Tuesday, August 24, 2010

FLASH

Really Bad Number

Released on 8/24/2010 10:00:00 AM For Jul, 2010
Consensus Consensus Range Actual
Existing Home Sales - Level - SAAR 4.650 M 3.960 M to 5.200 M 3.83 M
Existing Home Sales - M/M Change -27.2 %
Existing Home Sales - Yr/Yr Change -25.5 %

Highlights
It doesn't get worse than this. Existing home sales fell 27.2 percent in July to a 3.83 million annual rate for the lowest level in 15 years. The 3.83 million rate compares with expectations for 4.65 million. Supply at the current sales rate ballooned from June's already swollen 8.9 months to 12.5 months for the worst reading in 11 years.

Yet prices showed little effect, down only 0.2 percent to a median $182,600 and reflecting relative strength for higher priced homes. The year-on-year median price edged lower but was still positive at 0.7 percent. Yet "was" is the word to note as extremely heavy supply, together with heavy foreclosures and distressed sales, point squarely at price pressures ahead.

There's nothing to explain away July's collapse. Single-family and condo sales show nearly the same deterioration. Regional data show no substantial variation. Stocks are moving lower and money is moving to safety in immediate reaction to this report, one that marks a new bottom for the run of disappointing economic data. The street was looking for an improvement in tomorrow's new home sales report but that's definitely now an outdated consensus.

Dan Perkins

Wednesday, August 11, 2010

FLASH


Is Ben The Alpha Male in the Wolf Pack?
  
On June 29 I warned of the power of the Wolf Pack and its impact on the markets. I suggested that I believed that they would come out in mid summer and feed again. On July 17 I wrote about the Wolf Pack feeding again and suggested to my readers that if we didn’t close above the 1110 level on the S&P 500 then the downside could be 850 or so on the S&P 500.  If we did close above the 1110 level then it was most likely that the low would be 950 to 975. We closed about 15 points above 1110 so I’m not sure if that 1125 level is good enough to hold the 950 low. 

Over the last week we have tried three times to break above the 1127 level on the S&P 500 and each time we fell back. Yesterday the Federal Reserve Open Market Committee told the market their view on the economy and in essence they said, O Sh!! We are in trouble; The markets reacted with a significant sell off in stocks around the world on Wednesday. The demand for US Treasuries, the flight to quality, drove the yield on the 10-year to as low as 2.62% inter day.

I expect that the summer rally is over and we are in the correction I have been looking for. I do not expect panic selling, but a movement down and up into mid September when I think we will hit the 950 to 975 level. We will have to watch and see what happens over the next two weeks to see if the 950 level can hold,  

Dan Perkins

Monday, August 9, 2010

Just how bad are the problems is California



El Centro, California
Population: 41,241

Lose your job in El Centro and it may be quite some time before you find another one. One in four people here are out of work and the city holds the not-so distinguished honor of having the highest unemployment rate -- 27.5% -- in the country (close behind is Yuma, Ariz., with 27.2% unemployment).

The desert city, which is located in Imperial County just across the border from Mexicali, has a jobless rate triple the national average of 9.5% thanks to the seasonal fluctuations of field laborers. Field work is the county's third-largest employment sector after government, transportation and utilities, according to AOL News.

"Its location across the border from a much larger Mexican city means that there is a large floating labor force," Jim Gerber, an economics professor and director of the international business program at San Diego State University, told AOL News. "The data for Imperial County is skewed by this, such that the layoffs and out-of-work laborers are not actually counted correctly."

Even with the ebb and flow of its working population, things are still pretty bleak in El Centro. Last year, the city's cemetery went into foreclosure. 


I thought the above was very insightful as to the problems not only in California but other parts of the country. Go to the following link to see the rest of the top ten worst places to live in the US. 

http://www.walletpop.com/blog/2010/08/05/10-worst-places-to-live/?icid=main|main|dl6|link1|http%3A%2F%2Fwww.walletpop.com%2Fblog%2F2010%2F08%2F05%2F10-worst-places-to-live%2F

Dan Perkins

Friday, August 6, 2010

FLASH

Friday August 6, 2010

Futures on the CME Group Inc. exchange showed a 32 percent chance the Fed will raise its target rate for overnight lending between banks at least a quarter-percentage point by the August 2011 meeting, compared with 49 percent odds a week ago.

Tuesday, August 3, 2010

Time Running Out?



This Friday the Federal Government will report the unemployment numbers for July that may have the most significant impact on the fall election for the Democrats. Congress is about to go on summer recess for most of August and Labor Day is the official kickoff of the fall mid-term elections.
 
Through a quirk in the calendar we will have a report this Friday and then again on September 3 and the last one before the election will be Friday October 1.  So if the campaign officially starts on Labor Day we will only have one jobs report before the November election.
 
As the Congressmen and women and Senators who are up for re-election go home this month they will hear, I believe, two clear messages from the electorate. First, it’s about jobs. People want to work and extending unemployment benefits helps people survive, but jobs make families prosper. The second issue is Federal spending. It is out of control. By the time the mid term elections are over the Obama administration will have doubled the national debt that all of the past administrations created.  If you really stop and think about that statement it is very scary. 
 
All the debt accumulated in the first 232 years of this country was doubled in just 2 years. With all of that spending we still have unemployment at 9.6% and no real job creations. The administration is playing games with the jobs numbers by talking about the number of jobs saved. No economic model supports the concept of jobs saved. We now have a new number called private sector jobs. The forecast for Friday is for a decline of 70,000 non-farm jobs but an increase of 100,000 private sector jobs. If these numbers miss to the downside look for a sell off in the markets.
 
People just want the facts. They can look around their neighborhoods and see their neighbors who are out of work, the number of houses for sale and they know somebody who has lost not only their job but also their home.
 
People want to know what their elected officials are going to do to get people back to work and to  help people save their homes and have a secure life for their families. People do not want to be dependent on the government, but the longer we go with a jobless recovery the more people will become dependent on the government.  These are the issues that the Congressmen and women and Senators will be asked to address as they travel throughout their states  and campaign for reelection in August, September, and October.
 
I expect you will hear questions from voters like these on the campaign trail:
 
I want to work, but I can’t find a job. How are you going to make jobs available?
 
Business has trillions of dollars and they are not spending it to create jobs. What are you going to do to give business and incentive to spend and create jobs?
 
If we can’t pay our bills how can the government pay its bills with the deficit so high?
 
How can we afford the new health care program?
 
How will you make my social security secure?
 
I’m sure you can think of many other questions that you would like to ask your Congressperson or Senator if he or she is up for reelection. Why not put your thoughts down in an e-mail or a note and sent it to their campaign and see if they respond and if they do what do they say.
 
If the country was in the mood for change two years ago, then I think it may well be in for another change this November. The issues in the election I think are very basic, it’s about jobs and the economy. There are other issues, the environment, social security, spending, but these and all the rest pale in importance when compared with the other two.
 
For the first time since the recent presidential election we have all the congress and one third of the senate up for election and all the candidates will be out talking and listening to voters over the next three months.
 
What will be the outcome of the election? I think if we do not see any improvement in the unemployment numbers over the next three reports then in October the poling data may show a significant shift in the control of both houses of congress.  As we see news reports of the mood on the campaign trail then the angrier the voters are the greater the defeat for the Democrats. Will the Democrats lose control of the one or both of the houses of congress? I think it is more likely that we may well see similar election results that we saw in the Clinton midterm when the Republicans took control.
 
The American people gave the Democrats the White House and both houses of Congress in the last election because they felt they wanted change. I do not think the change they got was the change they wanted and I doubt the democrats will retain all that control on November 2.