Bottom Callers Run Rampant
Last week, I questioned the conventional wisdom which claimed that there was Not Enough Bullish Sentiment?
It seemed that there were plenty of Bulls who looked at the 15% pullback in the S&P500 as an ordinary dip-buying opportunity.
In a moderate recession, an 85 day, 15% drop would likely be insufficient to reflect the changes in both growth and earnings -- much less a deeper, more protracted recession.
The counter-argument is that the Fed has flooded so much cash onto the system, the recession no longer would matters.
Looking from a sentiment perspective, its hard to say that the we've seen the sort of fear that typically accompanies a lasting market bottom. There's still plenty of speculative juice around. Consider these headlines from over weekend:
• Barron's: Are You Ready for Dow 20,000 (this year!)
• Vince Farrell on We've Seen Our Bottom
• Barron's cover story: Hitting Bottom? Several Banks and Brokerages Are Ready to Pop Up for Air
• Jim Cramer on An End to the Bear Market? and why this is A Turning Point
• Insiders, at Least, See Reason to Smile
• Just about anything at Forbes.
The closest thing to an admonition of caution was Barron's Technical columnist, Michael Kahn, who called this The Market Bottom That Wasn't.
That doesn't mean we can't see a decent bounce here -- there's lots of liquidity, and as we saw last week, the market stopped going down on bad news. That's usually good for a 5-10-15% counter trend rally. We saw that begin last week.
But Dow 20,000 this year? I highly doubt it . . .
February Existing Home Sales Fell 23.8%
Today's fictional headline, via The Onion, National Association of Realtors: "Sales of existing homes increased in February and remain within a fairly stable range."
Why is this fictional? Changes from January to February are measuring seasonal differences, not actual improvements. January is one of the slowest months of the year for home sales. (We would never report retail sales from December to January this way; We always use year over year data).
What dos that show Year over year changes showed that single family home sales were 23.8% below February 2007 levels.
The national median sales price was also a big surprise, freefalling down 8.2%.
Single-family home sales decreased 22.9%, while the median existing single-family home price was $193,900 in February, down 8.7% from year ago prices.
The best news in the release was the 3% decrease in total housing inventory. At the end of February, there were 4.03 million homes for sale -- 9.96-month supply.
(NOTE: The original NAR report was correct)
graphic courtesy of Barron's Econoday
UPDATE: March 24, 2008, 11:27am
I think both the WSJ and Bloomberg got this wrong:
-Home Resales Rose 2.9% Last Month As Median Price Dropped 8.2%
Source:
Existing Home Sales Rise In February
Changes in US Withholding Taxes
Matt Trivisonno, a software developer in Miami Beach who follows the market, has come up with a neat way to track changes in the Federal Government's witholding tax receipts.
After being rangebound for the prior 4 years, the year-over-year growth in withholding began rolling over in Q4 of 2007 -- a possible date marking the beginning of the current recession:
click thru for larger graph
Source: Matt Trivisonno's Blog
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Note that withholding comes directly from Wages and Income, and would likely precede major shifts in consumer spending or credit.
See also:
In Debt Crisis, Uncle Sam Is Piling It On
Mark Gongloff
WSJ, March 24, 2008; Page C1
Easter Linkfest
Okay, its Easter, and I know many readers have other things to do -- but since this was such a topsy turvy week, with so much going on, I thought we needed to do at least post an abbreviated linkfest:
The gains were due primarily in belief that the Fed has the credit crisis under control, as interest rates came down, and commodities prices finally cracked.
Indeed, the Commodities were at the back of the pack this month, free-falling 8.6%, as Gold tumbled 7.9%, and Oil plummeted 6.3%.
Somewhat surprisingly, the European and Emerging market stocks got hit also, falling 2.4 and 4.3% respectively. In the US, the gainers were Nasdaq (+2.1%), Russell2000 (+2.8%), S&P500 (+3.2%), and Dow Industrials (+3.4%). The big winner were REIT stocks, up 7.9%.
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In the coming week, we Existing Home Sales on Monday, followed by Durable Goods Orders and New Home Sales on Wednesday. Thursday brings the final Q4 2007 GDP, which now seems like it was years ago. On Friday, we get Personal Income and Outlays, and Consumer Sentiment.
US Vacancy Rates by Metropolitan Areas
Nice bit of info porn via the WSJ, covering the official Census Bureau 2007 vacancy rate.
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click thru for interactive map
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There's also several audio interviews with economists and professors who cover this subject . . .
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