« April 2007 | Main | June 2007 »

Some More Housing Charts

Thursday, May 31, 2007 | 11:27 AM

On Tuesday, we told the Housing story using mostly words. Today, we'll go with an only-pictures review:

More Mortgage resets are coming:


Chart via At These Levels


Median Period (Months) Completion to Sale




Last three charts via Northern Trust

Funny thing: The charts tell pretty much the same story the words did:  The housing story is only halfway done, going to get worse as time progresses. We are not anyway near a bottom in Residential Real Estate.


The Forgotten Resets
At These Levels, Friday, May 11. 2007

All Indicators Point to Continued Weakness in Market for Existing Homes
Asha Bangalore
Northern Trust, May 25, 2007

April New Home Sales – One-Off Fire Sale!
Asha Bangalore
Northern Trust, May 24, 2007

Q1 Case-Shiller Home Price Index
Asha Bangalore
Northern Trust, May 29, 2007

Thursday, May 31, 2007 | 11:27 AM | Permalink | Comments (61) | TrackBack (5)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Gates & Jobs Video

Thursday, May 31, 2007 | 08:54 AM

I seem to be focusing on Media today, so as a follow up to yesterday's post on Gates & Jobs, here are some very amusing video clips from their interviews.

The rest of the session can be seen at the All Things Digital

The complete Steve Jobs and Bill Gates interview videos:

Steve Jobs and Bill Gates Prologue
Steve Jobs and Bill Gates Part 1
Steve Jobs and Bill Gates Part 2
Steve Jobs and Bill Gates Part 3
Steve Jobs and Bill Gates Part 4
Steve Jobs and Bill Gates Part 5
Steve Jobs and Bill Gates Part 6
Steve Jobs and Bill Gates Part 7
Steve Jobs and Bill Gates Highlight Reel

Thursday, May 31, 2007 | 08:54 AM | Permalink | Comments (4) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Who the @#$%! does Jim Cramer think he is?

Thursday, May 31, 2007 | 06:44 AM

I love the cover of this week's New York Magazine: Who the @#$%! does Jim Cramer think he is?

Cover20070604_cramerYou will never read a more self-deprecating article from a living author in your life:

"God knows why, but there seems to be a market for this kind of idiocy. In that first year, the ratings took off; the network put the show in not one, not two, but three time slots; I made the cover of Business Week; and less than a year later, I was improbably filling college halls with cheering student fans (for some reason, college kids are an especially eager audience for my show). But sometimes it feels like for every person who likes what I do, there are a dozen who hate me for it. Mad Money has spawned legions of haters, people who write about the show and my character in really negative, sometimes pretty nasty ways. These people accuse me of being a clown or an idiot. Usually, I agree with them. When people ask for my autograph, I instantly hate myself. Half the time I don’t believe I even deserve a television show, and the other half I spend believing that no one is more deserving of a show. Slap me and I’ll change my mind like Faye Dunaway in Chinatown. People also accuse me of being irresponsible or giving bad advice. I don’t agree with that. Some of them have even questioned my integrity recently. That I find absurd.

As a 52-year-old father of two, a suburbanite, and a guy whose only big interests are stocks and sports, I find it incredible that I could be popular at all, let alone controversial. It is a mystery to me that I am so loved and hated at the same time, although I’m pretty sure writing an entire story focused on myself, like I’m doing right now, can only push more people into the hate column. When I wrote my first book, Confessions of a Street Addict, a disgruntled former employee came out with his own book about me at roughly the same time. I can’t remember who, but one of the funniest reviewers asked why the heck there was even one book out about Jim Cramer, let alone two! I’m not usually one to go in for humility, but this is the kind of question I find myself asking a lot lately. Don’t get me wrong: I love doing my show and consider it a success, but compare the numbers with the rest of cable news and you can see that there aren’t really that many people watching. And yet it feels like there are as many stories written about me as there are about a guy like Bill O’Reilly, who is much more controversial than I am, talks about more important things, and has a much bigger audience. Maybe it just feels this way to me because so many of the stories written about me are negative (and I’m the one noticing), but it seems as if I get a disproportionate amount of media coverage."

The entire article is worth a read . . .

DISCLOSURE: I am a contributor to TheStreet.com


Cramer vs Cramer
James J. Cramer
New York, June 4, 2007

Thursday, May 31, 2007 | 06:44 AM | Permalink | Comments (25) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Media Appearance: Kudlow & Company (5/30/07)

Wednesday, May 30, 2007 | 04:00 PM
in Media


Its the regular appearance on Kudlow tonite: We will be covering Executive Pay, the correction in  Shanghai, today's reversal in the markets and new highs on the SPX, and the FOMC minutes.

On board are Joe Moglia of Ameritrade, major Bear Gary Shilling, and Wendell Perkins of Johnson Family of Funds.
You know my view on most of the items, except Executive Pay.

There are three problems that seem to dog most of the egregious CEO COmpensation cases: 1) Full Disclosure in advance; 2) Board of Directors with conflicts of interests; 3) Failure to represent the Shareholder's interests.

As long as the Board does its job, is conflict free, and the pay packages get disclosed in advance, the Shareholders should be protected.

When those elements are missing  -- when there are conflicts of interest, a failure to disclose, and/or a Board not protecting S/Hs -- that's you get the more abusive situations we have witnessed . . .

Wednesday, May 30, 2007 | 04:00 PM | Permalink | Comments (6) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Steve Jobs & Bill Gates at All Things Digital

Wednesday, May 30, 2007 | 01:50 PM

This year's All Things Digital has a rare joint appearance of Steve Jobs & Bill Gates. 

Check out this classic magazine cover from Fortune Magazine, August 1991:

Wednesday, May 30, 2007 | 01:50 PM | Permalink | Comments (4) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Are Hedge Funds Ruining Traditional Sentiment Readings?

Wednesday, May 30, 2007 | 09:00 AM

I love when two articles covering the exact same topic reach directly opposed conclusions.

Typically, its not a case that one is wrong and one is right. More often, when this sort of thing happens, its because one reporter is writing the mainstream or traditional viewpoint, while the other is exploring something new.

The journalistic yin and yang this morning is on a subject we have written about frequently: Short Interest on the Nasdaq and NYSE. Bloomberg and the WSJ each have quite different takes on the subject.

Bloomberg's coverage was straightforward -- and decidely bullish:

"Ultimately you have to cover the short positions and that tends to create more of a buying frenzy,'' said Andy Engel, co- manager of the Leuthold Core Investment Fund, which has outperformed 99 percent of similar funds over the past five years...

James Paulsen, who oversees $175 billion at Wells Capital Management in Minneapolis, expects the S&P 500 to reach 1650 this year, partly because investors betting on declines aren't acknowledging that stocks are cheaper relative to earnings than in 2000 when the Internet bubble popped.

Shares of companies in the S&P 500 trade at an average 17.8 times earnings, compared with 32.8 times at the end of the last bull market, according to data compiled by Bloomberg...

"The last time we were here there was bloody optimism everywhere and enthusiasm about the future, and everything was going to go up,'' said Paulsen, chief investment strategist at Minneapolis-based Wells. "Today it couldn't be any more opposite. It's a pretty good environment."

Compare that with the WSJ's Ahead of the Tape column. It takes a decidely more nuanced view on whether or not this contrary indicator still works the way it used to: 

So-called contrarians typically see such bearishness as a reason to buy. The idea is that when investors are down on stocks, expectations are so low that the slightest inkling of good news can send prices higher. In contrast, when investors get too bullish, stocks get priced for perfection, and when perfection doesn't come, stocks decline.

But with hedge funds cutting a much bigger swath in the market, today's high level of short interest doesn't represent the bearishness that it did in the past. Many hedge funds engage in a strategy of offsetting the purchase of shares in one company by shorting another, betting that it will perform worse than the stock of the company that they own. Then there is the booming deals market, which drives merger arbitrage, where investors buy shares of companies set to be acquired and short the acquirers.

Because this short-selling doesn't represent real bearishness, says Bollinger Capital Management President John Bollinger, short interest no longer says much about what the mood of the market is. "Hedge fund activity has destroyed the usefulness of the numbers," he says.

Fascinating stuff!


Short Story: Bearish Bets Lose Bullish Bias
WSJ, May 30, 2007

Short Sales Break Record on NYSE; Market Bulls Get More Bullish
Daniel Hauck and Michael Tsang
Bloomberg, May 29 2007

Wednesday, May 30, 2007 | 09:00 AM | Permalink | Comments (31) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

China & The Mother of all Double Tops?

Wednesday, May 30, 2007 | 06:17 AM

Shanghai was down 6.5% this morning.

The alleged cause was news that Chinese officials were raising the tax on stock transactions from 0.1% to 0.3%. They have been trying to reduce the speculative bubble there, but to no avail. (Stocks in China are limited to 10% daily movement).

The Shanghai Composite hit 4334.92, its highest level ever. YTD, its up 62%, and since mid-2005, the index has gained 328%.

Marketwatch reports that "Outside of China, global markets declined on Wednesday, but not precipitously - the Nikkei 225 closed with a 0.5% loss in Tokyo, and the FTSE 100 declined 1.1% in London." 

What will be interesting today is whether or not it sticks. Here in the US, markets have up until very recently, been clawing back from any negative opening. Its only over the past two weeks that we have seen tired trading, with an inability to sustain a strong open.

The failure of the SPX at the prior highs -- 1527 on closing basis -- and an inability to make a new high has some technicians wondering if we are looking at the mother of all double tops. (I have no opinion on this).

Whether the straight up market is merely tired, or overdue for some sort of pullback, or if this is the start of something else is unknown for now.

Futures are in the red, with the Dow down 70, the Nasdaq off 10, and the S&P500 off 7.5

Today's trading will be quite interesting to say the least.

Wednesday, May 30, 2007 | 06:17 AM | Permalink | Comments (29) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Battle at Kruger: Lions, Buffalo, Crocodile

Tuesday, May 29, 2007 | 05:30 PM

One of the fascinating things about YouTube is that it grants you access to video you would never have come across on your own. There simply never was a mechanism for finding and viewing clips of this sort before.

"Media," tracing its way back to the Gutenberg Printing Press, started out broadcasting as a priviledged few-to-few. The rise of the Mass Media in the 19th (Print) and 20th (Electronic) centuries turned media into a few-to-many communication form.

Today, media is many-to-many.

Which leads me to this video clip from the South African jungle. It is utterly fascinating -- I can guarantee you've never seen anything like this before. Perhaps there are some lessons in it for life.

Via Investment Post Cards

Tuesday, May 29, 2007 | 05:30 PM | Permalink | Comments (33) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Housing Freefall Continues Unabated

Tuesday, May 29, 2007 | 10:30 AM

A few items on the Housing front worth reviewing this morning -- two data based, the other two are more of a media/anecdotal set of examples.

First, the Case-Shiller Home Price Indices shows negative annual returns in the U.S. National Home Price Index, the 10-City Composite and the 20-City Composite, as well as 13 of the 20 metro area indices.


As the chart above shows, the annual returns of the U.S. National Home Price Index was down 0.7% from Q4 2006 and down 1.4% from Q1 2006. This is only the second time in the quarterly national index’s history that the annual growth rate has fallen into negative territory. The first time was in the period between 1990 and 1991, as depicted in the graph above.

Shiller made the following comments:

“The fall of the National Index into negative territory, after more than 15 years of positive annual growth, is a reaffirmation of the pullback in the U.S. residential real estate market. The National Index was yielding solid returns as recently as a year ago. Q1 2006 growth rates were up 11.5% vs. Q1 2005, a sharp contrast to the returns we are seeing today.”

The second data point worth reviewing is the Existing Home Sales (released on Friday). The WSJ reported that Existing_home_sales_may_07"Sales of existing homes slipped in April to their slowest pace since June 2003, and a rising inventory of unsold properties appeared to set the stage for weaker prices."

The sales rate in April was down 10.7% year over year.

Existing inventory jumped yet again -- rising 10.4% to 4.2 million homes. At current selling rates, this is an 8.4 months supply (up from 7.4 months in March).

The number of unsold properties relative to sales hit a 15-year high.

So I think we can say that the bottom-calling/stabilization nonsense we heard from such housing experts as Treasury Secretary Hank Paulson were premature.

Third, we had heard repeatedly since from other "experts" from the NAR, and elsewhere that the Spring selling season was where we would see price firming and sales increases.

That turned out to be an over optimistic -- i.e., wrong -- expectation. An article in this past Sunday New York Times noted how simply horrific the Spring selling season has been:

"It's spring, the traditional time for hope and growth in residential real estate sales. But beyond the borders of New York City, there are indications that a wintry chill besets the market in much of the region.

On Long Island and in Connecticut, brokers report the inventory of unsold homes continues to build, while the number of buyers is reduced by new lending restrictions.

In New Jersey, the market seems to have slowed from March to April — just when things would ordinarily be revving up. The number of sales contracts signed in April declined in 20 of 22 counties monitored by the Otteau Valuation Group, which does market analysis for brokers. Even in Hudson County, which encompasses such sought-after riverfront towns as Hoboken and Jersey City, sales volume declined 21 percent."

Pretty amazing. Despite all fo the obvious data, the bottom calling conmtinues unabated. I wonder if Tres. Secy Paulson got an early look at the New Home Sales data, was unaware of how volatile and flawed it actually is, and made his "call" expecting to look smart. (See this, this and this).

If you want to know what the builders themselves have to say, go to this article from Bloomberg today:

"New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.

Monthly construction starts would need to jump by 21 percent to reach Seiders's benchmark for full recovery, which is 1.85 million. There were 1.53 million in April, the Commerce Department said. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes.

"We've fallen way below trend because we soared way above trend during boom times,'' Seiders said in an interview. "The upswing will be relatively slow, unlike earlier cycles.''

The inventory of unsold homes is the largest since the Washington-based National Association of Realtors started counting them in 1999 and house prices have suffered the steepest drop since the Great Depression, according to the realtors' group. Defaults and foreclosures also may rise as about $650 billion of loans to subprime borrowers, those with poor or limited credit histories, reset at higher interest rates by 2009."         

The housing story is only halfway done, going to get worse as time progresses. We are not anyway near a bottom in Residential Real Estate.



Spring Brings No Signs of Warming in Home Prices
May 29, 2007 09:00 AM EST PDF

Home Prices Could Soften as Sales Decline
WSJ, May 26, 2007; Page A3

It’s Spring. Somebody Tell the Buyers.
NYT, May 27, 2007

Home Construction Bust May Last Until 2011, U.S. Builders Say
Bob Ivry and Brian Louis
Bloomberg, May 29, 2007

Tuesday, May 29, 2007 | 10:30 AM | Permalink | Comments (23) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Real & Private Fixed Investment

Tuesday, May 29, 2007 | 07:09 AM

A nice pair of charts from the St. Louis Fed explains part of our fears for a contraction in the coming quarters. Note the shaded gray areas are prior recessions.


Private Fixed Investment


Note that both of these charts goe negative (as the top one did sometime ago) prior to any recessions.

Real Nonresidential Investment

The bright spots? The above chart has not yet slipped into the Red zone.

Also positive (albeit somewhat anecdotal) approach is this academic analysis below:


Academic studies* have shown that a spike in the number of stories appearing each month in the printed editions of the New York Times and Wall Street Journal that mention "recession" runs somewhat ahead of the actual economic contraction.

The rationale for this indicator is that periods of below-trend growth of sales, production, employment, and profits spur an increased awareness of the possibility of a recession developing. This awareness shows up as recession chatter in the financial press.

There are a few things to notice in the chart: First, “recession” stories seem to exhibit normal business cycle characteristics; the number of stories rises during periods of slow growth and recession and remains low during periods of economic expansion. Second, recession stories seem to peak toward the end of the recession, or shortly after, and then fall sharply—which suggests that this indicator might be useful in helping identify troughs,
though perhaps less so for peaks . . . Finally, despite a noticeable jump in the number of
“recession stories” in the Wall Street Journal in March 2007, both series remain at levels consistent with economic expansion.

Fascinating stuff . . .


Recession Rumblings
Kevin L. Kliesen
Federal Reserve Bank of St. Louis
May 2007

* Academic studies:
“Is a Recession Imminent?”
John Fernald and Bharat Trehan,
Federal Reserve Bank of San Francisco Economic Letter,
Number 2006-32, 11/24/06.

“Identifying Business Cycle Turning Points in Real Time”
Marcelle Chauvet and Jeremy M. Piger,
Federal Reserve Bank of St. Louis Review,
March/April 2003, 85(2), pp. 47-61.

Tuesday, May 29, 2007 | 07:09 AM | Permalink | Comments (9) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™