Stocks moved sharply higher in early trade on better than expected economic data. DataQuik reports that mortgage defaults fell to a 3-year low during the 2nd quarter in California, following 5 consecutive declines, NOD filings slipped to 70,051 during the April to June period.
The June Existing Home Sales Report fell less than expected to 5.37 million units annualized, 8.3% higher than a year ago and a second year of higher June sales. Months inventory increased 4.7% from last year to 8.9, a 3rd consecutive gain it is also the largest jump since early 2008. The Median Price advanced to $183,700, which is 1% higher than last year. Certainly better than expectations though I wouldn’t characterize the report as good because the fundamentals of real estate remain terrible and the data is much more likely to get worse before it gets better.
Ben Bernanke’s Congressional testimony contained some notable points. He stated that most businesses weren’t spending on capital equipment because they have too much capacity, semi-conductors being the one real exception. Small businesses report their number one problem as a lack of customers not a lack of credit. A statement that underscores the fallacy of the need to make credit more available and hence bail out the banks as the problem is too much existing debt not the ability to obtain more debt. Which again is classic credit bust. Homebuilders are on track to deliver the fewest new housing units on record with data going back to 1959. This will help clear the excess housing supply, which currently stands at about 3-years worth.
Mr. Bernanke’s statement that the economic outlook is unusually uncertain is quite the contrast from his previously “certain” statements that there would not be a recession, housing wasn’t a bubble, unemployment wouldn’t break 8.5% and short-term rates wouldn’t fall below 2% and that deflation wouldn’t happen here. I laud the chairman’s candor in admitting that he really has no idea what happens next. He was quick however to point out that the Fed stands ready to act if the economy falters.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
