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Sledgehead

Us New Home Sales Rise, Despite Expectations For A Fall

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Now cut the rate on that Helicopter Boy

It goes to show how far removed the financial markets are from the economic reality on the ground. The most encouraging feature of today's housing data is that median house prices actually rose month on month and year on year. When new home sales last jumped up surprisingly a few months back, house prices had actually fallen dramatically on the month, as developers cut prices to offload their inventory.

Monday's existing home sales data is more important because it constitutes 85% of the market. Also watch out for a US GDP revision for quarter 2 up to around 4% next Thursday, after positive revisions to the trade balance and durable sales components.

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This is July data, the credit tightening began in August, so it's a bit early to call the beginning of a recovery trend. However, I was still surprised by the figures, these were fairly modest house price cuts but the US consumer seemed to respond more strongly than I would have expected.

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This is July data, the credit tightening began in August, so it's a bit early to call the beginning of a recovery trend. However, I was still surprised by the figures, these were fairly modest house price cuts but the US consumer seemed to respond more strongly than I would have expected.

There's a video link on the Bloomberg home page that explains these figures - the guy on there says that this is pretty much expected, next month should show a drop to the downside, and September figures will look like a Wile E. Coyote cartoon.

I don't know who the guy was - might have been RB :ph34r:

Edit for spelling.

Edited by Crash Gordon

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Now cut the rate on that Helicopter Boy

Indeed. He must be considering a hike of at least .25% to cool the fastest rate of growth since 2005. The low $ must have triggered manufacturing and exports to a frenetic pace. It may be the US plan to avoid a recession--keep the currency competetive and let the overvalued currency nations take the fall? That way they don't have to adjust IR to keep the domestic economy on track.

Result: inflation beaten, manufacturing and exports up, deficits adjusted favourably, jobs saved and the only damage is 20% of housing which can recover quickly and return to nortmal levels once the froth in the bubble markets is blow off. In the meantime, the Eurozone slows down, bears the brunt of subprime and is left with overvalued currencies to cripple exports, import more cheaper Chinese tat and to lose out in golobal competitiveness.

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