from gold eagle and tice...note the canuck economist piping in !
Here are a few quotes from today that we pulled from various new stories.(www.prudentbear.com)(David Tice)
?Who cares about gas prices? There?s so much money out there that neither gas prices or interest rate increases are affecting auto sales.? Greg Jones from Briefing.com.
?When you get a month like February that?s just a blowout, it?s pretty hard to see signs of moderation ahead.? Paul Ballew, director of market and industry analysis at General Motors.
?The traffic lights are green on Main Street, USA.? Bob Rewey, Group Vice-President at Ford
?This is not just strong sales, these are dizzying sales.? Ford?s George Pipas (Dow Jones)
?We are off to the fastest start of any year in our history.? Pierre Gagnon, executive VP and chief operating officer at Mitsubishi Motor Sales of America
?The economy?s a hot house,? Tim O?Neill, chief economist with Bank of Montreal (Bloomberg)
?Construction and manufacturing, which some economists had expected to undergo a moderation, are not even close to showing any signs of weakness.? Richard Yamarone, senior economist with Argus Research. (Bloomberg)
It ?is sending an extraordinarily clear signal that manufacturing is surging amidst inflationary pressures. And if things go on like this with construction surging and mortgage applications showing no impact from rising interest rates, the Federal Reserve has to think about moving more aggressively.? Russell Sheldon, chief economist at MCM MoneyWatch in regard to today?s stronger than expected National Purchasing Manager?s index. (Bloomberg)
There is ?fairly intense, across-the-board pressure on pricing. It?s not just oil prices. Oil prices translate into a lot of other things.? Norbert Ore, chairman of the National Association of Purchasing Managers. (Bloomberg)
Today?s much stronger than expected February auto sales added only confirmation of a desperately overheated US economy. Total vehicle sales were at a stunning 19 million annual rate, apparently second only to September of 1986 for all-time vehicle sales. General Motors? sales rose a much stronger than estimated 16%, led by a 20% increase in light-truck sales. Saab sales rose 14%. Ford also beat expectations with total sales gaining almost 7%, its best February on record. Volvo sales gained 18%, Lincoln 25% and Jaguar 175%. The Ford F-Series truck, the Explorer, the Expedition, and Windstar minivan all had record Februarys. The luxury Lincoln LS had its strongest month ever. Toyota had its best February ever as total vehicle sales rose 24%. The Lexus Division had its best February, led by a 25% increase in its popular SUV. Nissan had its best February as well with sales running 20% above last year. At DaimlerChrysler, total sales rose 5.3%, strongly ahead of expectations. Truck sales jumped 8% and minivan sales rose 26%. Mercedes-Benz posted a 27% increase from February 1999, with sales for the popular M-Class SUV surging 43%. Volkswagen sales surged 30%. Mitsubishi, posting its best February, saw year-over-year sales surge 57%. Audi reported a record February with sales jumping 60%. Sales jumped 80% for Mitsubishi?s Eclipse sports coupe. Kia sales surged 69%, with its Sportage SUV leading the way with an increase of 79%. Land Rover also posted its best February ever.
Also today, there was a stronger than expected report from the National Association of Purchasing Managers, with US manufacturing expanding at its fastest pace in four months. Importantly, the index of prices paid rose to 74.1 from 72.6 in January, the highest level in five years. For comparison, the prices paid index was at 36.2 last February. The production index jumped to 61.3 from January?s 55.9. The index of export orders increased to 55.6 from last month?s 52.6. On the other hand, the index of inventories sank to 45.2 from 53.4.
Today the Commerce Department reported stronger than expected January construction spending. Total construction spending was about 8% above last year?s very strong January. Residential construction was 7% above a year ago, led by a 13% increase in multifamily units. This was the largest increase in construction spending in almost five years, fueled by an 18% increase in public sector projects. Road construction spending ran 31% above January of 1999 and educational structures 17%. From this report we see that despite higher interest rates, spending on homes and apartments is actually accelerating. Just today we see that the Mortgage Bankers Association reported that its index of mortgage purchase applications jumped 6%. If there is one thing that is slowing housing sales it is significant lack of supply.
We are increasingly hearing of an absolute buyers? panic that has developed in Silicon Valley. For commercial properties, rents have skyrocketed and, additionally, tenants are often forced to ante up stock options. In the residential market, it is an all out buyer?s panic. We are told of a 3,200 sq. foot home in Palo Alto, recently listed for $2.2 million, was sold for $3.5 million plus some of the buyer?s stock options. Another example, a home appraised for $2 million this past October, was recently put on the market for $2.7. There were 19 offers above the listed price, and the property was sold for $4.3 million. We are told that such episodes are now not uncommon. The panic is fueled by an inventory of unsold homes of about one-fifth normal levels. We suspect that there has been a sharp acceleration in housing inflation throughout the country, especially in upper-end neighborhoods and communities where technology companies are large employers.
This afternoon transcripts were released from Federal Reserve Board meetings back in 1994. There were many interesting quotes including a couple from Greenspan: ?When we moved on February 4th, I think our expectation was that we would prick the bubble in the equity markets. What has in fact occurred is that?while the stock market went down after our actions on February 4th, it went down quite marginally on net over his period.?
?If we were dealing strictly with the economic outlook as it stands now, there is no doubt in my mind that this economy could absorb a very large increase in interest rates without a problem. The difficulty I have is that I don?t think the financial system can take a very large increase without a break in its tensile strength?It?s a risk, frankly, that I think we should be quite concerned about.?
Well Mr. Greenspan, the NASDAQ traded at about 800 in 1994 and now stands at almost 4,800. The AMEX Biotech index was at about 100, compared to today?s 740. The Philadelphia Semiconductor index was also about 100 back then, while closing today at 1172. The S&P500 was about 450 and now stands at 1380. Furthermore, there has been an historic mania in the Internet and telecommunications industries. Real estate prices throughout the country have risen sharply with a massive bubbles developing in California and elsewhere. Moreover, we have witnessed six years of the greatest credit excess in history. Total non-financial debt has increased by about $4.5 trillion, while financial sector borrowings have ballooned from $3.8 trillion to about $7.5 trillion. If Greenspan was worried about a stock market bubble and financial fragility in 1994, he must be absolutely petrified today. What a fiasco. |
