Wednesday, November 18, 2009

'Safe as Houses!'

Greetings good citizen,

I’ll spare you the report of how the only economic indicator we have performed today because if you aren’t rich, it doesn’t matter.

Although how the market performs influences which stories I select. When I logged on this morning the markets were down, not a lot, but, as it turns out, they stayed down all damn day.

Naturally, I look for a story (headline) that might contain the answer for why the market is performing the way it is. In that respect, you really have to hand it to the MSM. They aren’t very good at reporting the truth but damn it, you can’t fault their readiness to provide simple, speedy (even if they’re dead wrong) explanations.

Sadly good citizen, I’ve charged off the reservation and provided you with the wrong first impression of tonight’s first offering when tonight’s second offering contains the explanation (regardless of how implausible) for today’s market performance…

US Home Building Unexpectedly Slumps in October

Published: November 18, 2009

New home construction slowed unexpectedly in October to the lowest level in six months, the Commerce Department said Wednesday, resurrecting fears that the housing market may be slow to recover. [Um, Jesus, what’s so ‘surprising’ about this? Over 90% of the country is headed into winter, what the hell do they expect? Worse, it’s not like we ‘need’ the houses!]

A separate report showed consumer prices inched upward in October, but not enough to make inflation a concern even as the dollar weakens and interest rates remain at historic lows. [ya know, ‘interest rates’ don’t have anything to do with inflation yet our pal ‘Ben-Ber’ keeps pointing to low interest rates as the reason he’s confident we won’t experience runaway inflation…no, it’s not ‘interest rates’ that cause inflation, it’s ‘devaluation’. As your money becomes increasingly worthless, you have to print more to buy less shit and viola! We have inflation!]

The data on home construction showed a decline in the rate of single- and multiple-family homebuilding, contributing to an overall decrease of 10.6 percent in housing starts from September. In total, construction was at a seasonally adjusted annual rate of 529,000 housing units in October, falling short of the 590,000 predicted by analysts. Building permits, an indicator of future construction, declined as well, to an annual rate of 552,000 from 575,000, also falling short of forecasts. [Predicted by ‘analysts’…the fuckers are forever wrong so the only ones ‘surprised’ by their missed predictions are the freaking clueless media people!]

Apartment construction slowed to a historic low, dipping to a seasonally adjusted annual rate of 53,000 in October. Analysts attributed the decrease to the reluctance of banks to finance large construction projects and lackluster demand for rentals as vacancies remained abundant. [Stop right there good citizen…this is another seriously ‘bad’ indicator that nobody is paying attention to…where the fuck are all of the people who are losing their homes going if they aren’t renting apartments? Some of them, not many and certainly not most, go ‘home’. If not to their parents house then to a sibling’s residence…but isn’t not having enough money/credit/’fill in the blank’ to rent a stinking apartment make matters that much worse?]

Part of the overall decline in housing construction might be explained by the uncertainty in October over whether Congress would extend a tax credit for first-time home buyers. Earlier this month, lawmakers voted to extend the credit through April, but builders may have been reluctant to begin construction in October without assurance that homes would be bought. [As many besides myself have pointed out, using taxpayer funds to ‘subsidize’ the purchase of a new home (especially when those homes are still at inflated prices) doesn’t help anyone but the bankers]

The revival of the housing market is considered crucial to reviving the economy. Construction adds jobs to the economy, and once a home is sold, consumers typically go on spending sprees as they stock up on furnishings like televisions, refrigerators and sofas. [Um, missing from this cozy little tableau is the ‘true’ value of the property. Home situated in present or future ‘economic deserts’ have no chance of being sold for a profit no matter how long you ‘hold on’ to them. Until our economy is straightened out, buying a home is an exercise in futility…]

“These figures can be pretty volatile from month to month, so it may just be a blip,” Paul Ashworth, senior United States economist at Capital Economics, wrote in a research note on Wednesday. “Nevertheless, taken at face value it suggests homebuilders are still uncertain about the sustainability of the rebound in home sales.” [For pretty much the same reasons I lay out above.]

Celia Chen, senior director at Moody’s, said demand for homes would likely remain weak into 2010. [But what does Celia Chen know? Nothing! What you can count on is come 2010 and housing demand is still in the doldrums, you know Celia will revise her prediction into 2011 or 2012…]

“The housing market is still very fragile,” she said. “It seems that the market has bottomed in terms of sales and starts, but that stability can be easily broken, even if affordability is very high.” [Um, affordability is ‘relative’. People who can easily afford an expensive home don’t hesitate to purchase two or three, but those people are rare (and the ‘utility’ of having/maintaining more than two homes is what prevents people from ‘accumulating’ them by the dozen. If you have that kind of money, you usually don’t have the time to ‘make use’ of more than two or three ‘bases of operation’.]

The Labor Department’s report on consumer prices showed the Consumer Price Index climbed 0.3 percent, slightly above analysts’ estimates of 0.2 percent. The index measures the changes in the cost of a bundle of goods for consumers — everything from cooking oil to airplane tickets to medical care. [Naturally the big problem with CPI is it ‘ignores’ food & fuel, rendering its ‘usefulness’ as a measuring tool moot.]

The increases came because of rising energy and motor vehicle costs, the report said. When the government excluded the cost of food and energy, which can be volatile, prices rose 0.2 percent. [Two hundredths of a percent isn’t much but it is well known that the current method of computing CPI grossly understates the real rate of inflation…]

The prices of cars and trucks showed steep increases. Analysts said that could be a side effect of the government’s popular cash-for-clunkers program, which depleted the supply of both cheaper 2009 models and used vehicles, driving up prices. [Um, you don’t suppose the need to pay back the government subsidies has influenced the price of US assembled/sold vehicles?]

The small increase in consumer prices signaled that inflationary pressures, by and large, appear to be in check, restrained by the nation’s high unemployment rate and significant unused factory capacity. On Tuesday, a report on wholesale prices showed similar results, though there were signs that higher prices might be on the horizon. [I’ve noticed this low inflation ‘meme is getting a lot of play recently, especially in light of the fact that the dollar is plummeting relative to other ‘world currencies’. The dollar is sinking like a rock and it will soon take more of them to purchase the same basket of goods…a basket of goods that will be getting lighter as ‘food insecurity’ becomes more severe.]

“Effectively, this gives the Federal Reserve a checkered flag to keep rates exceptionally low for an extended period of time,” said Brian Bethune, chief United States financial economist for IHS Global Insight.

Um, since ‘A’ leads to ‘B’, food insecurity will lead to other kinds of insecurity as the tempo of crime accelerates to plug the gaps left by the slowdown in ‘the productive economy’.

Worse good citizen, we’ve been here before. It wasn’t that long ago although people under fifty might have a hard time remembering what it was like back in the Seventies. Anyone who remembers the premise behind the ‘Death Wish’ movies knows they were ‘reality based’. (Which is a bit misleading, We aren’t talking a real incident but the situation the movie described was what you’d really experience if you ventured alone, unarmed in the dark places of the ‘concrete jungle’)

Not only was ‘mugging’ a commonplace event that could strike anywhere, but it also wasn’t unusual for muggers to murder their victims.

Strangely, many of the muggings were blamed on welfare recipients, not something that was actually proven but you know how politicians are…they don’t want to solve a problem as much as they want to ‘appear’ to be doing something about it. It’s an appeasement thing politicians love to embrace.

Anyway, they finally got the muggers off the streets by turning them into cops…but that’s another story.

So we arrive at tonight’s> second offering which, as promised, speaks directly to today’s lousy market performance.

Stocks Off to Sluggish Start on Wall Street

Published: November 18, 2009

Stocks were lower Wednesday in early trading on Wall Street after a report showed housing starts dropped unexpectedly in October.

The Commerce Department said construction of new homes and apartments fell 10.6 percent in October to a seasonally adjusted annual rate of 529,000 units. Economists forecast a rate of 590,000.

A report on inflation showed prices at the retail level rose 0.3 percent last month, slightly ahead of the 0.2 percent economists’ expected.

The fall in the housing starts could stoke concerns that the economic recovery in the world’s largest economy will not be as strong as many in the markets have been predicting. Stock markets have rallied strongly since March as investors reined in their economic doomsday expectations partly because of a recovery in the property market. [Um, notice they are still talking up how the US is the ‘world’s largest economy’…what are they going to say when it isn’t anymore? I’d say it is already factually untrue to label the US as the world’s largest economy although US multi-national companies are among the world’s strongest, the question is how much the US is involved in making them strong…I’d say not so much.]

The Dow Jones industrial average was down 16.86, or 0.2 percent, at 10,420.56. The Standard & Poor’s 500-stock index was down 0.88, or 0.1 percent, at 1,109.44, while the Nasdaq composite index was down 5.17, or 0.2 percent, at 2,198.61. [While the ‘stupidity index’ didn’t finish in positive territory, it did close higher than these pre-noon figures indicate.]

European stocks were higher.

In Europe, the FTSE 100 index of leading British shares was up 15.43 points, or 0.3 percent, at 5,361.36 while Germany’s DAX rose 40.30 points, or 0.7 percent, at 5,818.73. The CAC-40 in France was 28.75 points, or 0.8 percent, higher at 3,857.81.

The dollar mostly fell against other major currencies, while gold prices rose, touching a new record high. Gold rose $8.10 to $1,147.50 an ounce, after rising as high as $1,151.00 earlier in the day.

Traders are keeping a close eye on the dollar, which has a major impact on the movement in commodity and energy price stocks, as well as any suggestions that borrowing costs will be rising sooner than anticipated.

The dollar won a brief respite over the last couple of days after the Federal Reserve chairman, Ben S. Bernanke, and the European Central Bank president, Jean-Claude Trichet, seemingly tried to talk up the United States currency, which has slid to multiyear lows against the yen and to near 15-month lows against the euro.

Some of the gains made in the early part of the week were lost Wednesday as the euro recovered 0.4 percent to $1.4934 and the dollar fell 0.1 percent to 89.18 yen.

“The dollar downtrend remains intact despite the increased volatility seen over the past week,” said Hans Redeker, global head of foreign exchange strategy at BNP Paribas.Earlier, Japan and Hong Kong led the Asia’s declines, with Tokyo’s Nikkei 225 stock average losing 53.13 points, or 0.6 percent, to 9,676.80 and Hong Kong’s Hang Seng shedding 73.82, or 0.3 percent, to 22,840.33.

Markets in Indonesia, Singapore and Thailand also fell.

Oil prices rose further, closing in on $80 barrel after an unexpected drop in U.S. crude supplies suggested demand could be improving. Benchmark crude for December delivery was up 48 cents to $79.62 a barrel in electronic trading on the New York Mercantile Exchange.

Dunno why the lying bastards bought up oil prices, which remain stalled around $80 a barrel, where they’ve been for the past two months.

The last time the Dow made it to the 10,400 level it ‘masturbated’ in this range for close to a year before (inexplicably) bounding higher…talk about funky little tidbits that ‘stick in your head’.

Hard to say what’s more frightening, the widespread ‘dis-information’ being spouted about the causes of inflation or the fact that those in charge of ‘repairing’ the economy are the ones spreading these fairy tales!

Hell, stocks are going up as the dollar dives! In fact, the dollar has lost what, 18% over the past few weeks alone? We have absolutely no clue as to why this is happening (now instead of months ago) but we do know nothing is being done to reverse the slide…which isn’t very surprising, considering who is in charge.

Left unanswered is whether or not you will ‘eventually’ need a wheelbarrow full of cash to purchase a loaf of bread and it is my opinion that you will, regardless of what the pundits think.

Thanks for letting me inside your head,


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