Richard Fisher, President of the Dallas Fed, had this to say the other day. I am so reminded of Cisco's fate in 2001 - where John Chambers, their CEO, had built all this capacity, and the whoosh! the bottom fell out of the telecom market almost overnight.
The key area of concern in the real estate markets is the housing market. You know the facts here, so I’ll make this brief by repeating what a friend who has been a major homebuilder since 1973 recently told me: “This is the roughest, most sudden correction we have ever seen in the housing market.”
But in making monetary policy for the nation, this provides scant comfort for the Federal Reserve. Nationwide, single-family permits are down 26 percent from the peak last September.
We are well aware that consumption drives 70 percent of the nation’s economic growth and that a significant slug of the purchasing power of consumers has in the last few years been greatly enhanced by refinancing their mortgages in a rising-price market.
August 24, 2006
Shockingly honest language from Dallas Fed President: "This is the roughest, most sudden correction we have ever seen in the housing market"
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8 comments:
f*ck! Now I've seen everything. Next they'll admit the US is going bankrupt
anyone get the feeling we should be shorting every retailer, every mortgage company, every bank, and every company that has anything to do with homebuilding?
Yes, go ahead and short. Buy high sell low, as the mantra says.
Oh no wait, did I get that wrong?
can we short realtors?
Where's the bid for Keith? Does a person get more stupid?
Every day I drive around town, there are more for sale signs. I am loving the meltdown.
"roughtest, most sudden correction we have ever seen"---- Hmmm. Might that have to do with the Internet and those bubble bloggers?
Nobody is going to catch a falling knife that they have to pay off for 30 freaking years!
I am shorting "RTH", an ETF composed of retailers.
Wall Street has already shorted the bejeezus out of the homebuilders, with the Cramerite bulls booyahing about them low low P/E's all the way down.
Then again, he did the same thing with the techs in 2000-2001.
In the longer run---like months, keith has been right.
Floyd Norris, veteran columnist of the New York Times, has a very interesting article in Saturday's paper. The article is entitled, "Car-Sales Indicator Suggests a Recession is Near or Already Here."
The article (and chart) shows that whenever the rate of sales by new-car dealer has dropped 2 percent or more on a year-over-year basis, we have been on the edge or actually in a recession. The record is shown below --
Sept. 1970, index was down 2.9%, recession began 9 months earlier.
Apr. 1974, index was down 3.2%, recession began 5 months earlier
Nov. 1979, index was down 2.6%, recession started 2 months later.
Feb. 1991, index was down 2.6%, recession started 7 months earlier.
May, 2001, index was down 2.6%, recession started 2 months earlier.
June, 2006, index was down 2.4%, recession ???
Note -- many times a recession is already underway, but it is not recognized at the time.
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