Posts under ‘The Markets’

The FHFA or Federal Housing Finance Agency reported that home prices fell 1.6% in the 2nd quarter from a year ago, as foreclosures became an increasing percentage of available inventory. Following a record 269,962 2nd quarter foreclosures.

I bring this up because next week features the existing home sales report. A report that is highly likely to be quite shocking as inventory spikes and prices fall absent the tax credit.

“If you don’t believe there’s going to be a double dip, it’s because the first recession never ended. If there is going to be a double dip, the odds are certainly higher than 50-50.”

How does it go, “no justice, no peace”. The demonstration in Watsonville earlier this week at the Chase bank is an expression of the public’s frustration with a lack of justice as the banksters collect their bonuses while John and Jane Doe collects food stamps, unemployment and foreclosure notices.

The June New Home Sales data is the worst figure for that month on record, while May set the new all time record low. Further the initially reported gains of +27 and +15% for March and April, the peak tax credit buying months have been revised down to just +11% and + 10% respectively.

Current forward operating earnings estimates assume profit margins for the S&P 500 companies that are nearly 50% above their long-term historical norms.

Found Mr. Fleckenstein voicing the opinion that S&P earnings and therefore valuations couldn’t be trusted because the financial sector is essentially making up the numbers as they go along.

Following systemic banking crises, the duration of housing price declines has averaged roughly six years, while the downturn in equity prices has averaged about 3.4 years. On average, unemployment rises for almost 5 years.

Nationally 1st time homebuyer traffic plunged 44%, investor traffic fell 9% and existing homeowner traffic slipped 17.5%. Here in California despite the State spending money it doesn’t have to support real estate prices with its own tax credit 1st time homebuyer traffic fell 22%.

Sharply wider credit spreads were a hall mark of the 2008 financial panic and it could well be that the Greek crisis turns out to be the canary in the coal mine.