"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'
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Summary of Key Monetary Policy Variables (CANADA)
Let's check in with Stats Can and see how the inflation-deflation picture is shaping up (red arrows since 2008). SOURCE
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Rogue Wave Turns Choppy
There are lots of bullish commentaries about how U.S. housing is leading a "recovery" out of the doom and gloom, But the housing charts tell a different story.
The last 4 years on the Case Shiller Home Index PRICE chart shows a lot of chop in a narrow channel when compared to the previous 10 year "Eiffel Tower" rogue wave, set up by interest rate price fixing and abandonment of appraisal fundamentals.
The Federal Reserve (FRED) chart of New Home SALES shows the same chop in a tight range but at new 50+ year lows.
The current Dow Jones Housing Index (ITB) and national home builder D.R. Horton (DHI) are selling off today carving out new 2 week lows as cash buyers take profit. (Lookup ITB & DHI at stockcharts.com)
Forecast: Strong headwinds, limited visibility with choppy seas ahead.
Yahoo! Interview of David Stockman Feb 4, 2013
David Stockman the former director of the Office of Management and Budget in the Reagan Administration on the topic of whether the current "U.S. housing recovery" is one.
According to David Stockman:
Bloomberg reports that: Blackstone (BX) has spent more that $2.5 billion on 16,000 homes to manage as rentals. It’s now the country’s largest investor in single-family homes to manage as rentals, with properties in nine markets. And Blackstone is joined by others like Colony Capital LLC and Two Harbors Investment Corp. (SBY) in trying to turn this market into a new institutional asset class.
Stockman argues the problem in housing is the two forces needed for a recovery, first-time buyers and trade-up buyers, are missing. With the combination of 7.9% unemployment and staggering student loan debt, he doesn't see a young generation of new home buyers coming into the market. And with baby boomers heading for retirement with less than adequate savings, he thinks they’ll be trading down with their homes, not up.
As for the "American Dream" of home ownership, Stockman argues the past model where the government was trying to get to 69% home ownership was a huge policy mistake that led to no-down payment loans, liars loans, and a degradation of lending standards. He says the government should have no dog in the hunt when it comes to ownership versus renting. “Let the market decide,” Stockman says.
February 4, 2013 Lauren Lyster of Yahoo! Daily Ticker Interviews David Stockman: Full text and 4.59 minute video interview here.
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense