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

To: russwinter who wrote (6312)	1/27/2004 10:25:00 PM
From: ldo79	Respond to of 110194

Picked this up off IHub by basserdan: investorshub.com ========================== From last night's King Report... From The King Report late last evening; Bob Prechter notes M3 since September has fallen >2%; the largest decline in 60 years. Jim Bianco notes the breakdown in the correlation between the monetary aggregates and stock prices. The breakdown, in our humble opinion, is due to the changing role of the stock market and the economy and bubble policies. The stock market used to be a barometer of the economy but, along with housing, is now an instrument of economic stimulus. In days of yore, the Fed would boost reserves, banks would lend, companies would borrow and invest, prospects would brighten, stocks would rally, profits would materialize and stocks would surge. The whole process was self-reinforcing as the borrowing and increased profits boosted investment and stock prices which all boosted the monetary aggregates. Now, C&I loans are in collapse, the bubble liquidity is going to service existing debt, maintain Caligulan consumption and asset speculation. The self-reinforcing and multiplying effect no longer exists as it did BB (before bubble). And the Double Bubble should produce other disconnects. As bad as the recent contraction in the monetary aggregates has appeared, in reality it's even worse. Our friend Lacy Hunt, chief economist and strategist at Van Hoisington Management and former Fed official, notes that buried in a Fed H8 report is a note that due to a FASB ruling, banks had to consolidate some assets and liabilities from 'off balance sheet' "interest rate entities" to their balance sheets in December. This resulted in some $42-50B of assets (probably most are in the form of jumbo CDs (M3)), being added to the monetary aggregates. The current January M3 growth rate of +5.5% annualized would be DECLINE of 3.5% annualized sans the recent asset addition. Lacy also notes that the Fed report does NOT state the total of liabilities moved to balance sheets. Ergo, the monetary aggregates are now overstated and the Fed should restate or normalize the data. As Roseanna used to say, "It's always something!" And it's a struggle to keep up with ever-changing data and methods. The late Al Sindlinger told us in 1997 that his data, which had correlated (income, GDP, employment, stock prices, earnings and prez approval ratings) for 60 years, became uncoupled when the US went into bubble mode in 1997. That year also happened to be the peak in corporate earnings.

To: russwinter who wrote (6312)	1/28/2004 10:15:59 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

Too easy money is now glutting the new home market (and the apartment and rental market:http://www.siliconinvestor.com/readmsg.aspx?msgid=19739984 with too much inventory. 374,000 houses for sale beats the last glut in 1995-96. (see Jan. 21 "new houses for sale chart"): northerntrust.com New Home Sales Surprise: They Fell Wednesday January 28, 10:03 am ET WASHINGTON (Reuters) - Sales of new U.S. homes fell unexpectedly in December as the strongest home-selling year on record ended with a whimper, a government report showed on Wednesday. New single-family home sales dropped 5.1 percent to a seasonally adjusted 1.060 million unit annual rate from an upwardly revised rate of 1.117 million in November, the Commerce Department said. Analysts polled by Reuters had been expecting an increase to a 1.100 million unit pace from the originally reported 1.082 million November sales rate. The weakness suggested by the December sales figure was dampened not only by the upward November revision, but by an upward revision to October's sales rate as well. For all of 2003, single-family home sales rose 11.5 percent, with a record 1.085 million homes sold as the lowest mortgage rates in a generation fueled buying. With sales slowing, the inventory of unsold homes on the market rose in December to 374,000, the highest level since June 1989. At December's sales pace, that represented a 4.3 months' supply, the largest since February. The report on new home sales stood in contrast to a report earlier this week that showed a sharp jump in sales of existing homes last month. The National Association of Realtors said on Monday existing home sales rose 6.9 percent in December to an annual rate of 6.47 million units.