The Golden Truth: The Housing Market Approaches A Cliff

Wednesday, November 27, 2013

The Housing Market Approaches A Cliff

Things always become obvious after the fact

- Nassim Taleb

I issued a "sell" on the new homebuilder stocks at the end of January (Dow Jones Home Construction Index basis - DJUSHB). Since then, the DJUSHB is down 18% and has been down as much as 26%. This is a remarkable call considering that in the same time period the S&P 500 is up 20%. During this same period, homebuilder company executives have been dumping their shares at a stunning pace.

I have been postulating that what has been promoted as a housing market recovery by the financial media, Wall Street and the Obama Government is really nothing more than a dead-cat bounce in a long term bear market that has been fueled by a couple trillion in taxpayer-backed Federal Reserve and Government stimulus programs.

Since the beginning of the year, I have written several articles explaining how and why the housing market has appeared to be in recovery when, in fact, both price and transaction volume has been artificially manufactured through the use of direct Fed money printing, Government implemented and tax-payer financed mortgage programs and outright bank accounting and operations fraud. As for the latter, while some of the banks have been prosecuted and/or engaged in what seems to be large settlements for business and accounting fraud, they have found other ways to exploit the numerous accounting and regulatory loopholes in order to continue their schemes. As my English major adviser in college used to say, "same old wine, new bottle."

At any rate, I published an article yesterday on Seeking Alpha which shows why the housing market "bounce" is now transforming quickly into a rapid decline. Keep in mind that when you read news headlines or hear reports on financial tv, they are using year over year comparisons in order to broadcast continued "gains." As I have writing about, in order to understand what's really going now, you need to look at the month-to-month sequential comparisons. On this basis, the housing bounce topped out in late spring and has been declining since June.

You can read my latest article here: The Housing Market: A Black Swan on the Horizon

What's most interesting about the sequential decline in almost every housing market metric is that this decline has been occurring in what should be the market's strongest seasonal period. If you are looking to sell your house and get the kind of prices that realtors are promoting, it is likely too late. If you want to sell your house, or have to, I would suggest getting it ready to be listed by mid-January and price it to sell, not to maximize profits.

Have a happy, healthy Thanksgiving and remember: enjoy what you can, as much as you can, while you still can.

4 comments:

Michael JacksonWednesday, 27 November, 2013
Your details analysis is always really good. Looks like several items from different points are going to gravitate to the center (housing, unemployment, weak retail sales and disposable income, China's gold buying and selling oil with their own currency instaed of US domination, etc.). The temp agencies here are hiring only up to Jan 1st then layoffs. Walmart starts its black friday on thanksgiving at 6PM. Remember when you had to be there 2-4am in the morning on friday, just hoping and waiting to get in at 5am? The media last year showed people at Best Buy camping outside the door from midnight onward with sleeping bags and portable TVs just to get in at 5am. They too are open thanksgiving at 6PM. Personally, I'm glad I stocked up on food instead of technology.

federal unemployment is set to expire 3 days after christmas, layoffs will be coming jan 1st, and obamacare then sets in.College students now have loans that they may never be able to pay off and probably will never own a home. Their future has been mortage off. So much for filling their heads with "Our generation can changed things and changed the world". Maybe on the virtual world of facebook or twitter.

So we are indeed reaching the cliff!
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AnonymousWednesday, 27 November, 2013
Off the topic. Do you monitor the price movements on the Shanghai Futures Exchange? There is some sort of backwardation in silver on the SHFE. Just look at the settlement prices of Ag1312 and Ag 1401 since last week.
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AnonymousFriday, 29 November, 2013
The war on democracy
How corporations and spy agencies use "security" to defend profiteering and crush activism

A stunning new report compiles extensive evidence showing how some of the world's largest corporations have partnered with private intelligence firms and government intelligence agencies to spy on activist and nonprofit groups. Environmental activism is a prominent though not exclusive focus of these activities.

The report by the Center for Corporate Policy (CCP) in Washington DC titled Spooky Business: Corporate Espionage against Nonprofit Organizations draws on a wide range of public record evidence, including lawsuits and journalistic investigations. It paints a disturbing picture of a global corporate espionage programme that is out of control, with possibly as much as one in four activists being private spies.
The report argues that a key precondition for corporate espionage is that the nonprofit in question:

"... impairs or at least threatens a company's assets or image sufficiently."

Referring to the work of US investigative reporter Jeremy Scahill, the report points out that the notorious defence contractor Blackwater, later renamed XE Services and now Academi, had sought to become "the intel arm" of Monsanto, the agricultural and biotechnology corporation associated with genetically modified foods. Blackwater was paid to "provide operatives to infiltrate activist groups organizing against the multinational biotech firm."

The FBI's involvement in corporate espionage has been institutionalised through 'InfraGard', "a little-known partnership between private industry, the FBI and the Department of Homeland Security." The partnership involves the participation of "more than 23,000 representatives of private industry," including 350 of the Fortune 500 companies.

But it's not just the FBI. According to the new report, "active-duty CIA operatives are allowed to sell their expertise to the highest bidder", a policy that gives "financial firms and hedge funds access to the nation's top-level intelligence talent. Little is known about the CIA's moonlighting policy, or which corporations have hired current CIA operatives."

http://www.theguardian.com/environment/earth-insight/2013/nov/28/war-on-democracy-corporations-spy-profit-activism?
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muliaFriday, 29 November, 2013
A stunning new report compiles extensive evidence showing how some of the world's largest corporations have partnered with private intelligence firms and government investasi logam mulia
intelligence agencies to spy on activist and nonprofit groups. Environmental activism is a prominent though not exclusive focus of these activities. still investment is something you should avoid especially when you follow the crowds :(
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.