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  • Are Housing Prices About To Take A Tumble? [View article]
    No housing recovery until employment recovery.
    Jun 18 12:08 PM | 3 Likes Like |Link to Comment
  • Are Housing Prices About To Take A Tumble? [View article]
    Phoenix, AZ, the whipsaw housing market of the last ten years, has already seen asking and transaction prices fall around 8 to 10% from a year ago.
    Jun 17 07:04 PM | 9 Likes Like |Link to Comment
  • Bubble, Bubble, Toil And Trouble: The Costs And Benefits Of Market Timing [View article]
    "To me, a bubble reflects a market disconnect from fundamentals, where prices go up steeply, with no help from the fundamentals."

    "While there are some who are adamant in their belief that the market is in a bubble, I remain unconvinced..."

    The fundamental value of the S&P 500 has increased by almost 40% since January 1, 2013?
    Jun 17 07:02 PM | 1 Like Like |Link to Comment
  • May CPI at +0.4%, exceeds consensus [View news story]
    "Meanwhile housing costs people a third of their income. If housing prices fall 10%, it reduces the overall price level by 3.3%."

    Wow, that's great! If housing prices fall by 10%, people's mortgage and rent payments are automatically adjusted down by 10%, which reduces the overall price level by 3.3%. Then, they can obviously use this newly freed up money to pay more for gasoline. I didn't know that!

    I need to stop reading journalist level spin about how mortgage and rent payments are almost always fixed regardless of what the underlying price of the housing unit is, and how this causes consumers to be massively squeezed when their housing payment stays the same, their income decreases, and the cost of (not very important) food and energy increase.
    Jun 17 06:40 PM | 1 Like Like |Link to Comment
  • The Most Hated Economic Recovery Ever [View article]
    Five guys have a total net worth of $50 before a recession. The first guy's net worth drops from $1 to $0. Second guy from $3 to $2. Third guy, from $5 to $3. Fourth guy from $15 to $12. Fifth guy from $26 to $20.

    Now five years later guy #1 is still worth $0, guy 2 - $2, guy 3 - $4, guy 4 - $14, and guy 5 - $40. Together they have recovered all their net worth + $10, or a 20% increase from the pre-recession high! Now, since "private sector net worth" is so strong, it's time for all of them to go out on a massive spending spree!
    Jun 17 06:27 PM | 3 Likes Like |Link to Comment
  • May CPI at +0.4%, exceeds consensus [View news story]
    dnorm - what "price fluctuations" in gasoline?

    Over the last 15 years gasoline has increased in price by 9% average per year in a steady upward march. If what you said about "fluctuations" had any validity, you'd see gasoline MAYBE increasing by an average of 2 to 3% a year to match "actual inflation".

    Let me know when gasoline spends a few years with -9% per year compounded price changes, then I'll believe in "fluctuations". Let's say in five years, 2019, gas at $2.25? For reference, even if gas did increase in price by 3% a year compounded, it would still only cost $1.81 in 2019 based on the 1999 price, half of what we pay now in 2014.

    Too "volatile", too many "fluctuations", too much "fog" in the data - better not count it.
    Jun 17 04:37 PM | 1 Like Like |Link to Comment
  • May CPI at +0.4%, exceeds consensus [View news story]
    My original post was to point out the absurdity of the government's CPI reports. They exclude food and energy because it is too "volatile", yet gasoline (a very visible form of energy) has actually increased substantially over the last 15 years. No "cloudy volatility" there if you care to look for it.

    I mentioned TVs and Netflix because somehow these items which "cost less" now are supposed to show that inflation in low and easy for consumers to adapt to. I probably spend $5000 on gasoline for every $500 I spend on flat-panel TVs. I'll gladly take 0% inflation in the former for 9% inflation in the latter. Unfortunately it's the other way around.
    Jun 17 04:29 PM | 1 Like Like |Link to Comment
  • May CPI at +0.4%, exceeds consensus [View news story]
    So gasoline prices and video rental prices have the same impact on the consumer and economy?

    Do you also think that the price of food and the price of Halloween costumes have the same impact?

    Well, I guess maybe we can all stuff Redbox videos into our gas tanks and use that to drive to work. Thanks for clearing that up.
    Jun 17 02:51 PM | 2 Likes Like |Link to Comment
  • The Fed Scenario That Could Catch Investors Off Guard [View article]
    As far as the four step rate cycle you outline, the fact is that with each recession the Fed has to cut rates faster and further than the last, then can only raise them to a level lower than the last peak. Now, we've been stuck on ZIRP for six years, and the Fed has said that the peak of the next cycle might only be 3 to 3.5%. From there, it's straight back to ZIRP, with automatic QE to simulate negative rates.

    At some point, maybe just another cycle away, the Fed will not be able to bring rates back off the floor even after "recovery", and the new cycle will be more or less permanent QE - maybe 5% of GDP per year in good times, 25% of GDP per year in bad.
    Jun 17 02:48 PM | 1 Like Like |Link to Comment
  • May CPI at +0.4%, exceeds consensus [View news story]
    In 1999 gasoline was about $1 per gallon. Now it's about 3.50. That's an average compounded annual increase of almost 9%. It's a good thing that gasoline is such an unimportant part of our economy and consumer financial health, otherwise it might cause people to question the accuracy of the government's inflation numbers over the last 15 years.

    At least I can get a flat-panel TV for 5% less than last year. Of course if I want to hook it up to cable, satellite, or Netflix I'll be paying 5%+ more than last year.
    Jun 17 12:24 PM | 1 Like Like |Link to Comment
  • Stock-Bull Topping Underway Looks Just Like 2007's Last One [View article]
    When you say a "clear catalyst in 2007" I'm curious what you mean. If you're referencing the Bear Stearns collapse, or more importantly the Lehman Brothers collapse, don't forget that these happened in early and mid-2008.

    In 2007 the very first inklings of a recession began to show in slowing housing sales, falling prices, consumer confidence dropping, job gains decreasing. But the macro economy continued to "chug along" for another six to eight months until the two "shock events" I mentioned above happened. Don't forget that oil went to $145+ and gas to $4 in the summer of 2008 - half a year after the recession officially started!

    This time, we might already be just at the brink of recession as of June 2014. Q1 clearly was, and I've just read that the GDP might be revised yet again to -2% for Q1. Q2 is not "bouncing back" as expected. But since it will take a few months until the real data on Q2 is seen, it might be September, October before the reality sets in. And even then, the "hope" of things getting better might keep the markets levitated. And of course you've got the Fed right there the whole time - they'll try to micromanage the economy/markets the whole time, but we'll see if they succeed. If the Fed can't keep the plates spinning you'll see the market react to the recession pretty quickly, but again I do see a slow grind vs. a plunge.
    Jun 13 08:52 PM | 3 Likes Like |Link to Comment
  • Stock-Bull Topping Underway Looks Just Like 2007's Last One [View article]
    This market does show the complacency common to market tops, but I think it still has a way to go, if only because the Fed is still "supportive" of the markets. When the Fed is really close to actually raising rates (could be in as little as six months despite the promises they've been making), and QE buying is truly over (again in just a few months), AND maybe the Fed's balance sheet starts to roll off ever-so-slightly, THEN the true topping process will begin.

    I'd say another 10 to 15% from here, maybe 20%. We are clearly in the early stages of euphoria, but we're not at the "nightly news" point yet. We'll get there soon enough. S&P 2250 could easily happen, followed by S&P 1200 to 1400 after the inevitable bear market. One thing however - I do believe we'd see a 2000-2003 slow grind bear vs. a 2008-2009 plunge. The slow grind is actually harder to navigate - people will buy at each level down thinking it's the bottom.
    Jun 13 04:53 PM | 8 Likes Like |Link to Comment
  • Did May Retail Sales Miss Or Beat Consensus? [View article]
    Hey, if you manipulate numbers enough you can make almost anything seem ok. I'm pretty sure that the May expectations were for a delta from April, but I guess your new definition, including any past revisions to make up for current shortfalls can be used if needed. But wait, did you include any revisions from March, February, January? If those were downward it might make things look worse. How about a baseline of 100 from October 2013 and a "prediction/actual/rev... computation to the present?

    The fact is that since everything bad from January to April was blamed on the weather, the expectation was that consumers would emerge from their hibernation and go on a spending binge to satisfy "pent up demand" in May, and that hasn't really happened.
    Jun 13 12:52 PM | 1 Like Like |Link to Comment
  • Online Joins The Rest Of Retail Sales [View article]
    The whole "the weather did it" argument was so desperate to begin with. Now, they'll have to come up with something else ... maybe it was because that horse didn't win the Triple Crown...?

    One thing I do see coming from this very disappointing retail number is that next week's Fed meeting will have them say that they are Really, REALLY going to base QE tapering/holding/incre... on the "qualitative economic data". Whatever it takes to goose the market just one more time...
    Jun 12 06:38 PM | 2 Likes Like |Link to Comment
  • How Should Investors Handle Iraq? [View article]
    "Now on the table is some strategic bombing ? Isn't that how all these wars start ?"

    The war in Iraq started in early 1991 and never ended.

    Bush I, Clinton, Bush II, Obama - they've all continued the military action to one extent or another. Obama might be about to be pulled back in a lot more than he had bargained for.

    If Islamists are able to control the oil profits out of Iraq, they will soon develop nuclear weapons or simply import them from Pakistan, which may also fall to an emboldened Taliban out of Afghanistan. The "Caliphate" mentioned in the Reuters article is not just a figurative reference.
    Jun 12 02:55 PM | 3 Likes Like |Link to Comment