesy of declining inflation expectations (who would think that a shallow one week drop in gas prices could do so much), as respondents, all 10 Wall Street CEOs of them, saw 1 year inflation expectations drop from 4.4% to 4.1%, the first drop since September 2010. Ignore the fact that the Billion Price Project, when it was still updating its index, indicated a 10% annualized inflation rate in the US. Regardless, the confidence number was promptly offset by a horrible number from the now completely discredited, conflicted and irrelevant National Association of Realtors, whose press releases should have absolutely no bearing on the market, and yet they do, which showed that April Pending Home sales plunged 11.6% on expectations of a mild 1% decline (from a revised +3.5% previously). Bottom line: homeless people are confident that only 100% of their paycheck (and not 200%) will go to covering gas costs.
From the NAR press release:
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, dropped 11.6 percent to 81.9 in April from a downwardly revised 92.6 in March. The index is 26.5 percent below a cyclical peak of 111.5 in April 2010 when buyers were rushing to beat the contract deadline for the home buyer tax credit.
The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
NAR chief Ph.D. holder Larry Yun was there with the requisite spin.
Lawrence Yun, NAR chief economist, said the dip in contracts may be due to temporary factors. “The pullback in contract signings is disappointing and implies a slower than expected market recovery in upcoming months,” he said. “The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims.”
Yun notes the growth in retail sales slowed measurably in April, while sales at furniture and home furnishing stores declined sharply. “Nonetheless, the magnitude of the fall in pending home sales is larger than can be implied by broad economic factors, so we need to see if it’s just a one-month aberration.”
Yun said tight credit is the primary long-term factor holding back the market. “No doubt the continuing excessively tight mortgage underwriting process is making the housing market recovery unnecessarily slow,” he said. “Lenders and bank regulators need to be mindful of the historically low default rates among mortgage borrowers of the past two years. A robust economic and housing market recovery cannot occur as long as banks continue to hold onto huge cash reserves.”
“We simply have to get back to sound, common-sense lending standards to provide mortgages to creditworthy borrowers who are buying homes well within their means. Bank balance sheets show rising cash reserves and declining loan balances – it’s time to loosen the purse strings,” Yun added.
Well, if this whole NARing thing doesn't work out for Larry, he can always get a job on the Mark Zandi Koolaid government. Failing that, his improv comedy routine should be worth a few Bernankebux.
The PHSI in the Northeast rose 1.7 percent to 64.5 in April but is 33.4 percent below a year ago. In the Midwest the index fell 10.4 percent to 74.1 and is 30.2 percent below April 2010. Pending home sales in the South dropped 17.2 percent to an index of 91.3 in April and are 27.0 percent below a year ago. In the West the index declined 8.9 percent to 89.1 and is 16.9 percent below April 2010.
“Even with very favorable affordability conditions, job growth and a pent-up demand from abnormally low household formation during the past three years, the recovery will continue to be uneven and sluggish given the ongoing credit constraints,” Yun said.
Blah blah blah.
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Beans, Bullets, and Bullion Bitchez!
Amen brother!
I couldnt have said it better meself!!!
Now lets see todays UK consumer confidence comes out at record jump in confidence from -28 to -18 which is ten points and all the headlines cheer it.... then US CONsumer CONfidence comes out and its clearly pure bullshit.... gas goes from $4.19 to $4.09 and all of a sudden inflation is no longer a concern?? WTF seriously!!!
Obama seems to think his re-election will be a steal.
http://nation.foxnews.com/guns/2011/05/25/obama-were-working-gun-control...
You know things are getting close to blowing up when they re-open that can. Things have been quite on the gun grabber side of the issue for a while, mostly because Harry Read needed the issue to go away for his re-election. The repubs in the house will not allow any new laws to be passed so as Obama says above they will have to do it "under the radar". This sounds like more regulation "interpretation" by the ATF and watch for more gun store inspections looking for any T not crossed or I not dotted and undercover stings at gun shows.
Except for the guns the government wants to sell to the Mexican drug lords, i.e. Project Gunrunner
Well, you have to create the crime to regulate the crime.
He's a bitchez, she's a bitchez, I's a bitchez, wouldn't you like to be bullion bitchez too?
Be bullion bitchez, hold gold and silver!
Protect ya purchasing power.
Be bullion bitchez, hold gold and silver!
Das right!
and bunkerz, too Bitchez!
Seed, saltpeter and specie! (18th century ZH post)
Water, Wagons and Winchesters
Shoes, Sharps and shovels, bitches!!
U Michigan CONfidence never fails. Beyond laughable...
now the only question that remains is which one of these two numbers will be used as the excuse to start ramping up the market as soon as London stops trading at 11AM...
The increasingly paranoid part of me thinks that Goldman et al. are deliberately trying to drive away investors so they can have the sandbox to themselves. Manipulation is so much easier when there aren't any pesky retail investors clogging things up. As soon as people start commenting on patterns and correlations they go out of their way to burn the people following the patterns. The scientist in me has yet to find a way to determine if this idea is based in truth or if I'm being fooled by randomness and seeing cause and effect patterns that aren't real. The 11AM ramp we've come to rely on seems to be moving later maybe?
GS profit is based on finding a greater fool to hand off the bag of shit to before it explodes. If they have the whole market and can't unload, they are screwed. This happened to a lot of HF and IB in 2008 when they were caught with quite a bit of toxic waste in their pipelines, that hadn't quite reached their customers. What amazes me is why so many "professional money managers" get suckered by GS after all their deliberate malfeasance is on the public record. I don't buy stupidity. Gotta be personal grift and graft.
What if they believe the hyperinflation scenario is unfolding? Real assets such as stocks will hold more value than cash so they may want to manipulate the competitors out so they can hold a larger slice of the pie. I believe some form of major crunch is coming but doubt the gloom and doomers who foresee everything unraveling. Factories, farms, utilities will still be here in the aftermath and if I were a greedy power-hungry squid vampire I'd want to lever myself to own as much of them as possible. Pumping the market, crashing it, then buying it back at garage sale rates would be a way to do that. I think they lie awake a night kicking themselves that they got caught in 2008-9 without enough liquidity to buy the whole S&P at 666 and swear it won't happen again.
I once tried that on a calculus exam, and it didn't work...
+fx'
Yun, what a tool.
Hey, stocks are up. Quit ur bitchin'.
And show some respect. This is Memorial Day weekend, so make sure to wave your flags and honor those who died to protect higher gas prices, unwarranted wiretaps and unlimited Fed printing.
U Mich regrets the omission of news that it actually runs two surveys: one in Mich and one in Newport Beach. The latter has been reported as the "New U Mich Survey" where confidence is, well, perky!
The Mich survey? Well, that's another story.
I am waiting for the Wall Street Bankster sentiment poll to come out. Perhaps a Bankster CPI, too. Rumor has it that the wait for a new Ferrari is pissing off a number of traders given their 100% perfect trading records.
Perhaps a "Cash for Condos" program would be in order. Govt could buy homes older than say 10 years, then torch them. Thus jumpstarting real estate. Hey, "Clunkers" got rid of all those used cars so people had to buy new from Govt Motors.
DID NOT READ THE ARTICLE. THOUGHT I WOULD TYPE IN BOLD HOW MUCH I LOVE THIS SITE!!! First post, been a member for a while.. It is now THE place I go for real news... Thank you all..... Back to read the article....
Robert
The more people who lose their homes and jobs means the poorest of society and unhappiest about the economy won't be contactable... so the Mich CONfiddledance figure will soar as a result
But But But.......One of the rationales for QE2 was it was going to stimulate the housing market.
Bernanke couldn't have miscalculated............."subprime mortgage problems contained".
Am I the only one who misses David Lereah and his funny cheerleading of the housing sector in 2006.... Article showing he knew he was blowing smoke up everyone's asses.
http://themortgageinsider.net/real-estate/david-lereah-calls-rosy-real-estate-predictions-positive-spin.html
Robert
What recovery? There will not be any recovery. It will take years to wipe out the short sales and foreclosures and many are now content with renting. Prices will probably bottom in the next 18 to 24 months but then they will languish for years.
You need and should have 20% down + closing costs. That is the way it was for 40 years before the Banksters changed the rules to make Them wealthy at the expense of humans. That bubble is over, just like the tech bubble. Over. Get used to it.
Drives me nuts to read this crap. Recovery. BS.
Now the mother of all bubbles inflating in government bonds and the world's reserve currency.
When this one pops, the devastation will be catastrophic.
As a guy getting ready to use a 100% VA loan I categorically disagree. You need to find people with a sense of honor, who can afford the loan and won't walk away or refuse to pay the loan no matter what house prices are. It boils my blood seeing these shysters on TV and other places advocating walking away, plus the stories from so many over the last few years who simply walk away and not because they cannot pay but because it doesn't make financial sense to them or is inconvenient. America falls when this becomes the norm. I would agree on walking away from underwater loans if that same person agrees on sharing any profits if the house appreciates. I suspect no one will agree to that type of risk sharing.
BTW, one of the reason I have to get full financing is that the IRS confiscated all my downpayment money I had planned. Withholding 30-33% of my income is not enough. According to Democrats and collectivists, though, higher taxes are great for the economy and will result in growth. So maybe they should take it all and have a really wonderful economy with no home sales whatsoever! Actually, no sales of anything! It could work?!?
How come Robot is not here bashing gold and silver? Oh, I see, gold up 12.00 and silver up .70 cents. Yup, all is good. Buy AMZN>< NOT! Looks like some think QE 3 is going to happen. Duh!!
all we need is another bailout for Greece over the holiday weekend and the low volume ramp up commitee can crush the shorts while the market is closed monday.
NEW YORK (Reuters) - Pending sales of existing U.S. homes dropped far more than expected in April to touch a seven-month low, a trade group said on Friday, dealing a blow to hopes of a recovery in the housing market.
U.S. consumer sentiment improved in May as job gains offset high gasoline prices, while inflation expectations diminished, a survey released on Friday showed.
COMMENTS:
MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD & CO. IN SAN FRANCISCO
"The bigger picture is that housing isn't really at the heart of the economic recovery in the first place so to see a down number like this while disappointing is probably not critical to the bigger picture in the economy."
PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK
"The pending home sales figure is very negative when taken at face value, but it's not clear that this is a valid reading. Compared to government releases, it's a small survey and still a bit experimental. Taken at face value, it's an indication that people have become unwilling to buy houses. Last month pending sales were relatively strong, but the actual existing home closings that occurred a month later were flat so a lot of contracts apparently were not financed. This month it looks like the willingness to buy at all seems to have evaporated.
"The sentiment numbers were good. The inflation expectations were also a good result. The number from late in May declined from the early month reading for both the near-term and longer-term inflation expectations.
"The five- to 10-year expectations are of great importance to the Fed because they amount to a vote of confidence in the Fed's ability to control inflation. We're finding out that the short-term inflation developments do impact short-term inflation expectations, but don't seem to be impacting longer-term inflation expectations."
JACOB OUBINA, SENIOR U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
"Pending home sales saw a sizable increase earlier this year as people were front running the increase in PMI insurance. Now we are seeing some payback from that. This is a testament to the spring selling season and what we have at hand is pretty horrendous."
"This paints a picture for existing home sales to fall back below the 5 million mark as pending home sales lead existing home sales by one to two months. There was absolutely nothing positive in this report. Housing remains in a depression right now. People are talking about a double-dip, but we never even recovered."
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK
"Very disappointing. We kind of had a base-case scenario that housing was going to improve in the second quarter but now it looks like things are not getting off the floor at all.
"This would offset any positive outlook for the economy. The Fed knows housing's weak, the Fed's still on the dovish side of the game. This is unlikely to affect policy, especially if this does turn out to be below the other data."
RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK
"Pending home sales were pretty much a disaster, well below market expectations. They are saying this had to do with inclement weather, but overall the headline does not look good and this points to pretty dismal new homes sales and existing homes sales for May."
GUS FAUCHER, DIRECTOR OF MACROECONOMICS, MOODY'S ANALYTICS, WEST CHESTER, PENNSYLVANIA
"There may some temporary factors like bad weather in the Southeast. Higher gasoline may be making potential home buyers a bit cautious. It is signaling further weakness in housing, but we do expect housing to turn around later this year. It just hasn't happened yet."
"Lending has loosened up a bit. It's a not a good sign it's not happening yet. To get a really strong rebound in the economy, you really need some pickup in housing."
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY AT CRT CAPITAL GROUP, STAMFORD, CONNECTICUT
"U.S. April pending home sales fell 11.6 percent from previous month, led by 17 percent drop in the South. Weather surely had an impact. March pending sales rose 3.5 percent, revised from a 5.1 percent gain. The (Treasury bond) market firms further."
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
"After March's unexpected 5.1% increase (now a softer rise of 3.5%), pending home sales sank by 11.6% in April to an index score of 81.9, more confirmation that surprise monthly readings reflecting the housing data eventually level out to general trend of a flat market at a depressed level.
"While April's decrease is nearly four times that of March's gain, sales activity -- measured by signed contracts -- still reflects scores seen in the summer of 2010 just after the expiration of the tax credit, thus despite the magnitude of the decline, we've seen this weak level of activity before.
"Pending home sales had indicated a positive existing home sales performance in April -- that didn't materialize -- so it would be safe to say that forthcoming sales data will post on the down side. Three of the four regions experienced lower activity, led by the South -- the largest home market-- with only Northeastern sales rising."
Only the Northeast had gains. Wierd, where do all the bankers live?
How do we have $20 billion for the Arab states, but we can't cut 1 Billion form our $3.8 TRILLION dollar federal budget.
You confuse spending with saving. There is always more money for spending, but curiously enough never any room for cuts.
The government must spend, and keep spending. At this point, that's the only way to push money into the deflating economy and keep this thing on the rails. It will succeed for a lot longer than anyone imagines, and then finally blow up in a spectacular fireball.
Here's the new New Yorker with a gee-whiz piece on the BPP but notice how they never contrast (or even explicitly state) actual BPP vs. CPI figures anywhere in the article while pretending to outline both side of the issue. An excerpt:
The B.P.P. can also help keep governments honest. In much of the world, as a 2010 study of developing countries found, governments regularly manipulate economic data—downplaying inflation, overstating job growth, and the like. The B.P.P. makes that more difficult by providing an independent check on the official numbers. And, while there’s no evidence that this kind of thing happens in the U.S., if you’re a conspiracy theorist you can now look to the B.P.P. rather than to the regular inflation number to see what’s happening.
See, now you're on top of cutting edge, applied technology in economics and prepared to appear witty and informed at that classy Hamptons BBQ this weekend:
http://www.newyorker.com/talk/financial/2011/05/30/110530ta_talk_surowiecki
Nice contradiction. If you live outside the US the BPP is a great tool for people to keep governments honest. If you live inside the US, where it claims economic data is not manipulated by the goverment, then you must be a kook to look at it, but if the US gov doesn't manipulate data there shouldn't be any difference.
Classic...
http://img151.imageshack.us/img151/2974/housingbellwetherisbv9.jpg
Hmmm, the old weather argument got used again. That line is getting hotter than "my dog ate my homework".
I just love it when they try and explain away the reasons for bad numbers. I'm surprised that the NAR would print a bad number, isn't that against the law now?
As for UMich...have they started offering a degree in clown college yet?
It makes you wonder WHY they feel the need to offer any spin at all. Why not present the data in an unbiased fashion and let people draw their own conclusions. Gee, what a concept.
I did just that - My conclusion is my underwear needs serious stain removal.
There are some(quite a lot really) people who have to eat from this rancid bowl of deeply depressed housing and I think they will be lucky to be able to purchase underwear.
Builders and reno boys.
Carpet/flooring lads.
Kitchen remodel ladies.
Softfurnishing trolls.
Durable goods makers.
wholesalers/ retailer sales bitches
Paint/painter pansies
moving companions
and
Poor and getting poorer real estate sales goons.
and
Harry Wanker
..........someone fucked up...... we got ZIRP that gets the USa ZIP
Absolutely fucking priceless! :D
Caught my eye also, but was thinking gas is better utilized for heating or cocktails.
"...retail sales slowed measurably in April, while sales at furniture and home furnishing stores declined sharply..."
Alright, its time to start ripping on Harry Wanger---- where has he been recently?
Have you checked under some over-passes? Look for the pimped-out shopping cart with the initials "H.W." on the handle...
Amazing how the Dow Jones has surged from yesterday's intraday lows on the heels of such terrific macroeconomic data. No, wait. The data this week has generally been lousy. I guess the FRBNY has been pumping the indexes again to get Americans feeling wealthier before a holiday...
I was hoping someone would put these two data bits together! Good job! I read both headlines this morning, plus the jobless claims are up slightly and I scratched my head. I interpret this to mean that lower homes sales, ergo prices and higher unemployment raise consumer confidence, right? So we will be happiest at full unemployment and worthless homes! Fantastic! I don't know who they survey but nothing in the economic headlines seems to agree with what is happening on the ground.
I am considering a home purchase to offset my expectations of future high or hyperinflation. However, it is hard to know how things will turn out in the shorter term. I have decided to expect that home prices will fall further after I buy but that I will get a payment I can afford and hope for the best with my own employment. After all, I buy cars with an expectation of depreciation and maybe homes need to be in a somewhat similar situation. I am not considering my home an "investment" of the traditional sort.
Homes have been and are always a discretionary purchase.
They come with high cost going in, high cost maintenance /insurance and local charges while in and high cost getting out. So many leeches attach themselves to your wallet and working life it has become its own tail that wags the dog
they also tie you down should you need to move. The unseen future always remains
Do your sums and stay nimble.
Good points every one. I have done the renting the last few years through several layoffs. However, I get a bit tired of many of my renter neighbors.
I get tired of moving and like to have something of my own...even though I agree with the argument that as long as government taxes your property with the right to seize you never truly own it.
The other advantage is in high or hyperinflation you get your place for free as rates and inflation skyrocket while your payment stays the same. Rents will go up and leases will shorten accordingly.
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Tyler, please prune the spam.