May 15, 2007

FLASH: MarketWatch - "Housing bust holds down core inflation in April"

Gotta love it - housing crashes, and the market celebrates that the crash (and a glut of homes for rent keepin rents down) is keeping inflation down as consumers begin to curl up in the fetal position and the housing atm shuts down.

Yippee!!!!

Uh, someone wanna ask Japan what they think about housing crashes, a slowing economy death spiral, and asset and price deflation before putting on the party hats?

The REALLY funny thing of course about the government inflation data is the use of rents, even though home"ownership" rates near 70%. Bubblesitters and Bitter Renters you rule the roost when it comes to US inflation reporting! Keep paying less than you did the year before and we can move the US to deflation. Watch for rents to keep dropping as this massive glut of inventory is rented out, the vacancy rate soars, the illegals go home, and the economy cools.

Also, nice to see the MSM using terms like "housing bust" as fact now. Guess someone didn't read their NAR talking points.

WASHINGTON (MarketWatch) -- A growing glut of housing on the market helped moderate U.S. consumer price increases in April, raising hopes that the Federal Reserve can declare victory over inflation.

The consumer price index increased a smaller-than-expected 0.4% in April, boosted by higher prices for energy and groceries, the Labor Department reported Tuesday.

Excluding food and energy, however, the core consumer price index rose 0.2% as expected, knocking the annual gain in the core down to a one-year low of 2.3%.

Rents and owners' equivalent rents, the biggest factors in the CPI, increased at the slowest pace in more than a year, reflecting a flood of vacant units in the rental market.

The benign figures impressed some of the most skeptical analysts.

The moderation in housing costs "is one of the most significant developments on the inflation front in a long while," wrote Stephen Stanley, chief economist for RBS Greenwich Capital Markets. If the good news persists, "then core inflation will probably turn out better than we have projected" and the Fed will have "more room to ease in the event that we are wrong" about the economy bouncing back.

And then there was this bonus headline too:

Housing market, investments wreck Home Depot profit - Expect more of the same, CEO warns

39 comments:

Bubbles are good said...

The cycle of over-the-top hype, vicious competition, bankruptcies and consolidation that characterized the dot-com boom could be the key to America's economic success

Mort said...

The bankers suckle at Bernanke's rich teat of nourishment, while the rest of us wait for the crumbs to fall from his mustache. Life ain't fair. I wanna be a banker baybee!

Americans end up better off after a bubble said...

http://money.cnn.com/
galleries/2007/news/
0705/gallery.bubbles/index.html

The bubbles that built America
These six bubbles - from the telegraph to the real-estate boom - show how Americans end up better off after a bubble, says the author of "Pop! Why bubbles are great for the economy" (Harper Collins).
By Daniel Gross

Anonymous said...

Keefer,

Yeah, that deflation thingy is just
around the corner.... Can't you see,
they are blowing another bubble already?
Energy and metals baby. Energy and metals.

-Matt C

Anonymous said...

Housing is the biggest expense for most people. When housing costs go down, inflation is low. I don't see why keith has his panties in a bunch over this.

HPers have a heart attack if the price of gas goes up a cent and scream hyperinflation. But if house prices fall 10% they say inflation numbers are fake.

You people make no sense.

Anonymous said...

what world are you living in????
markets are up, and house prices are still the same, rents are high and everyone is working...NO CRASH!!!!!

keith said...

wow, some dumb posts from the anonotrolls

Uh, housing prices aren't in the inflation numbers. Rents are.

And for "house prices are still the same" - well, I'll just leave that one there and marvel at it. Brilliant.

Sorry to feed the trolls. Just had to! Now back to smart people talking.

g said...

Gotta love the CPI numbers. "Excluding volatile food and energy costs".

So if you're an anorexic bicycle rider living in a tent I guess inflation is totally under control!

I won't even talk about the substitution of rents for houses bc we've already skewered that one just fine.

What a crock of shit.

borkafatty said...

I agree Keith there is definitely a severe case of
Rectal Cranial Inversion in here today.

And some very naive people, don't celebrate that 13,400 milestone anonopussy's, to break even DOW would have to be 20,000+ so in reality you are going nowhere, and your purchasing power is faltering again. Dollar @ -0.37 last tick...so stop looking the fool like it is party time...the smart money has already left the building...and the Roaches are taking over the place.

Anonymous said...

>> what world are you living in????
markets are up, and house prices are still the same, rents are high and everyone is working...NO CRASH!!!!!

Checking-in from FantasyLand, are you?

keith said...

it's funny when Americans see the Dow going up and think they're getting rich

meanwhile the dollar has tanked against foreign currencies

classic though.

Let's say the dollar drops another 50%, and the dow goes up 20%. You all gonna be feeling rich?

Come on over to England. I'll buy you a $10 pint of beer. Or maybe you'd like to enjoy a $20 hamburger with me.

Adam Smith said...

Anonymous said...

Housing is the biggest expense for most people. When housing costs go down, inflation is low. I don't see why keith has his panties in a bunch over this.

HPers have a heart attack if the price of gas goes up a cent and scream hyperinflation. But if house prices fall 10% they say inflation numbers are fake.

You people make no sense.


And just to reinforce what Keith said, you need to realize the inflation figures have NEVER included house prices in their calculations: hence why some naive people were wondering why prices jumped up 3-4x in 7 years, while the government did NOTHING about it? Well, duh: asset bubbles are intentional, viewed as favorable, as our leaders no doubt believe that the housing bubble staved off a recession/depression (while most critics will say the housing bubble only delayed it, making it no doubt worse when it hits).

Notice how Wall Street is heating up again? Well, dud: people realize housing is log-jammed, and it's glory days are over, so people are now looking for somewhere, ANYWHERE, to put their money for more of the same.

It's kind of like when the nightclubs close, and people still want to party: they mull around outside the club, looking for the next party (the after-party). That's where we are, now that housing has been declared dead from cocaine (a stimulant) over-dose.

Apparently some don't know that John Belushi and the housing market have more in common than you'd think!

Anonymous said...

Looks like a market top earlier today

Anonymous said...

and Greenspan "cringed" when Rubin mentioned that he wanted a strong dollar...

SPECTRE of Deflation said...

The moderation in housing costs "is one of the most significant developments on the inflation front in a long while," wrote Stephen Stanley, chief economist for RBS Greenwich Capital Markets. If the good news persists, "then core inflation will probably turn out better than we have projected" and the Fed will have "more room to ease in the event that we are wrong" about the economy bouncing back.

Ya think Wall St. wants a rate cut? They must hand them a box of Kleenex every morning to keep the floor dry while these jackasses salivate about a possible rate cut.

The FED ain't cutting rates folks. Hell M3 is growing by 12% so it ain't like there isn't liquidity/debt for all the sheeple.

The FED is very happy to sit on it's collective hands and do nothing. Meanwhile the paint huffers are continually calling for a rate cut. Here's hoping they get crushed on a wrong way bet!

Anonymous said...

DOW and SP going RED!!

RUN!!!!!

serindippity said...

All those "bubbles that built America"

were based on TECHNOLOGICAL, PERMANENT CAPITAL INVESTMENTS.

Go down the list of the actual "bubble" which contributed to prosperity.

1) Telegraph
2) Railroads
3) 1920's: autos and radio
4) Internet

They missed

1960's: transistor electronics & aerospace. (highest rate of real GDP/person growth was in JFK/LBJ era in modern history)

Alternative energy is real stuff, but it will just make a small dent in the massive decline coming from the other side of Peak Oil.

The good bubbles are stuff that today, China---not USA---is doing.

Bubbles in steel and aluminium mills. Bubbles in auto factories, and soon jet factories. Bubbles in electronics manufacturing and now design plants. Bubbles in infrastructure, roads, rails and power plants.

Those 'bubbles', and ONLY those bubbles, make a country powerful because of their specific physical nature.


Housing Bubble? As meaningful and productive as the beaniebaby bubble. In fact, I'd argue it encouraged a destruction of useful capital.

We didn't even get solid, well-constructed houses to last a century out of it. We didn't get well planned communities with energy efficient layouts.

We got freaking granite countertops and fiberboard trinkets. This helps prosperity in the future, how now?

edd said...

Today on CNBC Squawkbox, NCB chief
economist stated that housing
fallout comprises at least 70%
of the negative factors in his forecasting.

jymkata said...

Freedom is Slavery
Ignorance is Strength
War is Peace
Debt is Wealth

and now the new one:

Bad economic news is good economic news

Welcome to Orwelland

borkafatty said...

Looks like a market top earlier today

-------------

more like a market crash in real terms.

Look we are drowning in Liquid no one is buying shit, and lenders are welding the tap shut, if they are not welding the tap shut, they are taking blood samples urine samples and every other sample known to man to get a loan approval.

Game over..let me yell it out loud ,,,GAME OVER!!!!

So quit trying to prove to us that the good times are rolling cause they are not. I could careless it the DOW went 15,000 it does not mean shit..the excess Liquid has to go somewhere so, the market pumps and the printing press is on overtime...There is no relevant investment return...buy hey what do I know I am just a moron who picks his nose hoping for an ounce of gold.

Lost Cause said...

In related news, admission to Grand Canyon and Yosemite National Park is now $50.

Anonymous said...

wow, some dumb posts from the anonotrolls

Uh, housing prices aren't in the inflation numbers. Rents are.


Damn you're a slow one AL-QWEEFIE. Rents are based on house prices Einstein.

Anonymous said...

$ Crash Alert. Just back from London - a packet of Marlborough (cough cough) is 5 pounds 70 pence. That's $11.40 to you - cough cough cough cough cough.

Americ'a going down the tudes fast.

keith said...

Seriously, can people be as dumb as this anonotroll:

"Rents are based on house prices Einstein."

Man, I guess that's how people signed up for toxic loans. There really are people out there that dumb.

Shocking

Rents have nothing to do with house prices. Rents have everything to do with incomes.

Please seek help. Read a book. Go to a class. Don't go through life so ignorant.

Benjamin Franklin said...

Keith said:

Please seek help. Read a book. Go to a class. Don't go through life so ignorant.


YUP. If this anonymous person wishes to go thru life ignorant, that's his right, but please don't advertise the fact to others!

Seems there's an old saying about "better to remain silent and be thought ignorant, than to open one's mouth and remove all doubt."

Wish more people took THAT advice.

The Thinker said...

The Thinker's Guide to Present Inflation:

Health care --> Inflation
Education --> Inflation
Energy --> Inflation
Food --> Inflation
Housing --> Inflation
Cheap Foreign Crap from Walmart --> No Inflation

Hmmm....

Benjamin Franklin said...

Serendippity said:

Housing Bubble? As meaningful and productive as the beaniebaby bubble. In fact, I'd argue it encouraged a destruction of useful capital.


Yup, people forget that a house is NOT a capital investment like a factory (that in turn produces a prouct to be sold), or a transportation network (which facilitates trade): a house is a consumable PRODUCT!

Once it's built and sold, the builders move on to another site; the house is largely done contributing anything useful to the economy. When it comes to that MINOR effect on the economy, a house that provides shelter (plus electricity, phone, cable) is the same as any other.

shtove said...

Anon should go to Barcelona to get his pack of Marlboror: €3.10 - that's about $4.20. The Brits are nuts for loading 'bad things' with taxes: tobacco, petrol - but not alcohol (£0.80 for 500ml can Carlsberg - mmmmm).

GK said...

San Francisco housing PE ratios (Home price/Rent Paid) are normally around 24. Now that are at 42.

http://www.californiahousingforecast.com/commentary/2007/5/14/san-francisco-40-of-last-years-loans-are-io-or-neg-am.html?ref=patrick.net

San Francisco: 40% of last year's loans are IO or neg-am


Have you ever wondered how your friends, neighbors, and co-workers were paying for those high priced home in the Bay Area? Did you think they had a big trust fund or made so much money? Well, they don't. They just did something really stupid: they got interest only or neg-am mortgages at a time when a rational person would have locked into a 30 year fixed rate mortgage. The reason they did not do the rational thing is simple: they couldn't afford it.

Anonymous said...

"Come on over to England. I'll buy you a $10 pint of beer. Or maybe you'd like to enjoy a $20 hamburger with me."

Come on, Keith, stop using prices in London as examples of anything normal. Yes, dollar to pound exchange rate sucks, but London is just wildly overpriced thanks to the same global liquidity that is propping up London housing prices.

You're conflating two different issues.

keith said...

would you prefer paris? or stockholm? or rome? or birmingham? or edinburgh?

$10 for a pint. all across europe. the dollar is no good here.

keith said...

OK, I'll lay off the trolls. But the really dumb ones are coming out tonight.

Poor realtors. Nothing to do now that houses aren't selling and nobody is buying their spin and lies.

Hint: monster.com.

borkafatty said...

Keith I am an American and trust me, there are DUMB ASS MOTHER #UCKERS in these United States..after all they are just following in the footsteps of our Commander In chief.

SaY it loud DUMB MOTHER #UCKERS!!!

I can prove how dumb, I have relitives who still to this very day say to me and I quote:

Housing always goes up...And yes 2 of then have Exploding IO-Arm resets in Sept.

Anonymous said...

keith said...

Seriously, can people be as dumb as this anonotroll:

"Rents are based on house prices Einstein."

Man, I guess that's how people signed up for toxic loans. There really are people out there that dumb.

Shocking

Rents have nothing to do with house prices. Rents have everything to do with incomes.

Please seek help. Read a book. Go to a class. Don't go through life so ignorant.

May 15, 2007 8:33 PM
Keith I'll go one better on this for you.

READ THE DAMN ARTICLE DUMB@$$

FROM PAGE 1:

Rents and owners' equivalent rents, the biggest factors in the CPI, increased at the slowest pace in more than a year, reflecting a flood of vacant units in the rental market.

FROM PAGE 2:

Owners' equivalent rent and rents increased just 0.2%. Owners' equivalent rents are up 3.9% in the past year, down from the peak of 4.3% set in December. The acceleration in owners' equivalent rent accounted for most of the increase in the core CPI in 2006. The government uses rental prices for equivalent homes, rather than actual sales prices, to calculate the cost of owning a house.
Cecchetti said he was pleasantly surprised by the housing figures. "It is the glut of rental houses that is holding [owners' equivalent rent] down now and is likely to continue to do so in the foreseeable future. The result will be falling CPI inflation."

Anonymous said...

Americans end up better off after a bubble said...

http://money.cnn.com/
galleries/2007/news/
0705/gallery.bubbles/index.html

The bubbles that built America
These six bubbles - from the telegraph to the real-estate boom - show how Americans end up better off after a bubble, says the author of "Pop! Why bubbles are great for the economy" (Harper Collins).
By Daniel Gross

May 15, 2007 5:17 PM
--------------
He has a point, but made no prediction as to what the consumer/economic benefit of the RE bubble's burst will be. With the likes of zillow, ziprealty, redfin and the calls for anti-trust action against NAR on the RE side & new legislation and lawsuits at state & federal levels to overhaul mortgage lending and foreclosure proceedings we might must see the end of the exploitive & monopolistic REIC and more efficient RE transactions resulting in lower home prices (no more 6% inflation of price due to realtwhore commissions); lower amounts in closing costs (no more need for junk & hidden fees to pay the mortgage brokers, title insurance companies, and RE brokerages, etc.) and loans that are suitable for the buyers so they can live in the home for more than just the 2 year lower teaser rates.

On the downside all the parasites in the REIC will need to get real jobs that they are qualified to perform and be productive, say flipping burgers for 6 bucks an hour!!

devestment said...

Lets make everyone poor and then raise interest rates for our buddies.

Anonymous said...

Memo..Chrysler, a means of production, bought by Daimler, five years back for 36 billion, sold yesterday for 8 billion, guess it should make me glad im a farmer, looking for suburban lands and city lands!!!!!!!!!

FlyingMonkeyWarrior said...

Alternative energy is real stuff, but it will just make a small dent in the massive decline coming from the other side of Peak Oil.

The good bubbles are stuff that today, China---not USA---is doing.
--------
I Tulip sez the next bubble is alternative energy.

The China market was just opened up to international buyers, for the first time ever, and it is climbing fast. The China Population has savings, and that money is getting played in the China Stock Market as well.

Anonymous said...

Is sell in May and go away coming in June this year?