New York, November 24, 2015 – S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for September 2015 show that home prices continued their rise across the country over the last 12 months. More than 27 years of history for these data series is available, and can be accessed in full by going to www.homeprice.spdji.com. Additional content on the housing market can also be found on S&P Dow Jones Indices’ housing blog: www.housingviews.com.
Year-over-Year The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a slightly higher year-over-year gain with a 4.9% annual increase in September 2015 versus a 4.6% increase in August 2015. The 10-City Composite increased 5.0% in the year to September compared to 4.7% previously. The 20-City Composite’s year-over-year gain was 5.5% versus 5.1% in the year to September. After adjusting for the CPI core rate of inflation, the S&P/Case Shiller National Home Price Index rose 3% from September 2014 to September 2015.
San Francisco, Denver and Portland reported the highest year-over-year gains among the 20 cities with double-digit price increases of 11.2%, 10.9%, and 10.1%, respectively. Seventeen cities reported greater price increases in the year ending September 2015 versus the year ending August 2015. Phoenix had the longest streak of year-over-year increases, reporting a gain of 5.3% in September 2015, the tenth consecutive increase in annual price gains.
Month-over-Month Before seasonal adjustment, the National Index posted a gain of 0.2% month-over-month in September. The 10-City Composite and 20-City Composite both reported gains of 0.2% month-over-month in September. After seasonal adjustment, the National Index posted a gain of 0.8%, while the 10-City and 20-City Composites both increased 0.6% month-over-month. Fifteen of 20 cities reported increases in September before seasonal adjustment; after seasonal adjustment, 19 cities increased for the month.
On the pricing front, the 20-city composite is at levels similar to late 2004.
The interesting thing about this is that strength in Housing may be a pressure on the Fed to get on with moving rates up at their mid December meeting.
While this has improved market futures a bit (Dow down 104 in futures) we note that there is still tremendous weakness in certain commodities. Copper, for example is down to $2.02…
The Turkey Turkey-Shoot
Although it is not precisely a financial life-and-death issue, we have some deep concerns about the Turkey shoot-down of a Russian jet overnight.
As our military affairs export warhammer explains:
George, a classic “fog of war” incident has finally occurred near the Syrian/Turkish border.
There are just too many players, the swirling tactical dynamics are mind-billowing and frankly, I’m more than a bit surprised it’s taken this long for something like the Russian shoot down to occur.
One might expect that the Turks are sucking up seat cushions while they wait for Putin’s response.
All of this is concerning, not simply because we may expect a Putin response, but it will be key to see the level of Putin’s reaction.
To put it gently: If Putin responds by having one of his planes shoot down a single Turkish jet, then it seems likely that Putin is keeping himself “in check” and the odds of the Western/Russia proxy war in Syria escalating out of control to a regional tactical nuclear conflict is low.
HOWEVER, if Putin does a major thrashing of Turkey in coming days, then we will be into a much different “kettle of fish.”
The threat of escalation is driven by multiple factors, including the Russians wanting to have a warm-water port at Tartus.
Another key thing to watch is any involvement of the Chinese, who are also interested in relations with Syria. Remember, a couple of weeks back, a Chinese national was killed by ISIS and this will draw China further into the region.
Putin;s timing if of critical interest to us: As my colleague Grady put up on our www.nostracodeus.com site this morning:
We did a quick calculation to see when Russian military jets first intruded into Turkish airspace. It was 50 days ago. SO, BEFORE WE BEGIN – A look back to 50 days ago to see if Nostracodeus predicted the future.
October 5 2015.
Turkey intercepted a Russian fighter jet in the past twenty four hours. Even though it apparently was in Turkish airspace for a few seconds, overflying sovereign territory without permission is a big no no.
The global Islam problem is pushing its way into the general news. (Canada has announced the importation of 25,000 Syrian refugees)
It appears France may experience a ‘flood of Islam’.
(more at www.nostracodeus.com)
One reason why he could give a rip? The Russians recently lost that jetliner out of Egypt. It is becoming clear in press reports that the bomb was placed under a seat, possibly 31A.
According to The Daily Mail, EasyJet will be continuing a flight ban into the area (Egypt) until January 6th.
Pulling all this together, then, we have expectations that are working out like this:
- Since news is somewhat cyclical, we expect the week or Jan 10-16 will be a hot zone for another Russian aircraft story. Ideal date would be around January 13.
- The scope of the Russian response to the Turkey shoot will indicate whether Russia is still interested in working with the West to take out ISIS and AQ remnants.
- President Obama is talking with France about allied actions.in a WH session today.
- And we note that a worldwide terror alert for Americans has been issued.
We will be paying particular attention to how Obama fields the French appeal to work with the Russians.
The way we will be inclined to read it is simple: If Obama extends an olive branch to the Russians and apologizes for the accident shoot-down (remember where Turkey’s airplanes came from), then a multistate unified force might be in the works.
On the other hand, if Obama declines to work with the Russians in getting rid of ISIS, then I would see this as further evidence of White House incompetence and a furtherance of anti-American interests by the Obama administration.
Unfortunately, this president’s main claim to fame seems to be increasing the divisions among the American people and brining in as many foreign nationals as possible to divide American clear-thinking and resolve.
So if we don’t get serious about wiping out ISIS (and partnering with Russia and China to do it) then the Organizer in Chief will IMHO be showing his hand again as supportive of America’s enemies both foreign and domestic.
But FMTT, would that really be a surprise?
Another Fed Meeting to Watch
Don’t be fooled: We don’t know yet what the Fed did in its closed meeting on Monday. But we do know that another short-notice meeting is in the cards for next week. This one, however, will be an open meeting:
Matters to be Considered:
Implementation of the Dodd-Frank Act amendments to the emergency lending authority under Section 13(3) of the Federal Reserve Act.
There has been a lot of ink splashed around about Janet Yellen’s response for a Ralph Nader note about negative rates and such. But Yellen is basically saying the Fed will do what it needs to do.
And what that might be should come into focus shortly.
Fresh GDP Data
Just out from the Bureau of Economic Analysis:
Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 2.1 percent in the third quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis.
In the second quarter, real GDP increased 3.9 percent. The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 1.5 percent. With the second estimate for the third quarter, the decrease in private inventory investment was smaller than previously estimated (see “Revisions” on page 2).
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, state and local government spending, residential fixed investment, and exports that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the third quarter primarily reflected a downturn in private inventory investment and decelerations in exports, in PCE, in nonresidential fixed investment, in state and local government spending, and in residential fixed investment that were partly offset by a deceleration in imports.
Real gross domestic income (GDI) — the value of the costs incurred and the incomes earned in the production of goods and services in the nation’s economy — increased 3.1 percent in the third quarter, compared with an increase of 2.2 percent (revised) in the second. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.6 percent in the third quarter, compared with an increase of 3.0 percent (revised) in the second.
And something that may weight on markets: Corporate Profits deflated somewhat:
Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) decreased $22.7 billion in the third quarter, in contrast to an increase of $70.4 billion in the second.
Profits of domestic financial corporations decreased $8.5 billion in the third quarter, in contrast to an increase of $34.6 billion in the second. Profits of domestic nonfinancial corporations increased $15.8 billion, compared with an increase of $24.3 billion.
The rest-of-the-world component of profits decreased $30.0 billion, in contrast to an increase of $11.4 billion. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the third quarter, receipts decreased $7.2 billion, and payments increased $22.7 billion.
Taxes on corporate income increased $2.3 billion in the third quarter, compared with an increase of $31.3 billion in the second. Profits after tax with IVA and CCAdj decreased $25.0 billion, in contrast to an increase of $39.2 billion.
All of these items today have combined to give the stock market a sour outlook. Futures 45-minutes before the open were down 130 on the Dow and much more is possible depending on Russian response to Turkey and how the Housing numbers roll…