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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (5859)	5/7/2004 11:26:19 PM
From: mishedlo	Respond to of 116555

statistics nypost.com The government's computers generally look back three years to see how statistics should be adjusted for the "seasons." This time, the Labor Department's machines will sneak a peak at the last three Aprils [which were all bad], and they won't be expecting much growth for this year. If last month - the most recent April - happens to have produced a modest number of new jobs (which is likely, based on other numbers we are seeing) the computers could swish the figures around in their seasonal adjustment computations and make them look larger. Got that? The computers expect very little, get a more decent number and then make that number look better than it really was because the expectations were so low.

To: Chispas who wrote (5859)	5/7/2004 11:52:34 PM
From: mishedlo	Respond to of 116555

ILLUSIONS financialsense.com

To: Chispas who wrote (5859)	5/8/2004 12:08:34 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Faltering "Financial Sphere" Credit Bubble Bulletin, by Doug Noland prudentbear.com

To: Chispas who wrote (5859)	5/8/2004 12:51:00 AM
From: mishedlo	Read Replies (4) \| Respond to of 116555

Question to me on the FOOL about today's job numbers. Wait a minute, someone please help me out here ..... Does this mean that since April 2003, 912,000 jobs have been added to the employment numbers based on an estimate???? My reply: As best as I can determine: Yes What seems to have happened is this: 1) Last Dec and Jan figures were adjusted down for the year as jobs were not really created that were expected to be created. Somehow the model figured this out (on purpose or manipulated) very late in the year. 2) In March, with all the expiring benefits, a whole bunch of people ran out and took anything they could find (part time jobs at Walmart or wherever), creating a one time aboration of (+308,000) 3) This showed up in March stats when 296,000 people complained about working part time for economic reasons. To the model: A job is a job is a job. The models do not count people working two part time jobs instead of one full time job as one job but 2 jobs. No determination is made at all as to the quality of the job. 10 hours part time a week, is counted as a job. 4) In april we added more jobs (how many is unknown), but since April has been weak for 3 years running, the damn model (based on real headcounts +- some real crapola WAGs based on birth/death rates) assumes something REALLY BIG is happening and adds a lot more jobs to the total on statistical assumptions. Part of this is probably enhanced by overcounting returning strikers from a huge grocery strike in California. 5) Rather than using real headcounts and ONLY real headcounts, the model magically sees jobs were "created" at a time when the powers that be just happen to need to prove the economy is adding jobs at a healthy rate. 6) There is no doubt we created a whole bunch of part time jobs somewhere (probably some full time ones as well). How many is anyone's guess because today is the first day I was even aware of this extra manipulation. I am going to go out on a limb and suggest that since the rate of firing people has slowed down (I accept that), that some model somewhere suggests that huge numbers of jobs are being created. There is some REAL evidence of job pickups based on Monster numbers. However when 13,000+ jobs are being terminated at BOA, and 10,000 at a couple more places that I can not remember now, and with more people bitching about part time work to the entire tune of all 300,000 jobs that were supposedly created in March, something really smells here. That said, with all the over-expansion building of Lowes, HDs, McDonalds, Walmarts etc we probably did create a lot of low paying jobs somewhere. How many is nothing more than a guess since the model is allowed to make all kinds of assumptions. Finally much of it is probably desperation: People taking ANYTHING with benefits expiring. 7) There was a false start to job numbers last year, and when it became apararent that jobs were not really created, they took them all away in one fell swoop in Jan and February (and then some to be able to goose March and April for political reasons?). 8) Someone needed to show jobs, the model for showing jobs was modified this year, and low and behold jobs were found. Again, I am not doubting that some jobs were created, but I am suspicious of model changes right at a time when we need to show job creation. 9) All of which leads us to this thought from a well respected poster on SI: Message 20106754 10) Finally but most important. Regardless of whether or not jobs were really created, the bond market is acting as if they were. As much as you or I or anyone else is "right" about these numbers being a crock of horse hockey, the bond market accepted them. Mish

To: Chispas who wrote (5859)	5/8/2004 12:55:09 AM
From: mishedlo	Respond to of 116555

It's Official: housing bubble has lost its hot air Sydney Morning Herald -- By Matt Wade -- May 8, 2004 smh.com.au The housing bubble is deflating, the Reserve Bank has declared, suggesting interest rates are on hold for the foreseeable future. The bank published figures yesterday revealing house prices fell across Australia in the first three months of this year - the first across-the-board drop since the recession more than 10 years ago, according to some analysts. "A turning point appears to have been reached in the housing market after the overheated levels of late last year," it said in its quarterly report card on the economy. "There are . . . recent indications that house prices may have reached their peak." It also suggested that the huge growth in home lending was also beginning to decline. After warning for more than two years that unsustainable growth in house prices and runaway household debt posed a threat to the economy, the Reserve now seems confident the housing market is in retreat. "The adjustment now under way in housing finance reduces this source of risk to the economy, but it is still too early to predict how it will unfold," it said. Macquarie Bank economist Rory Robertson called the figures showing across-the-board falls in house prices one of the "most sensational" tables the Reserve Bank has ever published. "There is a lot of people who have geared up on housing the past year or two who will wake up in the morning with a sick feeling in their guts," he said. Mr Robertson said that if house prices kept falling, and this damaged consumer sentiment and crimped spending, interest rates might even be cut. "The big house price upswing has ended and we have the first quarter of negative price growth in over a decade," he said. "What happens next is anyone's guess and the Reserve Bank is saying we're sitting on our hands." HSBC chief economist John Edwards said the Reserve's statement was a "sharp turn" from its recent rhetoric which had suggested rate rises were possible. "It is very good news for the Howard Government on the eve of its Budget, and even better news for the real estate market," he said. The Reserve published Australian Property Monitors figures showing prices for established homes - not just apartments - fell 8.4 per cent in the March quarter. Prices in Melbourne were down 14.5 per cent, followed by Sydney at 10.5 per cent. It noted the housing market's decline was against an "advantageous" economic backdrop, with unemployment and inflation low and the world economy gaining momentum. It said risks for the economy had not "gone away entirely" but the "chances of achieving well-balanced growth and a more restrained pace of credit expansion have improved". The international recovery would help Australia's exporters. The Reserve board left interest rates unchanged after its Tuesday meeting and economists say yesterday's statement suggests rates will not change for some time. JP Morgan senior economist Andrew Pease said: "The RBA thinks that housing is cooling, economic growth is sustainable, and inflation is under control. The cash rate will be unchanged at 5.25 per cent for the foreseeable future." The Reserve forecast inflation would fall to 1.75 per cent by the end of this before rising to 2.5 per cent by the end of 2005.

To: Chispas who wrote (5859)	5/8/2004 8:29:51 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Housing bubble has burst, says RBA By David Uren May 8, 2004 THE housing bubble has burst, with property prices falling by an average 8.4per cent in the March quarter, according to the Reserve Bank, confirming that interest rates will remain stable for months. The bank cited preliminary private research showing house prices dropped by 14.5per cent in Melbourne and 10.5per cent in Sydney in the March quarter. Price falls were 1per cent or less in other capitals, except in Adelaide, where they rose 2.7per cent. Based on official estimates of the value of all dwellings in Australia, an 8.4 per cent fall in housing prices amounts more than a $60 billion loss in capital value. "A turning point has been reached in the housing market after the overheated levels of late last year," the bank said yesterday in its quarterly statement on monetary policy. Housing Industry Association senior economist Harley Dale said all the signs were that prices had slipped on a widespread front. "I'd be surprised if there was anyone in the industry that would disagree with the Reserve Bank view on this," Mr Dale said. Louis Christopher, author of the research on prices quoted by the Reserve, said the price falls were being driven by a lack of borrowers. "They're leaving the market in droves and it has forced sellers to reduce pricing expectations in auctions." Mr Christopher, of Australian Property Monitors, said it was the sharpest downturn in the market since 1989. He gave as an example houses in the Hills district in northwest Sydney, which are selling for as much as $100,000 less than they were fetching last year - a slide of about 15per cent. Mr Christopher said the weakness in the market had spread beyond the apartment market, which started to slow early last year. Further falls were in prospect, with the likelihood the drop could reach 20per cent by the end of the year. Peter Costello earlier this week told The Australian that the end of the housing boom was a risk facing the domestic economy. The Reserve Bank said that interest rates, based on its 5.25 per cent official cash rate, were "close to normal" and that falling house prices reduced the likelihood that the economy would require further credit tightening. The central bank said the 1percentage point increase in interest rates late last year had significantly reduced the stimulus of cheap credit to the economy. The overheated housing market had been an important reason to shift interest rates to a "more normal" level. The quarterly statement said housing loan approvals had peaked at about $15billion a month in October and had fallen in each of the four months to February to about $12billion. There were signs the fall in approvals was being followed by a drop in actual home lending. Accurate and current information on house prices is hard to obtain, because most of the surveys are based on the price at settlement, which may be months after the purchase. However the Reserve bank said the house price index constructed by APM tracked prices at the date of contract. Its survey shows apartment prices are also falling, with a 10.2 per cent decline in Melbourne and 3.5 per cent in Sydney offsetting rises in other capitals. The Reserve Bank said no single house price measure could be regarded as definitive. However, other indexes prepared by the Commonwealth Bank, private research firm Residex and the Real Estate Institute of Australia also showed price falls. "The preponderance of price falls in the major cities suggests that for Australia overall, house prices declined in the March quarter," it said. Auction clearance rates and surveys of consumer sentiment provided further evidence of the turn in the housing market. The bank said the trends in rental markets were not uniform. Rents were rising strongly in Adelaide, Brisbane and Canberra, but were flat in Sydney and falling in inner Melbourne. The bank said the turn in the housing market was extending to new home construction, citing Housing Industry Association research that commitments for new houses were about 35 per cent below the peak last year. However, there will not be a crash. "The decline will be mild in comparison with previous housing cycles," it said. There was strong underlying demand for housing and favourable conditions in the economy generally were likely to sustain new dwelling construction. The decline in new dwelling construction would partially be offset by the relative strength of renovation. The Reserve does not expect the decline in the housing market to generate a broader malaise in the economy. However, it said households were more heavily indebted and saving less than ever, with interest payments consuming an even higher share of disposable income than when mortgage rates peaked at 17 per cent in the late 1980s. The Australian news.com.au -8% in one quarter! The UK is next