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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (1806)	11/4/2003 7:50:46 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

<Lets see what the consumers have left.> I keep daily tracking (yesterday's was UGLY) the W&S reports from the Treasury, and if anything wages are weakening, not firming. Message 19454428 This indicator managed to stay flat (loosely defined, actually was down 0.4%) in Sept., but that's gone and more. So XMAS money isn't coming from wages despite what Snow hypes, and that's just the facts. Where's the beef? On the refi front the mortgage rates have sort of stayed within 10 BP of 5.9%. The refi index has been running thusly. Not enough for serious XMAS money when wages are actually falling: 9-12: 2884 9-19: 2439 9-26: 2507 10-3: 3005 (when mortgages dipped briefly to 5.67%) 10-10: 2340 10-17: 2204 10-24: 2312 So it looks like we are settling into that low 2000 area at 5.9% rates. Will 6.0% take us to the 2000 line? The indicator I use to determine how much heroin is being provided to inflate housing prices (the bloated collateral to base equity extraction on) is the mortgage loan app index. That's the one that's stayed pretty goosed up until the last three weeks. But now it too is rolling over. I feel if this index gets down below 350 and stays for a quarter, then the bloom will quickly start to come off the housing bubble. Since you need huge credit induced demand, underlying prices (collateral) will soften, and new construction activity will abate. Obviously, the 400 plus numbers from April-Sept has put a lot of activity into the pipeline, that's showing up in the reported numbers. But housing is getting to be very old news and is quite long in the tooth (), and will start retreating going forward, unless they can get rates down in a so called economic upturn environment (). That will be big, and should be closely watched. I'll update these tomorrow. I feel the analytical methodology is solid with this approach. 9-5: 409 9-12: 432 9-19: 402 9-26: 398 10-3: 441 (the brief 5.67% rate reprieve) 10-10: 359 10-17: 386 10-24: 364 A month old chart on these indexes: see link to Oct.8 northerntrust.com () see Contrary Investor's 10/21 issue, page 11's revealing chart of the most extended upcycle in a half a century. The cyclicality of housing is an eye opener too. People apparently think that's been abolished? that's the problem with prolonged low interest rate environments: moral hazard. (**) what happens tomorrow when the UK raises rates to cool their runaway housing bubble? Australia and others will soon follow. The Fed may be the most irresponsible central bank in the world, but they aren't the only one. Message 19458094

To: Ramsey Su who wrote (1806)	11/4/2003 8:41:27 AM
From: russwinter	Respond to of 110194

Darn, dog (fires) ate the homework again. Not sure why nice warm fall days would discourage shoppers? Was there a heatwave I don't know about? This convulated financial media reporting gets laughable. Maybe I'll put my resume in?: Reuters Chain Store Sales Up, But Fires Affect Tuesday November 4, 8:14 am ET NEW YORK (Reuters) - Last minute shopping for Halloween-related supplies put U.S. chain store sales on the upside as the California wildfires continued to curb gains, a report said on Tuesday. Sales rose 0.5 in the week ended Nov. 1, the Bank of Tokyo-Mitsubishi and UBS said in a joint report, compared with a 0.9 percent dip in the preceding week. Compared with the previous year, sales for the week were up 5.1 percent. The fires that swept through Southern California negatively affected regional sales even as far as Nevada. Unseasonably warm temperatures weakened sales further. BTM/UBS settled on the low end of its previous October comparable store sales growth estimate to 2.5 percent to 3 percent on a year-over-year basis. The BTM/UBS Weekly Chain Store Sales Snapshot is compiled from a group of major discount, department and chain stores across the country that report their weekly results. The index measures sales growth with the year 1977 equaling 100. October's auto and truck numbers, kind of a rout. Only three months have been lower in the last four years. btmna.com