Fed Daze, Housing Collapsing?

The market’s jump yesterday was very good news, indeed.  With the Dow popping up 228-points there are a couple of ways to read the Dow. 

One way – and this is the one I’m inclined toward – is this is a massive “Buy the rumor” event.

If you watch the market long enough, you can get a sense of it:  Sometimes, when “planned news” like the Fed announcement tomorrow afternoon is due, you’ll see a big run-up ahead of time.  This is oftentimes followed by a major decline after the news comes out.

That’d be about the least surprising result.

There is, however, reason to expect the markets to keep going up; not the least of which is our Trading Model which has been a poster child for this particular blend of crack and Starbucks that seems to be powering the market upward.

Same kind of thing as was going on in 1928-1929  until things broke.

Sit back and you can see why stocks are something of the “only game in town” at the moment:  Housing prices are going up about like the general rate of inflation as measured by the CPI.  With that stuck at less than 2 percent, it’s not too enticing to run out and buy a home.

To be sure, there are still hot markets.  Our San Francisco real estate broker/watcher was reporting brisk growth in sales and prices there.  But just last night, Sacramento Channel 13 was running a story about how Drought is forcing new restrictions on water use at hotels and restaurants.  And west of Suisun, (locals call it “sih-SOON”) there isn’t much better to report. The whole state is still stuck in drought and it looks to Ures truly like the Dust Bowl replay for the Greater Depression will be centered in the California agricultural heartland.

Not that it stops there:  Two more counties up in Oregon are looking at drought restrictions, now, too.

Somewhere, along in here, you’re going to be glad you didn’t build that marina to retire to up at late Shasta. 

For those who missed Ure’s Complete Economic History, Volume IV, you’ll see the explanation of what’s at work in California right now, despite all the protestations from naysayers who insist it will be pouring buckets any old minute, now.  Volume IV consists of single page, reproduced upper right:  Humans got along for millions of years without the web or software, but few can go more than 120-days without food.

Without calories, your body will lose 0.5% of its weight, just supporting itself.  (Marvels of writing up my diet book…).  Which means, even from being technically obese, I can tell you with fair precision that I would be down to 93w pounds by September 18th on the current diet plan.

That said, I could turn off all my computer gear, and leave it off for a couple of years, and let’s toss in the television while we’re at it.  Come back in 5-10 years, but keep shoving calories into the old pie-hole, and I will be as rotund as ever, and perhaps a bit brighter, too.

And that’s the problem of California in a nutshell.

Just like an overweight person (obese) a little belt tightening is a good thing – helps slow the drain on natural resources.  But carried too far (to September with no rain, for instance) and the state will be taking on all the aspect of anorexia.

Not that it’s the only economic fly in the ointment.  The people in Europe have figured out that printing up money is an easy fix to deflation, so they too are now in the Global Competitive Devaluation scramble.  Overnight, the Germany DAX blew through the 12-grand mark (or is that marks, lol). 

So it’s with this kind of pressure on that the Fed will gavel-in this morning and tomorrow afternoon will tell us what we already know:  We’re screwed.  But that’s just my sense of it, and remember:  I’m  a crazy man in the East Texas Outback who just doesn’t much give a rip one way, or the other, having designed (close as I can figure it) a “crash-free life.”

Few people understand this imperative well, let alone do something about it.  So even though the market is up, we’re reminded that markets are subject to gravity, too. 

Oh, and weather forecasts.

Housing:  Blame Weather?

A serious bummer is out from the Census folks this morning:  Housing is on its ear:

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential
construction statistics for February 2015:
BUILDING PERMITS
Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,092,000. This is
3.0 percent (±1.7%) above the revised January rate of 1,060,000 and is 7.7 percent (±2.0%) above the February 2014 estimate of
1,014,000.
Single-family authorizations in February were at a rate of 620,000; this is 6.2 percent (±0.9%) below the revised January figure of
661,000. Authorizations of units in buildings with five units or more were at a rate of 445,000 in February.
HOUSING STARTS
Privately-owned housing starts in February were at a seasonally adjusted annual rate of 897,000. This is 17.0 percent (±9.5%) below the
revised January estimate of 1,081,000 and is 3.3 percent (±12.5%)* below the February 2014 rate of 928,000.
Single-family housing starts in February were at a rate of 593,000; this is 14.9 percent (±10.0%) below the revised January figure of
697,000. The February rate for units in buildings with five units or more was 297,000.
HOUSING COMPLETIONS
Privately-owned housing completions in February were at a seasonally adjusted annual rate of 850,000. This is 13.8 percent (±9.0%)
below the revised January estimate of 986,000 and is 1.8 percent (±11.7%)* below the February 2014 rate of 866,000.
Single-family housing completions in February were at a rate of 595,000; this is 12.1 percent (±10.0%) below the revised January rate of
677,000. The February rate for units in buildings with five units or more was 236,000.

You just know this leaves government in a box:  How can housing collapse due to record cold and snow on the one hand, and a straight face be maintained about Global Warming?  A sane person would note that “Gosh, George, they’re calling in climate change, not warming anymore!”

Right – presactly: And your BS detector isn’t going off because????

I’m reminded of the guy who falls off a tall building.  On his way down, about the 25th floor, he says “You know, this ain’t so bad…”

And that’s how markets are taking this one so far:  The Dow futures are only down 35, and – many will rationalize – they really ought to give back a few cents of that 228-pointer Monday…

The pavement ought to be more in focus by tomorrow afternoon.  The surging dollar on the one hand, and is there a quiet “Weather War” on the other?

Israeli Elections

Big day for Benjamin Netanyahu today.  Since there are so many dual-citizens both in government and finance in the USA, I think a fair question to be asked is “How many of them get to vote?”  I’m not sure how voting in Israel works, that way; definitely a hole in Ure’s knowledge bank.

But that might have something to do with Netanyahu’s appearance in Congress…if dual citzs get to vote, that is.

Virulent Bid Flu?

Thousands of birds – snow geese – have fallen from the sky in Idaho.  So much for being good for the gander.

Revising St. Patrick’s Day: V. 2.015

Be sure and wear something green today.  Irish around the world are celebrating St. Patrick’s say for, another other things, driving the snakes out of Ireland.

I’ll simply repeat the previous call made here that we need the American analog, sooner than later:  We need to drive the snakes out of government.

Just to prove my theory that all possible consumer niches have been filled, here we have another example of consumer super-saturation at work over on Amazon: NYX Macaron Pastel Lippies Lipstick – Key Lime : MALS03 “Lime Green” 0.16 oz  – be ab out $10 bucks and might keep till next year.

The real question is: Will the world?

More after this…