Worst Housing Number in Decades: What Is the Wall Street Media Smoking? 25 comments
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The housing numbers are as bad as they could possibly be. They show year-over- year housing starts to be down by 45.2% from May 2008. I cannot recall the numbers, but, if memory serves me, this decline is of the same magnitude as the housing decline which occured during the Great Depression of the 1930s.
Housing sales always are greater in April than in February. Furthermore, people almost always buy more houses in May than in April. The fact that they repeated that pattern in 2009 is not surprising. It's been happening since the days of the Roman Republic.
The real news is that housing starts are deeply down year over year. On top of that, we must consider that fact that 2008's numbers are way down from 2007, and 2007's numbers were way down from 2006. Housing starts in May, 2006 were running at a seasonally adjusted annual rate of 1,957,000 (www.census.gov/const/newresconst_200605.pdf). In other words, since the height of the housing market, housing starts have fallen so deeply that they amount to only 27% of what they were 4 years ago. That is very bad news and it justifies a deeply downward move on the stock market. Frankly, it is surprising that the DOW and S&P 500 didn't fall a lot lower than they did.
However, forget about all the doom and gloom of reality! Enter the Wall Street spinmeisters. Don’t bother them with reality. Here is the fantasy...
Bloomberg writes: “Housing starts jumped 17.2% to a seasonally adjusted annual rate of 532,000 units in May, up from April's figure of 454,000…”[i]
Marketwatch wrote:“Housing starts bounced back with a vengeance in May, rising 17.2% to a rate of 532,000 on a seasonally adjusted annual basis”[ii]
No, I am not making that up. I’ve given you the citation and you can read it for yourself. As ridiculously stupid as that is, they really did write “…bounced back with a vengeance…”.
But, no one beats Wall Street’s big bank analysts at the exceptional skill of being out of touch with reality.
Zach Pandl at Nomura Securities in New York, for example, explained: "This (housing) starts report is actually very encouraging…”[iii]
What kind of weed are these people smoking?
This is a horrible economic news week so far. To add to the bad housing numbers, the Federal Reserve reported that industrial production fell 1.1% in May from April and, in an unusual twist, admitted that this news was “worse than expected.” Six Flags, which owes billions of dollars to its creditors, has filed bankruptcy. Extended Stay Motel chain, which owes billions more, joined them in bankruptcy court.
The most frightening thing is that this is probably only a first taste of things to come. The green shoots are becoming impossible to find, if there ever were any.
Disclosure: Neither long nor short on anything mentioned in the article.
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This article has 25 comments:
Which is it?
The twisting and spinning of stats is now just the norm..
If you're one of the sheeple, you'd be having a warm and fuzzy that "things" are getting better.... too many sheeple believe what they're being fed by the controled media... we're in deep kimchi...
Do figures lie or do liars figure?
As a mortgage banker for a Community Bank I am speaking with people almost everyday who are preparing to build their own new home. This is positive. Yes we still have a lot of pain to go through but I will not and never will succomb to the idiots who have no perspective on the Great Depression, my parents lived through it, since our situation today is no where close to what they went through.
I am as troubled as anyone by the current and just past administration's handling of this mess but think they are too stupid to get much done in a positive vein anyway. As long as they are fumbling around up in Washington this will be a protracted recession of historical proportions but I see no evidence pointing to depression.
Clearly you've not been watching CNBC!
On Jun 17 08:42 AM Steve Owen wrote:
> In what universe do you think that a seasonally adjusted number of
> housing starts being 27% of what they were four years ago is good
> economic news, Mr. Wrixon?
Actually, it could be. Builders could go to 0.0% I suppose but then would be OOB. Builders are "chasing" completions, which over the last two years have exceeded new-starts/permits by around 150-200k per month, with some months as high as 300k. You know the new-house mkt. has hit bottom, more or less, when completions fall more in line with new-starts/permits. We are at least several months off from this - - doesn't matter whether you do SA or NSA on this, result is roughly the same - - too many new completions competing with the current (recent completions and existing) housing inventory.
This up move in housing and in the stock market are the first real bounces that we have had on the way down. As they say, even a dead cat will bounce, albeit this dead cat bounced higher than one would have expected, but I saw a lot of pushing the market up with just plain hot air and maybe some Government end of day buying.
Reality will return when the millions of unemployed run out of benefits and stop paying on their mortgages and the existing mortgage holders have even more interest rate resets on their mortgages and can no longer pay even though they are still employed. Also, there are millions of employees who are now on a shortened work week and are cutting their spending to the bone just to stay afloat. I am one of them, now at less than 50% of my normal pay.
The wallstreet news is lies and fabrication since August of 2004 when the market really collasped. If had Paulson kept AIG afloat ILLEGALLY the market would have crashed in August of 2004 and Bush would never have been re-elected.
Just imagine stopping 4 years of Predatory and Sub-Prime Loans if Paulson had only obeyed the laws and let investor know AIG was bankrupt in 2004 !
Yes. In fact about 70% of the starts ( I forgot the exact number) where multifamily. Single family starts were up only a couple percent compared to April.
Seems logical - since those "downsizing" will more than likely have to rent.
On Jun 17 07:38 PM ChrisL wrote:
> I believe I read someplace that multi-family housing starts are included
> in the "housing starts" numbers. If this is true, maybe some smart
> builders are building multi-family "rental" houses to handle all
> the people that are walking away from their current under-water mortgages?
> Anyboby have any insight on this?
On Jun 17 08:43 AM O-B-WON wrote:
> Avery...
>
> The twisting and spinning of stats is now just the norm..
>
> If you're one of the sheeple, you'd be having a warm and fuzzy that
> "things" are getting better.... too many sheeple believe what they're
> being fed by the controled media... we're in deep kimchi...
>
> Do figures lie or do liars figure?
The Wallstreet Media is smoking the pipe of delusional optimism. You can deduce who is manipulating the media to convince the sheeple to "regain" confidence in the market in the hopes of turning this massive "ocean-liner" economy around. The Wallstreet boiler room minions are crossing their fingers that they won't collide into an immense yet inconspicuous "iceberg" floating around waiting for a titanic to sink. They know it is out there.
On Jun 17 02:01 PM MudEngineer wrote:
> No depression? Maybe it just isn't here yet!
>
> This up move in housing and in the stock market are the first real
> bounces that we have had on the way down. As they say, even a dead
> cat will bounce, albeit this dead cat bounced higher than one would
> have expected, but I saw a lot of pushing the market up with just
> plain hot air and maybe some Government end of day buying.
>
> Reality will return when the millions of unemployed run out of benefits
> and stop paying on their mortgages and the existing mortgage holders
> have even more interest rate resets on their mortgages and can no
> longer pay even though they are still employed. Also, there are millions
> of employees who are now on a shortened work week and are cutting
> their spending to the bone just to stay afloat. I am one of them,
> now at less than 50% of my normal pay.
You might say W.S. is a "functional" addict of failed economic/political ideas....