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Category Archives: Housing

Housing bubble 2.0. best ever.

In retrospect everyone looks back at the housing bubble of 2005-2007 and understands why house prices had to correct. Well, for the past couple years we’ve exceed the scale of that housing bubble and grown a larger one. * real median HH income is baselined on 1947 and adjusted by CPI. source: BLS * real mean house price is baselined on 2008 being equal […] Read the rest of this entry »

US Housing bubble update

The US housing bubble has not completed its deflation. The pace of house appreciation in the 80s-90s (still above the long term trend!) applied to the past 15 years is shown via the trend line below.  We’re nowhere near the point where all that red area has been given up. Mean reversion can be really inconvenient.  

Collapse in Household Formation

Young people frequently get a bad rap / are accused of being lazy. I’m sure this has always been the case. What has not always been the same, however, is the current level of household formation. This chart speaks volumes about how young people are moving back with the folks instead of going into mortgage debt (like everyone that came before them).  2013 saw […] Read the rest of this entry »

Short Economic Stories March 31 2012

In the US: Mr. Bernanke got the week going with a speech before markets opened on Monday. His comments were interpreted as a sign that more dollar printing would be on the way (hello QE3!). Mind you, there was no explicit commitment. In so doing, Mr. Bernanke is continuing to paint the Fed into a corner and further cementing the reliance of equity markets […] Read the rest of this entry »

Short Economic Stories March 24 2012

In the US: Weekly initial unemployment claims dropped under 350,000 for the first time in four years. Good. Now if we could find jobs for the 6-7 million others that have lost jobs and fallen out of the UI system, that would be nice. The latest housing data has been a mixed bag. House prices are stabilizing, but sales volumes remain low. And this […] Read the rest of this entry »

Short Economic Stories March 10 2012

The greedometers are increasingly suggesting that we’re currently in the warm-up act a few months before a secular top in risk assets. (More in the private client letter on Wednesday.) In addition, talk about low trading volume. Wow! Watching Friday’s equity markets, you would have thought two guys were buying and selling. When only 300M S&P500 company shares have traded by 3pm, you know […] Read the rest of this entry »

Short Economic Stories March 3 2012

Bailouts spreading The US financial system was on the front line of news stories in 2008 & 2009. Since then, it has quietly repaired and rebuilt itself. More wealth, more debt, and hence more risk is now concentrated in even fewer and larger banks as a result. In the short run there was and is no other way. But eventually the mega banks will […] Read the rest of this entry »

Short Economic Stories Feb 17 2012

In the US: •For years I have commented that S&P500 profit margin is one of the best mean reverting series of economic data there is. The final stock market peaks of 2000 & 2007 coincided with turning points when profit margins began retreating from their peaks. •Notice -like all mean reverting series- the larger the area above the average (green area), the larger the […] Read the rest of this entry »

Short Economic Stories Feb 4 2012

US-only this week….. 4Q 2011 Earnings season is roughly 58% done — as of Thursday’s most recent data from S&P. •57% of earnings results beat, 32% missed, 11% met lowered earnings expectations. Again, this is below the 65% average beat rate for sandbagged results. Why do I refer to earnings estimates as sandbagged ? Because there’s a pattern of earnings estimates being lowered as […] Read the rest of this entry »

Short Economic Stories Jan 21 2012

Big Picture: Warning: The mini greedometer (tactical risk indicator) is displaying readings previously only seen when the S&P500 was within 5% of a secular (long term) top. The greedometer (strategic risk indicator) is approaching dangerous risk levels as well. There is very little upside and a great deal of downside to risk assets (stocks, junk bonds, commodities, REITs) at this time. A much more […] Read the rest of this entry »