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

To: mishedlo who wrote (55171)	8/22/2006 12:34:25 AM
From: RealMuLan	Respond to of 116555

Yeah, plenty of fund managers are bearish, Message 22737138 but how come the index holds up so well?<g> Maybe funds are busy with distribution, so do not want index drop too much before they are done<g>

To: mishedlo who wrote (55171)	8/22/2006 12:49:48 AM
From: regli	Read Replies (1) \| Respond to of 116555

Here is a man with a lot of courage and lots of confidence in gold's performance till the end of the year! jsmineset.com Posted On: Monday, August 21, 2006, 5:20:00 PM EST A Free Put From Jim Author: Jim Sinclair “Anyone buying on a scale down with a limit up to 200 one ounce gold coins (approximately$126,000USD) starting from this evening’s gold price close, I am offering a FREE PUT at your average in price for the balance of 2006, starting from the last trading day of September 2006. This is for 10% of your intended position for each ten dollar drop, should it occur, evenly spread between now and the last day of September.” -Jim Sinclair

To: mishedlo who wrote (55171)	8/22/2006 4:05:29 AM
From: Chispas	Read Replies (1) \| Respond to of 116555

This week has been terrible for the real estate market. - Clément Gignac, chief economist and strategist, and Eric Dubé, an economist, noted that U.S. housing starts are already down 20.7 per cent from their January, 2006 peak "and some leading indicators are suggesting more declines are to be expected in the months to come," they warned in a recent economic comment. They also noted that the National Association of Home Builders reported this week that traffic of prospective buyers had tumbled to its lowest level since 1991, a recession year. Furthermore, U.S. building permits have plummeted 22 per cent from their peak last September. A decrease in supply can be a signal of several problems. There could be a glut of product on the market. This is part of the reason, as US inventory levels are very high. A decrease in supply can also be a sign of little to no confidence in the market's short-term prospects. Considering most major housing companies have lowered their earnings forecasts at least once this year - and several times for a few companies - this decrease in supply is probably also a sign of concern for the market's short and medium term prospects. "These indicators combined with the skyrocketing inventory of new homes for sales are more consistent with a hard landing, rather than a soft landing scenario for the U.S. real estate sector," the economists said. That makes it important to monitor the impact of the weakening real estate market on house prices and on American consumers' wealth, they said. "While baby boomers are likely to be forced to scale down their irrational exuberance about home prices appreciation, they should soon feel the need to restore their savings rate," they added, and that could set the stage for a prolonged period of sub-par gross domestic product growth around 2 to 2.5 per cent. This economist is arguing that US consumers have used housing equity as a proxy for savings. If the real estate market no longer looks attractive as a viable alternative for savings, then people will withdraw their money from the housing market and instead start saving again. According to the Bureau of Economic Analysis, the US savings rate has been negative for the last year. Three other studies have confirmed the low US savings rate: The FDIC, Boston College and the Employee Benefit Research Group. Because house prices have appreciated rapidly over the last few years, consumers have used this appreciation as their major savings source. As consumers see house price appreciation slow, they will withdraw from the housing market and move their money into more traditional savings vehicles. If this happens, the housing market will lose a great deal of money, possibly sending prices lower. Also this week, the Wall Street Journal published a chart showing the percentage of listed homes in various markets across the U.S. whose prices had been reduced as of Aug. 2. Boston topped the list; 46.4 per cent of the houses listed for sale in that area have had their prices cut. Sacramento, Orange County and San Diego, all in California were the next three on the list. "That we are seeing price quotes coming down in areas like Baltimore and Minneapolis is a sign that, contrary to popular opinion, the mania in residential real estate this cycle was more national than local in scope," Mr. Rosenberg said. Inventory levels for new and existing homes are incredibly high. Most press stories covering real estate have started to call the housing market a buyer's market. As bargaining power in a market shifts, sellers are forced to accommodate buyers which means a drop in prices. Other economists are also sounding the alarm about the U.S. housing market. David Rosenberg, North American economist at Merrill Lynch & Co. Inc., referred to data from the National Association of Realtors in his morning market memo earlier this week. It showed that 26 metropolitan areas in the U.S. recorded year-over-year price declines in the second quarter. Moreover, he pointed out that "an increasing volume of homes are being put up for auction - one sign of an increasingly distressed market." Prices decline in a falling market. That's simple supply and demand at work. As this economist notes, price declines are occurring across the country, not just in one market. That's not good. So, we have the following. Incredibly high inventory levels A decrease in supply, probably indicating a supply glut and decreasing confidence in the market. Declining prices occurring across several geographic areas. This is not looking good. ....................... (This is from a blog on the PHILIDELPHIA ENQUIRER, but I can't get the link for some reason)