Posts Tagged ‘recovery process’

THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

housing marketCourtesy of The Pragmatic Capitalist 

The simple economics behind the situation in housing is beginning to become more apparent as the weeks go by. As we’ve noted for several years now the primary problem in the US housing market remains one of supply and demand.  As the jobs market continues to weaken, deflation takes hold of the US economy and the shadow inventory floods the market the math here remains simple enough for an Econ 101 student to understand. In order for the housing market to build a firm foundation that does not require government aid we will need to see a reduction in prices. In a recent research report Merrill Lynch described just how extreme the supply/demand imbalance has become in recent months and years:

“The collapse in housing demand means that it likely will take even longer to clear the inventory of homes for sale. In the new market, builders have continued to slash construction, maintaining incredibly lean inventories, and yet there is still supply of 9.1 months. Even more worrisome, however, is the existing home market where inventory is still on a decisive uptrend. As such, it takes 12.5 months to clear the inventory at the July sales pace. This widening gap between housing demand and supply means that construction likely will remain depressed and prices will dip lower (Chart 5).”

mer1 THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

More worrisome is the huge increase in shadow inventory that Merrill expects:

“The inventory of existing homes for sale is set to increase further as “shadow inventory” moves into the market. According to the latest Mortgage Bankers Association’s report, 9.1% of loans outstanding, which translates to 4.8 million, were seriously delinquent at the end of Q2 (capturing 90+ days delinquent or in the process of foreclosure). Unfortunately, this is not the end of the foreclosure pipeline. There were 2.6 million of mortgages either 30 or 60 days delinquent (Chart 6). It is likely that re-defaults from failed modifications — there have been 616,839 failed HAMP modifications – have contributed to early stage delinquencies.”

mer2 THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

Based on Merrill’s estimates the housing market is unlikely to normalize before 2015.  The supply/demand imbalance is simply staggering at the current levels and is likely to deteriorate if the economy weakens further:

“We define a normal housing market to be one in which housing starts


continue reading


Tags: , , , , , ,




 
 
 

Phil's Favorites

Weekly Market Summary

 

Weekly Market Summary

Courtesy of The Fat Pitch

Summary: All of the US equity indices made new all-time highs again this week. Treasuries were the biggest winner. A drawdown of at least 5-8% in SPX is odds-on before year end, but there are a number of compelling studies suggesting that 2017 will probably continue to be a good year for US equities.

* * *

On Friday, SPX and DJIA made new all-time highs (ATH). During the week, COMPQ, NDX, RUT and NYSE also made new ATHs. All the indices moving to new highs together suggests that this is a broadl...



more from Ilene

Zero Hedge

"Where Does This Crisis End?" - Kurt Schlichter Lays Out The Left's Violent Endgame

Courtesy of ZeroHedge. View original post here.

Submitted by Kurt Schlichter via Townhall.com,

The Democrat Party, its Media serfs, and Social Justice Incorporated are all outraged because we uppity normals are again presuming to rule ourselves, and their agony is delightful. Less delightful is how, in the process of trying to claw their way back into power, they are incinerating the norms and rules that preserve our political order. That stuff Hillary babbled about honoring the legiti...



more from Tyler

ValueWalk

Aswath Damodaran - Session 9: Historical, Analyst & Fundamental Growth

By VW Staff. Originally published at ValueWalk.


In this session we continued our discussion of growth by first looking at the limitations of analyst estimates of growth and then examining the fundamentals that drive growth. Starting with a very simple algebraic proof that growth in earnings has to come either from new investments or improved efficiency, we looked at how best to estimate growth in three measures of earnings: earnings per share, net income and operating income. With each measure of earnings, the estimation of growth boiled down to answering two questions: (1) How much is this company reinvesting to generating for future growth? (2) How well is it reinvesting? (3) How much growth is added or lost by changes in returns on existing investments? In the next session, we will continue this discussion after the quiz.

Start of the class test: ...



more from ValueWalk

Mapping The Market

Why Facts Don't Change Our Minds

Courtesy of Jean Luc

Good article about facts and why we reject them:

WHY FACTS DON’T CHANGE OUR MINDS

New discoveries about the human mind show the limitations of reason.

By Elizabeth Kolbert

In “Denying to the Grave: Why We Ignore the Facts That Will Save Us” (Oxford), Jack Gorman, a psychiatrist, and his daughter, Sara Gorman, a public-health specialist, probe the gap between what science tells us and what we tell ourselves. Their concern is with those persistent beliefs which are not just demonstrably false but also potentially deadly, like the conviction that vaccines are hazardous. Of course, what’s hazardous is not being vaccinated; that’s why vaccines were created in the first place. “Immunization is one of the triumphs of modern medicine,” the Gormans no...



more from M.T.M.

Market News

Breaking News And Best Of The Web

Courtesy of John Rubino.

US stocks finish at record high. Gold and silver at multi-week highs. Bitcoin near all-time high. Trump national security adviser scandal evolving, EPA chief controversy ramping up after email release. Debate over Putin and fake news intensifies.  

Best Of The Web

It’s bubble time! – Peak Prosperity

Dazed & confused… Treasury buying vs. asset valuations? – Econimica

...



more from Paul

Digital Currencies

As Bitcoin Surges To Record High, China Prepares Its Own Digital Currency

Courtesy of Mike Shedlock (Mish)

Bitcoin hit an all-time high over $1200 today.

Traders are happy because the SEC is expected to rule on a Bitcoin ETF by March 11.

Meanwhile, Bloomberg reports China Is Developing its Own Digital Currency.
 

After assembling a research team in 2014, the People’s Bank of China has done trial runs of its prototype cryptocurrency. That’s taking it a step closer to becoming one of the first major central...

more from Bitcoin

Kimble Charting Solutions

Crude Oil; Energy stocks suggesting its about to fall, says Joe Friday

Courtesy of Chris Kimble.

Below takes a look at the price action of Crude Oil, Energy ETF (XLE) and Oil & Gas Exploration ETF (XOP) over the past three years.

Could Energy stocks be suggesting the next big move in Crude Oil again? Which direction are they suggesting?

CLICK ON CHART TO ENLARGE

At this time the intermediate trend in Cru...



more from Kimble C.S.

Members' Corner

The Manchurian President

 

The Manchurian President

Courtesy of  at BillMoyers.com

As the Trump presidency unravels, unraveling the country along with it, there is no real political antecedent, no lessons from American history on which to draw and provide guidance. We are in entirely uncharted waters.

But there is an antecedent in our popular culture that provides a prism through which to view the contemporary calamity, especially the alleged collusion between Trump’s henchmen and Russian intelligence to deny Hillary Clinton the presidency. I am not the first observer who has ...



more from Our Members

Chart School

Good Recovery

Courtesy of Declan.

In early morning action it was a clear swing to sellers after yesterday's non-event. However, buyers came back and were able to make a good chunk of these losses into today's close.

Large Caps remained the most attractive as defensive stocks often are during times of doubt. The S&P registered higher volume accumulation as intraday action proved to be relatively tight.

The Nasdaq suffered larger losses, but there was no distribution to go with it. Technicals were relatively immune to today's action.

...

more from Chart School

OpTrader

Swing trading portfolio - week of February 20th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas

Notes

Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...



more from Promotions

Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

more from Biotech

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David



FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>