Tuesday, May 20, 2014

"Higher Mortgage Rates Dragged Down U.S. Home Sales"

From SF Fed (WSJ):

"The pronounced slowdown in U.S. home sales in the second half of 2013 was primarily caused by a rise in mortgage rates that made borrowing more expensive for potential home buyers, according to new research from the Federal Reserve Bank of San Francisco.

The U.S. housing recovery has slowed over the last year. Sales of previously owned homes, a key indicator that accounts for the vast majority of home sales, hit a seasonally adjusted annual rate of 5.38 million last July, according to the National Association of Realtors. Existing-home sales have slumped since then, and in March were down 7.5% from a year earlier."
This supports my interest rate increases are self-limiting hypothesis. This is also consistent with what Bernanke has been going around telling people at $250,000 (!) dinners:
"At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime"
In Japan, betting against government bonds during the 20 year deflation has been a "widow maker" trade:
"Since 1990, one trade that has always lost money, over any reasonable time period, has been the shorting of JGBs (Japanese 10-year)"
People are starting to realize that shorting bonds was a mistake - but they haven't embraced them yet.


theyenguy said...

Mike Mish Shedlock writes Emerging Fed Policy ... http://tinyurl.com/nkh2d6h ... If employment growth stalls, tapering will slow or halt. Long-term, hikes are longer off than most realize. Also, the Fed will never sell anything. Assets will be held to term.

The failure of credit, .... that is trust in the monetary policies have failed as evidenced by World Stocks, VT, Nation Investment EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, trading lower, ... has commenced.

Money market funds will soon break the buck, that is the traditional constant $1 Dollar Value, with the result that capital controls will be implemented and banks everywhere will be integrated into the Government, and be known as Government Banks, and in the US, the Bank’s Excess Reserves will be captured, so as to speak, by the US Fed.

There will be no raising of the US Feds Funds Rates; it simply will not happen. Banks everywhere will be integrated into regional governments, with the Eurozone and the US being leading examples of economic fascism. Savings and Loans, such as BOFI, Regional Banks, KRE, such as SIVB, HBAN, and RF, the Too Big To Fail Banks, RWW, such as BAC, will be integrated into the banks and be known as the Government Banks, or Gov Banks.

The dynamos of creditism, corporatism, and globalism are winding down on the failure of credit and breakdown of currencies. The singular dynamo of regionalism will be powering up the age of debt servitude, where regional economic stability, security and stability become the driving factors of economic activity.

Out of soon coming chaos, in particular a global credit bust and financial system breakdown, known as Financial Armageddon, seen in Revelation 13:3-4, a new era of trust will emerge, that is one where residents of the world’s ten regions come to embrace and in fact give homage to policies of diktat of regional fascists governance, and comply with schemes of totalitarian collectivism in mankind’s seven institutions, as is held forth in the dream given by angels to the Apostle John, while he was in his 90s living on the Isle of Patmos, and presented as Bible scripture in Revelation 13:1-4.

Those who are into short selling may want to consider using a portfolio of ETFs as basis for collateral.

One of these might be JGBS, that is a short of the Japanese Sovereign Debt.

A portfolio might consist of the following


Anonymous said...

This is also consistent with what Bernanke has been going around telling people at $250,000 (!) dinners:

lol. he's parlayed a career of inflating the money supply into a retirement where he inflates his own money supply