Monday, Mar 23, 2009
Dcb?
Timesonline: Global stocks leap on shock rise in US house sales
A surprise 5.1 per cent rise in sales of US houses today sparked a global rally across stock markets in the UK, America and Europe, adding to optimism sparked by the Treasury's unveiling of plan to spend $1 trillion to boost lending.
The National Association of Realtors said that existing home sales were up 5.1 per cent in February, beating expectations and marking the largest monthly jump since July 2003.
Posted by flintster1994 @ 04:07 PM (2159 views) Add Comment
22 Comments
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1. paul said...
Eek. This is like a hairdresser saying that demand for haircuts is up 5.1% - even if it is true (not like the NAR to lie at all!) its hardly a rally for house sales.
The stock market is desperately snatching at whatever good news it can right now.
2. 51ck-6-51x said...
Although volume will pick up with a turning market, making the reverse causality link is bogus.
3. cyril said...
I have noticed that people are less gloomy in March than they were in February so maybe they are buying more houses in the states. They are probably thinking they might as well go on a spending splurge because there's no point in doing anything else in the current climate.
4. gone-to-colombia said...
The house price crash in the US has been deeper and longer lasting than the UK. Some prices are so low that they cannot fall any longer.
Witness Detroit where the average house price is less than $10,000, and houses can be bought for a dollar, closing costs thrown in as well.
Also the price rises were less than the UK in the boom times.
The US really is a composite of many housing markets, some areas have hardly suffered. For example, Raleigh NC is one market and thriving, Durham NC (just 30 miles away) quite another and doing badly, the country areas around both cities are a completely different market and much cheaper and stagnant.
Having said this, I suspect that prices in the US have further to fall.
5. icarus said...
So toxic or 'troubled' 'assets' are now "legacy loans" and the US Treasury is buying more of them. How does this differ from the old policy of buying the ordinary troubled assets?
6. uncle tom said...
US market did not overcook to the same degree as in the UK, and started falling sooner than ours. Prices are not about to take off there, and in most areas will probably fall a little more before finding a sustainable level.
But as the end of the slump approaches, it is entirely to be expected that sales volumes will start to pick up.
The major over-correction that I expect in the UK is unlikely to be seen in the USA
7. nickolarge said...
An increase in sales volume is not the same as an increase in house prices. It may lead to rising prices but that all depends on so many other factors.
For the markets to take off on the basis of what may just be a blip just proves once again that stock markets are no more sophisticated than your average high street betting shop.
8. icarus said...
UT - "end of the slump"? Big assumption, surely?
9. enuii said...
Many people over here in the UK are currently viewing the reductions seen in asking prices as 'bargains' and I have come across this perception numerous times in conversations with a number of friends and colleagues in the last month. Unfortunately many of these people are 40 something and are considering saddling themselves with what I view as large loans (180K plus) right up to their current official retirement dates. Virtually all of them have incomes which have peaked i.e. they are at the top of their professions with little potential to gain increases to their incomes other than increases in the market rate which may well turn out to be decreases in real terms. Unfortunately with some equity in their existing houses they are being tempted into a falling market to purchase what were relatively modest family houses in areas they have aspired to move to for a number of years and reasons (room to accomodate their teenage kids). The trouble with all of this is they are buying at historically low rates of interest when the only way for them to go is up with the nett result being their financial crucifixion all for the sake of an extra bedroom or a detached house instead of a semi.
All of a sudden prudent people are being tempted to throw caution to the wind in what may be the biggest and costliest financial gamble of their lives.
10. timmy t said...
I still maintain that an increase in activity does not necessarily mean that people think prices are approaching the bottom, but might be downsizing to mitigate their losses because they think the falls will continue. God only knows what it means in the US. Frankly, if you can buy a house for a dollar its worth doing just as a punt - for the same price as a can of coke what you buy might actually be worth enough to sell and buy a car one day so why not?
11. magnifico said...
enuii, you hit the nail right on the head. I've been experiencing that feeling more and more often lately. Your summary just shook me into sanity.
I didn't sell to rent to turn soft now, when the times get tough....
12. techieman said...
Re : Housing -US Home Buiders (which were a leading indicator on the US housing slump) seem to have found a (short term at least) bottom. As far as overshoot - try convincing someone in Nevada that they havent - and thats the point regional variations are always applicable in each country.
As for the Stockmarket - deep breath - yes i thought that 3950 would hold the rally (and lost a few bob on that). [I wont bore you with the details but I raised my stop on the open (that blip looked a bit of a panic) and then lowered it back down again]. Hit for around 60 points on a quarter size of maximum when fog cleared. The fact that it didnt means that the low around 3460 is probably a more major low. A Retracement and then higher. Higher until no-one things its a bear market rally anymore - when that happens ne sales. Thats my view. Confident? Nope not really - would rather play a waiting game now and look elsewhere ...
13. techieman said...
enuii - yes to average a loss is to compound stupidity. But this mindset does increase the likelyhood of the DCB.
14. mountain goat said...
TM - Higher until no-one things its a bear market rally anymore.
Not sure what you mean? Higher so people think the worst is now over?
15. str 2007 said...
techieman
''3460 is probably a more major low.''
Meaning that it could well have been the absolute low or that it could still go lower after this rally ?
I noticed Gold is taking a hammering (in sterling terms). Once again would most of you think that to be a temporary buying opportunity while this stock market rally is on ?
16. str 2007 said...
techieman
The 'New Market Wizards' arrived on Friday, (The first edition Market Wizards was out of stock). Only a 1/4 of the way through so far, but yes a good read. Thanks for the recommendation on that one.
17. techieman said...
STR 2007 & MG - i will come back later on this, Cheers!
18. house said...
Enuii @9
Spot on nothing much to add. Patients is the name of the game. Time will tell who was correct.
19. letthemfall said...
ennui
Yes, it would seem the belief in houses as a sure investment has yet to wane, implying bigger falls to come if you believe in the capitulation idea.
20. mountain goat said...
Letthemfall - it would seem the belief in houses as a sure investment has yet to wane..
It implies we will likely get a bounce in sales (prices too?) as well this spring, as seen in the US.
21. techieman said...
This is what i said on monday 2nd.
"ok so its looking a bit overdone to me. A bit more downside tomorrow and then picking the bottom (or to be more accurate covering nearly all of the remaining shorts). We are near the bottom of a trend channel - expect a little overthrow of that to the downside perhaps mid to low 3500s; we have a technical target of around 3600 (reached) , we are very oversold (RSI - 11day around 20; lowest since the top last year, although i would like to see divergence before liquidating the rest of the shorts and there isnt any).
Wouldnt rule out a violent bear squeeze, but wouldnt expect to see 3950 breached before a new swing low that breaks this low we are establishing now. After that it looks boom boom for a while to me.Monday, March 2, 2009 08:46PM"
ok so we have had the violent bear squeeze which HAS breached 3950. Because it has that then puts the money on the boom boom for a while - after this retracement now which now shouldnt (75% probability) hit new lows. Where this rally ends or will it go sideways for a while - those are the things i am working on. After this more major rally though (the first "proper" bear market rally) my GUESS is that it carries on UNTIL people think its over (the bear market i mean) at that point we start to move down and yes more lows to come before this bear is put to bed.
Re the Wizards book - the first one (IMO) was better but yes its interesting read.
22. str 2007 said...
Techieman
Thanks for that
Any opinion on the Gold hammering today ? I know you keep a bit, wasn't sure if you traded and followed it closely.