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

To: CalculatedRisk who wrote (17231)	11/30/2004 3:35:19 PM
From: mishedlo	Respond to of 116555

The supply of homes for sale continues to dip. As of Tuesday, 10,040 detached homes were for sale, a 6 percent drop from Oct. 31, according to First Team. The number of condos on the market fell 3 percent in the same time to 7,346 units. Is the above really bullish in light of this? The pullback in demand appears widespread, affecting not only cheaper homes, including condos, but also more pricey abodes, such as new residences. Sales dropped 16 percent for resales of detached homes, 25 percent for condos and 21 percent for new homes. ==================================== I think this says it all: "Luckily, I'm not under any time pressure (to sell), so I will just wait and see," he said. People are pulling houses off the market because thay can not get what they want. In the meantime interest rates are rising and the economy is cooling.

To: CalculatedRisk who wrote (17231)	11/30/2004 3:53:56 PM
From: mishedlo	Respond to of 116555

Heinz on Housing and Treasuries Date: Tue Nov 30 2004 14:51 trotsky (Stevens @ housing) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved this is imo way too simplistic an analysis - it reminds me of the argument that could be heard in Japan anno 1989, which was "Japanese house and land prices can never come down significantly, since both are in short supply". as an aside, Japanese demographics were 10 years ago where US demographics are now. Japanese land prices have been falling for 13 years in a row now, and the compound price decline amounts now to about 80%. blaming demographics for the bubble ( and it IS a bubble - proof are the facts charted on this site which looks specifically at the San Diego bubble: piggington.com - as can be seen there, neither population growth, nor income growth, nor in fact any other of the myriad excuses used to explain how prices came to rest 85% above trend are satisfactory. there remains only one logical conclusion - it's a bubble ) is not good enough imo. the bubble has been egged on by way too easy credit and the peculiar moral hazard introduced by the activities of the GSEs - which with their willy-nilly buying of mortgages without regard for the underlying assets or the creditworthiness of the borrowers allow the industry to extend credit on ever more irresponsible terms. by the way, i have heard this demographics argument before - at Nasdaq 5000. it was explained to me then that it was completely immaterial that the average p/e of the Nasdaq firms actually making a profit had risen to about 300 - the retirement money of the baby boomers would definitely not only help to sustain such absurd valuations, but would actually increase them even further. we know how that one turned out. and so it is with the 1/2million dollar hovels that were worth a mere 150,000 only a few years ago - they have become unaffordable for the bulk of the potential buyers; their price has increased, but their VALUE has not; the price increase is far above anything that could be justified by the available data, including inflation; and it all rests on the biggest EZ-credit inflation the world has ever seen. this latter point is probably the most crucial - the expansion in mortgage credit is simply off the charts. since the 1950's, bank exposure to mortgage assets has increased from 10% of bank assets outstanding to over 60% - which is to say that once this bubble pops ( it has already begun as can be gleaned from inventory and sales data ) it will leave the banking system in tatters - just as has happened in Japan. and that in turn will very likely be good for treasury bonds - and bad for all other debt instruments.

To: CalculatedRisk who wrote (17231)	11/30/2004 4:12:38 PM
From: mishedlo	Respond to of 116555

Rule of Bubbles "People have been talking about a real estate bubble for over a year, but prices have continued to go up." Yes, prices have gone up. That's what happens in a speculative bubble. To quote The Economist: "The first rule of bubbles is that they always go on longer than one would think possible. The second rule is that they always burst." piggington.com

To: CalculatedRisk who wrote (17231)	11/30/2004 4:19:08 PM
From: mishedlo	Respond to of 116555

NT Daily Commentary Corporate profits with inventory valuation and capital consumption adjustment dropped $27.6 billion in the third quarter, reflecting the impact of hurricanes. Third quarter corporate profits were reduced $79.7 billion because benefits paid by insurance companies following Hurricanes Charley, Frances, Ivan, and Jeanne reduced profits. However, adjusted corporate profits excluding costs of hurricanes also show a deceleration in the year-to-year change in corporate profits (see chart below). After excluding hurricane expenses, corporate profits grew 16.0% in the third quarter on a year-over-year basis, down from the recent peak of a 27.8% increase in the first quarter. Unit labor costs have now risen for two straight quarters after posting declines in 2002 and 2003. Given that labor costs are the major operating expense of businesses, if the current trend of rising costs prevails, it should not be surprising to see a further deceleration in corporate profits. The economy is predicted to nearly match the pace of growth seen in the third quarter. Consumer spending is most likely to show a milder gain in the fourth quarter compared with the 5.1% increase in the third quarter. Equipment and software spending should be the main driver in the fourth quarter, partly due to firms making use of the favorable tax breaks for capital spending that are due to expire by the end of the year. Barring a very weak November employment report, the FOMC will almost assuredly raise the federal funds rate target by 25 basis points on December 14. However, if the apparent slowing in the growth of consumer spending decelerates more into the first quarter of 2005, the FOMC might pause its rate increases for several meetings after the presumed December 14 hike. northerntrust.com

To: CalculatedRisk who wrote (17231)	11/30/2004 4:19:14 PM
From: mishedlo	Respond to of 116555

NT Daily Commentary Corporate profits with inventory valuation and capital consumption adjustment dropped $27.6 billion in the third quarter, reflecting the impact of hurricanes. Third quarter corporate profits were reduced $79.7 billion because benefits paid by insurance companies following Hurricanes Charley, Frances, Ivan, and Jeanne reduced profits. However, adjusted corporate profits excluding costs of hurricanes also show a deceleration in the year-to-year change in corporate profits (see chart below). After excluding hurricane expenses, corporate profits grew 16.0% in the third quarter on a year-over-year basis, down from the recent peak of a 27.8% increase in the first quarter. Unit labor costs have now risen for two straight quarters after posting declines in 2002 and 2003. Given that labor costs are the major operating expense of businesses, if the current trend of rising costs prevails, it should not be surprising to see a further deceleration in corporate profits. The economy is predicted to nearly match the pace of growth seen in the third quarter. Consumer spending is most likely to show a milder gain in the fourth quarter compared with the 5.1% increase in the third quarter. Equipment and software spending should be the main driver in the fourth quarter, partly due to firms making use of the favorable tax breaks for capital spending that are due to expire by the end of the year. Barring a very weak November employment report, the FOMC will almost assuredly raise the federal funds rate target by 25 basis points on December 14. However, if the apparent slowing in the growth of consumer spending decelerates more into the first quarter of 2005, the FOMC might pause its rate increases for several meetings after the presumed December 14 hike. northerntrust.com

To: CalculatedRisk who wrote (17231)	11/30/2004 6:47:02 PM
From: mishedlo	Respond to of 116555

Screensaver tackles spam websites Net users are getting the chance to fight back against spam websites Internet portal Lycos has made a screensaver that endlessly requests data from sites that sell the goods and services mentioned in spam e-mail. Lycos hopes it will make the monthly bandwidth bills of spammers soar by keeping their servers running flat out. The net firm estimates that if enough people sign up and download the tool, spammers could end up paying to send out terabytes of data. Cost curve "We've never really solved the big problem of spam which is that its so damn cheap and easy to do," said Malte Pollmann, spokesman for Lycos Europe. "In the past we have built up the spam filtering systems for our users," he said, "but now we are going to go one step further." Before now users have never had the chance to be a bit more offensive Malte Pollmann, Lycos "We've found a way to make it much higher cost for spammers by putting a load on their servers." By getting thousands of people to download and use the screensaver, Lycos hopes to get spamming websites constantly running at almost full capacity. Mr Pollmann said there was no intention to stop the spam websites working by subjecting them with too much data to cope with. He said the screensaver had been carefully written to ensure that the amount of traffic it generated from each user did not overload the web. "Every single user will contribute three to four megabytes per day," he said, "about one MP3 file." But, he said, if enough people sign up spamming websites could be force to pay for gigabytes of traffic every single day. Lycos did not want to use e-mail to fight back, said Mr Pollmann. "That would be fighting one bad thing with another bad thing," he said. Slow down The sites being targeted are those mentioned in spam e-mail messages and which sell the goods and services on offer. Bill Gates, Microsoft chairman Bill Gates is reportedly the world's most spammed person Typically these sites are different to those that used to send out spam e-mail and they typically only get a few thousand visitors per day. The list of sites that the screensaver will target is taken from real-time blacklists generated by organisations such as Spamcop. To limit the chance of mistakes being made, Lycos is using people to ensure that the sites are selling spam goods. As these sites rarely use advertising to offset hosting costs, the burden of high-bandwidth bills could make spam too expensive, said Mr Pollmann. Sites will also slow down under the weight of data requests. Early results show that response times of some sites have deteriorated by up to 85%. Users do not have to be registered users of Lycos to download and use the screensaver. While working, the screensaver shows the websites that are being bothered with requests for data. The screensaver is due to be launched across Europe on 1 December and before now has only been trialled in Sweden. Despite the soft launch, Mr Pollmann said that the screensaver had been downloaded more than 20,000 times in the last four days. "There's a huge user demand to not only filter spam day-by-day but to do something more," he said "Before now users have never had the chance to be a bit more offensive." news.bbc.co.uk

To: CalculatedRisk who wrote (17231)	12/1/2004 1:25:39 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

interest rates please take a gander at these charts all very bullish except the last set There is a daily and a weekly for every currency. All June 06 interest rate futures short sterling - UK June 06 futuresource.com futuresource.com Euribor - EU June 06 futuresource.com futuresource.com Bax - Canada June 06 futuresource.com futuresource.com NZ signaled it is done tightening OZ has as well Japan at 0% and holding I Do not have future charts for those as I can not find the symbols Now take a look at the US Eurodollars - US June 06 futuresource.com futuresource.com Now, am I supposed to believe that the whole world is done hiking and will be cutting or holding but the US(and China) are going to keep hiking and the US$ is going to keep falling and gold keep rising to boot? FWIW I do not think that combination is in the stars. Something will give and what gives depends on the US consumer, US housing, or Greenspan's continual hiking. IMO, If the world starts cutting (lead by the UK, NZ, or perhaps Canada) the US is going to go on hold. If I am wrong and the US keeps hiking and others are cutting I think gold as well as housing will do a major collapse and Europe will sink into deflation. Housing is walking dead anyway IMO just begging for a catalyst. Will Greenspan provide that catalyst at the next FOMC in a couple weeks? I keep wondering about Brown's comments today on UK interest rates. He stated that even if UK housing collapses the UK might hike anyway. On that comment the pound soared today while every other currency stayed approximately even vs the US$(+1.60 or so). The pound has soared from 1.77 to 1.90 in just a couple of weeks. Huge rally. Was this an attempt by Brown to get the pound as high as possible before he starts cutting to halt the UK housing collapse? Mish