Auto sales continue to rise, and are up at a 14.5% annualized rate since the bottom in February, 2009. This is what a V-shaped recovery looks like, even though sales have still not yet reached their prior highs. With sales consistently beating expectations, the ripple effects throughout the economy are very positive on the margin.
Home builders' stocks are making new post-recession highs. Still far below their prior highs, but moving in the right direction. Lumber prices have doubled since their low in March 2009, further confirming that there is some genuine improvement in the construction sector.
The meme continues: the economy still stinks, but it is getting better on the margin, and things are not nearly as bad today as the market had feared not too long ago. This is what is driving equity prices slowly higher.
Clever use of log scales -- the reality is that the US is one crisis away from folding up the flags -- we live in high risk times -- those without means and skills have much to lose and little to gain at this point -- conversely, accredited investors have much to gain and little to lose today -- now is the time to buy up equity bargains across America...
ReplyDeleteIt is indeed a great sign of improvement if 1/3 of auto loans are subprime with FICO scores 2nd lowest of last 10 years, LTV's of 120%+ and 5yr+ maturities. Carmakers are actually so confident they acquire those subprime auto lenders (GM/AmeriCredit). Of course, cars are not houses, since the subprime auto loan customer needs his car to get to his job. Unless there is no more job. Oops. Upside-down "V" recovery.
ReplyDeleteWhat do you think about the market's rise in the recovery as an insidious form of inflation?
ReplyDelete