US existing home sales YoY fell for the seventh straight month, -4.10% in September.
Existing home sales median price YoY has cooled to 4.2% YoY while inventory remains below the long-run average.
There is little doubt that Federal Reserve policies have resulted in mispriced risk and massive distortions in the economy. Fed Chairs Bernanke and Yellen were masters of distortion (keeping rates too low for too long) while Fed Chair Powell (Hurricane Jerome) is raising rates rapidly in the face of little-to-no inflation. Throw in Hurricane Florence and we have “The Mist” where fear changes everything.
Housing starts for September were released yesterday and, as expected, the numbers were down across the board (except for the West where it is seemingly always sunny).
1-unit starts (aka, single family detached) are still below 2000 levels thanks, in part, to The Federal Reserve dropping their target rate like a hammer to 1%. We got a massive construction response. That blew up, so The Fed dropped their target rate like a hammer … again from which Hurricane Jerome is only recently begun raising.
But it is with multifamily (5+ unit starts) that Fed rate increases are being daunting.
In a sense, The Fed destroyed the single family detached housing market (along with other misguided Federal programs) and now The Fed is applying its mist to the multifamily market.
Courtesy of the great Jesse’s Cafe Americain!
There was a time when Sears sold houses, rifles, electric belts, autos and groovy (Eleri) pants in their catalogs. But alas, those times are gone. There is only so long that a company can survive of negatve EPS.
But Sears is not alone. These companies are on Bloomberg’s distressed list.
Here are some of the pages from old Sears catalogs.
Maybe for my ailing back!
Why is there an electric wire attached to “The Netherlands”? Or as Ron Swanson called it, “The Nuggets”?
It was inevitable. Federal Reserve rate hikes and balance sheet shrinkage is having the predicitve effect: killing mortgage refinancing applications.
And mortgage purchases applications SA have stalled in terms of growth with Fed rate hikes and balance sheet shrinkage.
WASHINGTON, D.C. (October 10, 2018) – Mortgage applications decreased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 5, 2018.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 2 percent higher than the same week one year ago.
The refinance share of mortgage activity decreased to 39.0 percent of total applications from 39.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.3 percent of total applications.
The FHA share of total applications increased to 10.5 percent from 10.2 percent the week prior. The VA share of total applications remained unchanged at 10.0 percent from the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.
The bloom is off the rose for homebuilders. Yes, it had been a great run, fueled by The Fed’s zero-interest rate policy (ZIRP) and asset purchases (QE). But despite a roaring economy, SPDR S&P Homebuilders ETF have been falling since January as The Federal Reserve Open Market Committee (FOMC) sticks to their guns and keeps normalizing interest rates.
Yes, the Fed Dots Plot project indicates that there is still upside momentum to short-term interest rates.
And the Fed’s System Open Market Accounts (SOMA) show a declining inventory of Treasury Notes and Bonds to let mature.
So, let’s put on some groovy pants, put on Iron Butterfly, and chill.
10 year Treasury Note shorts just hit an all-time high as speculators bet on more interest rate hikes and rising 10 year rates.
Because .. that’s the way Central Banks like it!
(Bloomberg) — The Pimco Total Return Fund could be headed for its first annual loss since 2013 as the bond firm’s former flagship lags behind competitors four years after the ouster of longtime manager Bill Gross.
Hurt by rising interest rates and emerging-market bets, the $70 billion fund fell 1.62 percent this year through September, ranking in the bottom 30 percent of its peers, according to data compiled by Bloomberg. It also narrowly trails the Bloomberg Barclays U.S. Aggregate index, which has declined 1.6 percent this year.
Total Return’s last negative year was 2013, when it lost about 1.9 percent. Since its 1987 inception, the only year it had a bigger decline was 1994, when it fell 3.6 percent as interest rates soared.
Of course, The Federal Reserve isn’t helping Pimco’s fund, particularly since The Fed started their great unwind of their balance sheet.
Mall retail anchor JC Penney is yet another victim of the on-line shopping revolution. Note that JC Penney lost 50% of their stock price between early 2007 and the beginning of The Great Recession. It has gone from over $80 per share in early 2007 to under $2 per share today.
And their corporate bonds, once at par in 2010, have swooned to $44.625 today.
Of course, JC Penney has had relatively attroicious earnings per share growth, in part due to on-line sales from competitors and changing consumer tastes.
Yes, American retail shopping malls are getting Bezos’d. Or Darth Malled.
Lumber futures, a harbinger for housing, are down solidly on the year amid weaker demand.
And US homebuilding companies relative to the S&P 500 index has been falling since 2017.