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

To: mishedlo who wrote (19573)	12/27/2004 1:25:47 PM
From: mishedlo	Respond to of 116555

Heinz comments on UK housing article: Message 20890111 From Heinz...... "As the market stabilises..." this unexplained assumption is the foundation on which the entire forecast rests. "as the market stabilises" - as if it was a given, in no need of further inquiry, that the market will 'stabilise', whatever that actually means. what if it doesn't? "He said his confidence is based on four factors: Household incomes are increasing by 5 pct per annum, unemployment is continuing to fall, lenders are increasing the multiples of income on which they lend and interest rates are still historically low. "There is no reason why any of these factors should dramatically change over the coming twelve months," said Wriglesworth. there is every reason to expect dramatic change. this is similar to low volatility periods in financial markets, which are ALWAYS followed by high volatility periods. and even though not ALL of the above cited factor will likely change unexpectedly or at an alrming rate, the intermarket relationships that are assumed to exist as a matter of course are themselves not guaranteed to continue. e.g. falling interest rates are NOT a guarantee of a recovering housing market. a collapsing housing market otoh could become the CAUSE of falling interest rates.