“Told you so!” – and way back in December when I said that I’d expect a decline for the first couple of months of the year, but then a move up from there through early Summer of ‘09 and with the gains in the markets the past couple of days – not to mention some nice green on the futures this morning -100 points up or so — – there’s a good chance that the longer-term outlook will turn out to be largely correct. Not that this is investment advice – it ain’t – and not that it’s been without stress.
For example a couple of weeks back I told subscribers to Peoplenomics that the area where we actually break through what had been downside trend channels would turn me into a ‘cowardly bull’. But look quick, Ma – I’m over that little bit of fear. Most years, the largest gains and safest bets are to go long after Easter and then take off your winnings in mid to late May. I don’t make large bets against the House.
It’s also not surprising to see lots of news items popping up that support the bullish case. Besides the Fed meeting – a non-event except that it wasn’t are outright gloomy as past outlooks – there have also been a number of stories out that argue there’s actually something of a bounce in real estate markets shaping up. Take for example this PRWeb news release that crossed my desk this morning:
“Local real estate experts in five resort and residential markets – Myrtle Beach, Las Vegas, Greenville, Los Angeles and Sarasota FL, are reporting brisk sales in an earlier-than-normal spring buying season. Could the bottom of the market be here already?
Myrtle Beach, SC (PRWEB) April 30, 2009 — Late spring and early summer is glorious in Myrtle Beach, and judging from the restaurant lines and traffic, this may be one of the best years yet. With less rain than usual, Myrtle Beach golf courses have been in full swing. Our northern neighbors never fail to be charmed by the gorgeous weather, and this time of year inevitably brings a surge of retirees looking to move south – a surge that our beleaguered real estate agents will appreciate.
Spring Flowers in South Carolina Many of our better restaurants have an hour or more wait already, which is unusual this early in the year. While groups of golfers can be found in all of them, there is a noticeable number of “baby boomer” couples filling the seats as well, a result of the numerous vacation condos that were purchased during the real estate rush several years ago. As each week passes, vacationers replace owners, and summer brings the tourist season in full force. Owners use the rental income to pay the bills, and hopefully real estate sales will change from foreclosure hunters to buyers looking for the perfect vacation resort. All in all, 2009 promises to be a banner year for Myrtle Beach real estate!
Las Vegas, NV – Summer started heating up early this year in Vegas, and we don’t mean temperature wise! March statistics for Las Vegas real estate sales showed an incredible 80% increase over last year’s sales during the same time period. Prices are affordable for the first time in years, and many are taking advantage of the $8000 first time homebuyer tax credit.
Those buyers have some stiff competition though: Las Vegas has been named one of the top six undervalued markets in the country, and investors are once more closing in. Single family homes in beautiful neighborhoods that sold three years ago for well over $300k are now priced in the $150k to $170k range, and those listings are generating crazy multiple offer scenarios reminiscent of the 2003 and 2004 boom years.
But the STEALS are in the Las Vegas luxury homes segment. Incredible estates in elite neighborhoods and fully furnished high rise condos in Trump Towers on the Strip are selling for literally 30 to 50 cents on the dollar. It’s not too late to buy a townhome in Lake Las Vegas that originally sold at $850k for under $200k with superb golf and lake views!
Greenville, SC – Greenville is a city that is true to its name especially in Spring. The incredible rain this past winter helped the Upstate to spring its glorious colors with azaleas, dogwoods, clematis and more blooming everywhere. The world renowned golf courses are looking sharp with new cut green grass and Greenville SC homes are starting to sell. We have seen an increase in the number of people looking for new homes since January of this year.
It is no wonder, with the stability of the Greenville SC real estate market influenced in part by the business environment. Greenville was rated the top North American City of less than 100,000 in population for business expansion and prospects of economic development by FDI Magazine, a “foreign direct investment (FDI) magazine. Even during these tough economic times the Greenville market’s home values have held steady and even appreciated 2.8% according to Zillow’s January Home value report. Forbes.com considers Greenville as one of the best places to weather an economic downturn, number five on their list. Money magazine predicts Greenville will be one of the areas recovering first from the “Great Housing Paralysis of 2009″ as they are calling our current U.S. markets.
Los Angeles, CA – The spring market for Los Angeles real estate has started to blossom! Real estate agents report that open houses are teeming with potential home buyers who are expressing optimism about the opportunities in today’s housing market. What makes this year different is that this real estate market is heavily weighted in distressed properties. With California ranking third in the foreclosure rate nationwide, buyers are finding favorable prices on foreclosures, short sales and bank-owned properties. Agents report that multiple offers on these distressed properties are commonplace, with actual sales prices often going for more than the list price within days of coming on the market. This is frustrating home buyers, who are facing stiff buying competition in many price ranges.
With 50 year record-low interest rates and government incentive programs, many home buyers find that their mortgage payment will be less than their current rental amount. Investors who are feeling more comfortable about their personal finances are gradually returning to the real estate market. And, with affordable housing available, many are expecting that the spring activity levels of Southern California real estate will continue into the summer months.
While I usually don’t print big chunks of press releases, this one seemed like a pretty decent summary of some of the positive forces that are starting to back-up the bullish case.
Would I personally buy real estate now? Nope. Only if it was farm land or had some ag use. Otherwise, still reason to be cautious as the Dickens…
Why? Phoenix, for example, says the Phoenix Business Journal, “…leads nation in home price declines in February.” Home prices have been halved. Wait! Did I hear someone question my assertion that this is the Second Depression?
Despite my very short-term optimism about the markets, they could turn down any time since we are, by my reckoning, really in the Second Depression. Evidence of that was obvious in yesterday’s GDP report, but the thing to keep an eye on are the reports that point to cities where the local unemployment rate is higher than it was during the first Depression. And still climbing, or are you in denial about that one, too?
Again, we’re in a period of disconnectedness where outfits like Goldman Sachs are are noting in their “Global Economics Weekly” that some of the global imbalances are improving, which might be so but at the same time, the auto industry is headed for the rocks and housing prices may, or may not, be nearing a bottom. And one of my trader friend says the % of S&P stocks above the 50 day moving average looks ‘toppy’ to him.
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So are we out of the woods yet? Hell no. We won’t be until we get past the other side of 2012 – and even then there’s some stuff out on the other side of that event which is problematic. But at least for the next half month to two months, with caution just after May 18 and again in mid July, seems the long side of the market is promising; subject to the normal disclaimers and assuming the hybrid flu scare only escalates for another week, or two, and then as was the case with the Spanish flu of 1918, makes its decline/fake-out to the downside until it returns with a vengeance in September.
The most useful new tool of the day? Slate has come out with an interactive job loss map that shows who’s gaining and loosing in 3,100 counties nationwide. Gotta love Slate.
Personal Incomes
Before we get into this too deeply, remember the report earlier this week that said the advance GDP report showed the economy shrank in Q1 at a 6.1% annualized rate? Logically, if the economy is pulling in its horns dropping at a 6.1% annual rate then what would you expect personal incomes and expenditures to be doing?
“Personal income decreased $34.4 billion, or 0.3 percent, and disposable personal income (DPI) decreased $1.8 billion, or less than 0.1 percent, in March, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $24.2 billion, or 0.2 percent. In February, personal income decreased $24.3 billion, or 0.2 percent, DPI increased $0.2 billion, or less than 0.1 percent, and PCE increased $39.1 billion, or 0.4 percent, based on revised estimates.
Real disposable income increased less than 0.1 percent in March, in contrast to a decrease of 0.3 percent in February. Real PCE decreased 0.2 percent, in contrast to an increase of 0.1 percent.
Private wage and salary disbursements decreased $32.9 billion in March, compared with a decrease of $28.8 billion in February. Goods-producing industries’ payrolls decreased $15.3 billion, compared with a decrease of $14.2 billion; manufacturing payrolls decreased $7.8 billion, compared with a decrease of $7.4 billion. Services-producing industries’ payrolls decreased $17.6 billion, compared with a decrease of $14.6 billion. Government wage and salary disbursements increased $2.9 billion compared with an increase of $1.9 billion.—
The government’s fine sense of humor is alive & kickin’: The knee-slapper in the report?
“Personal saving — DPI less personal outlays – was $455.3 billion in March, compared with $432.6 billion in February. Personal saving as a percentage of disposable personal income was 4.2 percent in March, compared with 4.0 percent in February…”
ROFLMAO… Oh, boy, they can sure tell ‘em, can’t they? Maybe the folks under the overpasses are saving so much money by not having a house payment that they can save 4%! Yeah…that’s gotta be it. Pass the crack pipe, wouldjah? Self medicating seems in order before we get to the medical stuff…
Flu Still Rising
While we wait for the first ‘crest’ of the hybrid flu wave, there is still the case to be made that economic impacts could mount up on that front. For openers, the WHO has raised its pandemic alert status to phase 5, which means – if you remember the chart from earlier this week – that the flu is likely to go global. But even Chan said:
“On the positive side, the world is better prepared for an influenza pandemic than at any time in history.
Preparedness measures undertaken because of the threat from H5N1 avian influenza were an investment, and we are now benefitting from this investment.
For the first time in history, we can track the evolution of a pandemic in real-time.
I thank countries who are making the results of their investigations publicly available. This helps us understand the disease.
I am impressed by the work being done by affected countries as they deal with the current outbreaks.
I also want to thank the governments of the USA and Canada for their support to WHO, and to Mexico.”
As I posted in a special mid-day update on Wednesday, the CDC is reporting 91 cases in the USA and one death so far – a child brought to the US for treatment. One Marine ion southern California has been tested positive for swine flu and 30 Marines at the TwentyNine Palms base have been quarantined. That will likely be in the count to be released later today by the CDC in their flu update about mid day.
I’ll continue calling this hybrid flu even through reports say the “Mexico outbreak traced to ‘mature lagoons’ at pig farm” there’s debate over whether there is actual swine flu at the heart of this outbreak.
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The reaction worldwide is in some cases becoming extreme. Egypt, for example has ordered the killing of all pigs. Farmers are reported rioting there as a result.
In the UK, every home can be expecting a government flu pandemic leaflet in the mail.
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The key thing about the flu, as I see it, is this: A lot of people are not yet taking this now Phase 5 Pandemic seriously. I’d urge you to visit the CDC’s Pandemic Flu site and pay particular attention to the preparation checklists on this page (link).
With France asking the EU to stop flights to Mexico, I’m expecting that before the year is out, that we will see all kinds of ‘restrictions on travel’ since that has been an extremely long-term building portion of predictive linguistics modelspace and we’ve learned from 8+ years of tinkering that the longer a concept hangs around in modelspace, the larger the appearance works out in ‘real’ everyday life when events show up. Oh sure, there has been plenty of ‘restriction on travel’ ever since before the events of 9/11, but it’s just never really gone away.
Going over the individual and family preps checklist I couldn’t help but notice that I don’t have the granola bars or the anti-diarrheal medications…so that goes into our next shopping run. Yeah, I know that there’s a huge debate about high fructose corn syrup, but doggone it, there’s something comforting about ginger ale…maybe Jones Soda could come out with an all-cane sweetened version of ginger ale again? Seems like they had it in Canada for a while and retired it…oh well…guess I’ll have to do without. Chicken soup, then?
Perspective point: CNN reports “Regular flu has killed thousands since January” so being ready could be more than an academic exercise.
Who Was that Masked Man?
Yet another predictive linguistics hit on “designer flu masks”, not that its particularly comforting to know this kind of thing is coming in advance.
Global Coastal Event
Another linguistic we’re waiting to make a much larger appearance in June oir so is percolating along in the background – it’s the global coastal event. I haven’t mentioned this for a while, but the reports about changing rise rates (March of this year) set a 90-day (or so) temporal marker for
awareness and focus on odd things going on with ocean levels. Sure enough, the story this week that “Rising seas threaten renowned French coast” fit right into the scheme of things.
I trust you’re hip to the report that “Huge ice chunks break away from Antarctic Shelf“? Ice that’s already in the water, of course, won’t raise sea levels. BUT the ice in the water that holds back ice on land that could slide into the water is the kind of scenario that could raise sea levels worldwide – if it all happened at once – something like 184 feet according to an old USGS study.
Remember when I moved to Texas (Jan 2003) one of my criteria for buying the ranch was what? Elevation of 600′ plus 200 miles of buzzer zone between us and the coast. This has been in the linguistics data for YEARS which means when it happens it will be BIG. Global pandemic doesn’t mean squat by comparison. But hey, don’t let that ruin your day.
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Calling 2009 the “Year of Transformation” has been a pretty good call by our friends with the rickety time machine. Flu, global coastal event, the middle east mess to come this fall, and be sure to keep an eye the stories that North Korea “threatens nuclear, missile tests” for hints to what follows that. Dandy year, huh?
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Speaking of Iran (middle east stuff) you saw the 5.5 quake in SE Iran this morning?
100 Days?
President Obama last night did his “100 days” speech. Maybe I’ve been reading too many linguistics books, but ‘remaking’ sounds a little grandiose to me…Best I can figure, sending more troops to Afghanistan, borrowing bushel baskets of paper to prop up banks (and the odd insurance company) doesn’t sound much like ‘change’ to me. Wasn’t that what Bushco was turned out for? Call me skeptical, but I’ll just sit back and watch a bit more, thanks. Call me when we don’t need food banks.