Fannie was already in the news this morning courtesy of the $10 billion settlement announced between the GSE and Bank of America. Let's make it two in a row courtesy of the firm's monthly housing survey in which one aspect, the ongoing expectation that home prices will continue to rise driven by the recent momentum, should come as no surprise: there is always hope that this dead cat bounce is different and unlike the previous three, and will result in something substantial. It won't, once all those millions of properties held on bank books and generating zero cash flow (remember: BAC's 6+ month delinquent mortgages now amount to a whopping $64 billion [4]) are unleashed on the market once the subsidized housing price is perceived as sufficient by most as a new, and satisfactory, clearing price. What was surprising was the consumer outlook on the economy and personal finances, which was diametrically opposite, and in fact those who expect that their personal financial situation will get worse in the next 12 months rose to the highest since August 2011.
The full details [5]:
- The percentage who expect their personal financial situation to get
worse over the next 12 months continued to rise, reaching 20 percent and
the highest level since August 2011. - Thirty-seven percent reported significantly higher household expenses
compared to 12 months ago, a 3 percentage point increase over the past
month and the highest level since December 2011. - At 39 percent, the share of respondents who say the economy is on the right track fell by 5 percentage points from last month’s survey high.
- Twenty-two percent of respondents say their household income is significantly higher than it was 12 months ago, a slight increase over last month and a 5 percentage point increase over September.
So, to recap, the US household's financial situation is bad and getting worse, with expenses "significantly higher" than a year ago, but it must be all the Fiscal Cliff's fault so there is absolutely no inflation, and buy stocks?