After a brief correction (10-yr T-bond yields fell from a high of 3.95% on June 10th, to a low of 3.30% on July 10th, and the S&P 500 fell 6.4% over the same period) driven by doubts about the economy's ability to recover, we're now back in bullish mode: T-bond yields are up 28 bps and stocks are up almost 6%.
The news has been better than expected (or perhaps better than feared). Companies like Goldman Sachs, Intel, and Apple are making lots of money. The economy is beginning to turn up. Housing is probably bottoming (the Bloomberg Home Builders Index has been flat for nine months now, and is up 70% from its November low). Deflation is dead. Manufacturing conditions are improving.
Higher interest rates are a sign of economic health, not a threat to the economy. They are also signaling that the Fed should start raising short-term interest rates before inflation becomes a problem.
Housing is probably bottoming (the Bloomberg Home Builders Index has been flat for nine months now, and is up 70% from its November low).
ReplyDeleteScott,
Anything BELOW 50 means conditions are getting worse......we are still under 20.
As far as increasing median prices...you may find this from the L.A. Times today insightful:
The month-over-month increase, however, does not mean that home prices have stopped falling. Instead, it shows more the changing mix of homes sold, with higher-priced properties taking a greater market share. More of those homes are selling because high-end prices are now softening.
http://www.latimes.com/business/la-fi-home-sales16-2009jul16,0,6992810.story
Higher interest rates are a sign of economic health, not a threat to the economy.
ReplyDeleteIsn't your wife from Argentina?
Dr. Mark Perry over at Carpe Diem kicks Alstrynomics to the curb:
ReplyDeleteLa Jolla, CA---Southern California home sales rose in June to the highest level in 30 months as the number of deals above $500,000 continued to climb. June’s sales gain, plus another rise in the region’s median sale price, indicate buyers responded to price cuts on mid- to high-end homes and found it easier to secure financing for pricier abodes, a real estate information service reported.
A total of 23,262 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 12% percent from 20,775 in May and up 29% from a revised 18,032 a year ago, according to San Diego-based MDA DataQuick (see chart above).
Sales have increased year-over-year for 12 consecutive months.
June’s sales were the highest for that month since 2006, when 31,602 homes sold, but were 17.7 percent below the average June sales total since 1988, when DataQuick’s statistics begin. June sales peaked at 40,156 in 2005 and hit a low last year.
The median price paid for all new and resale houses and condos sold in the Southland last month was $265,000, up 6.4% from $249,000 in May but down 26.4% from $360,000 a year ago. It was the second consecutive month in which the median rose on a month-to-month basis. Before May’s 0.8% increase over April, the median hadn’t risen from one month to the next since July 2007.
MP: All signs point to the beginnings of a recovery in the Southern California real estate market.
Chad: Thank you for the positive contribution to this discussion.
ReplyDeleteMP: All signs point to the beginnings of a recovery...
ReplyDeleteExcept for the fact that prices are crashing on increasing volume and foreclosures are now at record highs....and GROWING.