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

To: regli who wrote (47802)	3/6/2006 2:47:01 PM
From: mishedlo	Respond to of 116555

Ask Not For Whom the Toll Bells Housing stocks nearly hit all-time highs last summer. But since then it seems like the stock market believes the housing slowdown is a prelude to a crash. I don't buy into this thinking. Higher interest rates are going to hurt the housing market, and will eliminate some of the creative financing that the Fed would like to see gone. I believe existing home sales will be hurt more than new home sales because people will sit on their price longer when they live in their home. I believe new home sales will slow but remain strong. This brings me to my pick of the week: Toll Brothers (TOL:NYSE - commentary - research - Cramer's Take) is down almost 50% off of its highs. Toll Brothers is trading at around a 6.5 price-to-earnings ratio and a 15% long-term growth rate. Toll is the "McMansion" building leader, with an average new home selling for around $660,000. It averages $113,000 in upgrades and lot premiums, a 21% increase over base prices. This has given the builder the highest average net margin of all homebuilders for the last ten years. Toll recently reported first-quarter earnings growth of 49%. It stated that 2006 earnings would come in at $4.77 to $5.26, and that return on equity on beginning capital would be more than 30%. Toll has a supply of 87,000 lots with a record 258 selling communities. The company ended its first quarter with a backlog of $5.95 billion. When you consider that Toll's 2004 EPS was $2.52 and the coming year's estimates are around $5.00, this is a company that is hardly headed over a cliff. Yet the market is pricing it like it is. The housing market has cooled by every measure; however, its death is greatly exaggerated. The object is to buy low and sell high: With any multiple expansion at all, Toll is a $50 stock over the next 12 months. thestreet.com

To: regli who wrote (47802)	3/6/2006 2:51:22 PM
From: mishedlo	Respond to of 116555

DJ US Pending Home Sale Index Dn 1.1% To 116.3 In Jan -NAR WASHINGTON (Dow Jones)--A leading indicator of U.S. housing demand fell in January for the fifth straight month, reaching a level almost 5% below a year earlier, a real estate industry group said Monday. The National Association of Realtors said its index for pending sales of existing homes was down 1.1% in January to 116.3, and that was 4.8% below the same month a year earlier. The Realtors' group noted, however, that the rate of decline in January 2006 was lower than the average monthly decline of nearly 3% in the previous four months, declines that followed the record high of 128.2 reached in August. David Lereah, NAR's chief economist, said the latest reading shows a flattening out that is in line with "the soft landing we've been expecting" for housing market. "We are at a much more sustainable level of home sales now - a welcome cooling from the super-heated conditions that were driving exceptional price gains," Lereah said. The NAR economist said home sales remain strong and should give a solid foundation to the overall economy. Housing wealth will help support consumer spending this year, while business spending will lead economic growth, he said. In January the pending home sales index was down 5.1% in the South, but still 2.0% above a year earlier. In the West the index was down 1.9% during the month and down 13.6% from a year earlier. In the Northeast the index was up 0.4% in January but 12.0% less than a year earlier. In the Midwest it rose 6.0% during the month but was 1.0% below a year earlier. The index is based on pending sales of existing homes, including single-family homes and condominiums, with 100 equaling average contract activity in 2001, the first year analyzed. A home sale is pending when the contract has been signed, but the transaction hasn't closed. Pending sales typically close within one or two months of signing.

To: regli who wrote (47802)	3/6/2006 2:59:45 PM
From: mishedlo	Respond to of 116555

Arizona Group pushing California-style property tax limits azstarnet.com Group pushing California-style property tax limits The Associated Press Tucson, Arizona \| Published: 03.03.2006 advertisementPHOENIX- A taxpayer's group fed up with the prospect of higher property taxes brought on by skyrocketing home values is collecting signatures for a ballot measure to bring California-style tax limits to Arizona. If the measure gets on the November ballot it would use property valuations from 2003 as the base for future tax bills. That would eliminate any tax increase from the higher home prices this year. The proposed law would limit taxes to 1 percent of the assessed valuation. "We're revolting against a tax system that is unfair, and we're going to fix that," said Marc Goldstone, a Bullhead City resident who is chairman of the Arizona Tax Revolt. The initiative drive is kicking off just as the property owners across the state receive new property valuations in the mail. More than 1.3 million valuation notices were sent out this week in Maricopa County, the first in two years. Western Arizona activists worked the Howard Jarvis Taxpayers Association in California to craft the initiative, borrowing much of the language of Proposition 13, approved by California voters in 1978. Goldstone is a former California resident who says he doesn't trust local governments to hold back their spending if more tax money is available. The new valuations will be used for new tax bills due in 18 months. Goldstone says he expects property taxes to rise as much as property values have. The ballot initiative would cap the combined tax rate for any property at 1 percent of its 2003 value. That puts taxes on a home valued at $150,000 three years ago at $1,500, regardless of the school district or city in which it was located. Tax rates now vary depending on the special district such as schools that have taxing authority. The initiative is similar to a proposed ballot item that state Sen. Ron Gould, R-Lake Havasu City, is promoting in the Legislature. Business groups pushing a property-tax cut in the Legislature are nervous about California-style limits coming to the state. "This would devastate local government," said Tim Lawless, president of the Arizona chapter of the National Association of Industrial and Office Properties. "It's not good public policy. You could have draconian impact fees for everything under the sun. Local governments will find a way to replace that money and perhaps in a more regressive way." The Arizona Chamber of Commerce and chapter of the National Federation of Independent Business also are skeptical.

To: regli who wrote (47802)	3/6/2006 3:24:18 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Van Eeden kitco.com ==================================================================== A fall in the value of the US$ by 30% will likely do nothing for the trade deficit. It would take more than that. It is far more likely to be cured by a dramatic drop in US spending than any fall in the US$. Nor is China or Japan likely to start selling US treasuries or US$ as he implies. Private foreign investors might but that is not a huge asset class. Mish

To: regli who wrote (47802)	3/6/2006 4:02:18 PM
From: mishedlo	Respond to of 116555

Posted on my Blog... I live in the Bay Area, and last week my jaw dropped when I saw what came to my house has junk mail: a direct mail advertisement from luxury condo builder Toll Brothers for distinctive townhouses in the South Bay. Has it come to this now? Noah 3.06.06 - 1:55 pm \| #

To: regli who wrote (47802)	3/6/2006 4:07:21 PM
From: mishedlo	Respond to of 116555

Forty years in the wilderness prudentbear.com

To: regli who wrote (47802)	3/6/2006 6:31:12 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Dust Bowls and Hurricanes globaleconomicanalysis.blogspot.com Mish

To: regli who wrote (47802)	3/6/2006 10:08:28 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Bush declares war on freedom of the press March 6, 2006 07:44 AM / The Rant . By DOUG THOMPSON Using many of the questionable surveillance and monitoring techniques that brought both questions and criticism to his administration, President George W. Bush has launched a war against reporters who write stories unfavorable to his actions and is planning to prosecute journalists to make examples of them in his "war on terrorism." Bush recently directed Attorney General Alberto Gonzales to use "whatever means at your disposal" to wiretap, follow, harass and investigate journalists who have published stories about the administration's illegal use of warrantless wiretaps, use of faulty intelligence and anything else he deems "detrimental to the war on terror." Reporters for The New York Times, which along with Capitol Hill Blue revealed use of the National Security Agency to monitor phone calls and emails of Americans, say FBI agents have interviewed them and criminal prosecutors at the Justice Department admit they are laying "the groundwork for a grand jury that could lead to criminal charges," CIA Director Porter Goss told Congress recently that "it is my aim and it is my hope that we will witness a grand jury investigation with reporters present being asked to reveal who is leaking this information. I believe the safety of this nation and the people of this country deserve nothing less." As part of the investigation, the Justice Department, Department of Homeland Security and the National Security Agency are wiretapping reporters' phones, following journalists on a daily basis, searching their homes and offices under a USA Patriot Act provision that allows "secret and undisclosed searches" and pouring over financial and travel records of hundreds of Washington-based reporters. Spokesmen for the Justice Department and Department of Homeland Security admit there are "ongoing investigations" regarding publication of stories "involving threats to national security" but will not reveal what those investigations include. In addition to using the USA Patriot Act to pry into the lives of journalists, the Justice Department has also dusted off a pre-World War I law to prosecute people who receive classified information, although the law was aimed at military personnel not civilians. "This is the first administration that I can remember, including Nixon's, that said we need to think about a law that would put journalists who print national security things up in front of grand juries and put them in jail if they don't reveal their sources," says David Gergen, who served as President Regan's director of communication and also worked in the Nixon and Ford White Houses. Political scientist George Harleigh, who worked in the Nixon administration, says such use of federal law enforcement authority was illegal when Nixon tried it and still so today. "We're talking about a basic violation of the Constitutional guarantee of a free press as well as a violation of the rights of privacy of American citizens," Harleigh says. "I had hoped we would have learned our lessons from the Nixon era. Sadly, it appears we have not." In recent weeks, the FBI has issued hundreds of "National Security Letters," directing employers, banks, credit card companies, libraries and other entities to turn over records on reporters. Under the USA Patriot Act, those who must turn over the records are also prohibited from revealing they have done so to the subject of the federal probes. "The significance of this cannot be overstated," says prominent New York litigator Glenn Greenwald. "In essence, while the President sits in the White House undisturbed after proudly announcing that he has been breaking the law and will continue to do so, his slavish political appointees at the Justice Department are using the mammoth law enforcement powers of the federal government to find and criminally prosecute those who brought this illegal conduct to light. "This flamboyant use of the forces of criminal prosecution to threaten whistle-blowers and intimidate journalists are nothing more than the naked tactics of street thugs and authoritarian juntas." Just how widespread, and uncontrolled, this latest government assault has become hit close to home last week when one of the FBI's National Security Letters arrived at the company that hosts the servers for this web site, Capitol Hill Blue. The letter demanded traffic data, payment records and other information about the web site along with information on me, the publisher. Now that's a problem. I own the company that hosts Capitol Hill Blue. So, in effect, the feds want me to turn over information on myself and not tell myself that I'm doing it. You'd think they'd know better. I turned the letter over to my lawyer and told him to send the following message to the feds: Fuck you. Strong letter to follow. capitolhillblue.com

To: regli who wrote (47802)	3/6/2006 11:55:48 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

UK retail sector continues to struggle; Feb sales below expectations - BRC Tuesday, March 7, 2006 12:16:34 AM afxpress.com LONDON (AFX) - The UK retail sector continued to struggle in the new year with sales in February rising only modestly after a disastrous January, a leading retailing lobby group said In its monthly survey, the British Retail Consortium said like-for-like sales, which strip out the impact of changes in floor space, climbed 0.6 pct from last February against expectations of a 1.0 pct improvement. Additionally, the rise in February comes on the back of a weak comparison with the same month in 2005, when sales actually registered a fall BRC said that in Feb, the spring/summer ranges of items had a slow start, with footfall down and consumers often still in a winter mind-set Clothing and footwear found some demand in the final week of the month but performances were far from strong. Food sales meanwhile, improved, helped by Valentine's day, after a flat January. "With consumer confidence still weak amid concerns about personal finances, shoppers remain wary of committing to larger housing-related purchases," the BRC said Kevin Hawkins, Director General of the BRC, said the survey underlines yet again the continuing squeeze on consumer spending "Contrary to the Bank of Englands expectations, there is no sign of an upturn. Reports of a recovery in the housing market have yet to work through to the big-ticket product categories, which have been depressed for the past 15 months," he added. Indeed, the data casts some doubt if the BoE's rather rosy predictions for consumer spending will be proven correct. If anything, the latest results will go some way to rekindle UK rate cut expectations. Over the past few weeks markets have been scaling back rate cut expectations after some strong economic indicators and hawkish rhetoric from the central bank The survey also showed that total sales in February rose 3.5 pct from a year ago compared with 3.4 pct in Jan The three-month trend rate of growth, meanwhile, weakened in February to 0.9 pct from 1.1 pct in January for like-for-like sales, but rose to 4.2 pct from 3.6 pct for total sales, reflecting the continued growth of retail space