Well That Hasn't Happened Before - Exhibit 3

We have never, ever, seen a larger Fed-fueled, mal-investment boom in private construction...



While some see new record highs in private construction spending as a signal that everything is 'normal' again, it is that 'normal' that we should be most afraid of as extremely cheap money in the form of loans backing this construction (which will never go down in value thanks to The Fed's omnipotence) will lead inevitably to a glut or over-supply... or, as we have seen recently, a collapse in credit will disable these highly-levered property speculators from rolling debt.

The distorted picture being painted by 'unemployment trends' and constant reassurance by any and every talking head that - thanks to the stock market's renaissance - everything is set for escape velocity merely places the entrepreneur once again with misleading signals... either a) they do not invest due to uncertainty or b) they pile in speculatively and lose thanks to Fed promises.

Be careful what you wish for... the last 2 times property construction rose at 50% YoY was the top...


Chart: Bloomberg

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See Exhibit 1 here

See Exhibit 2 here