Please note I don't follow most of these figures, surveys, and government junk reports - all I care about is what the companies themselves say, but I just found the headlines amusing when amassed in 1 spot so this is why I highlight it.
Job Worries Sink Consumer Confidence
- Consumer confidence plunged in February as Americans worried about less-favorable business conditions and job prospects, a business-backed research group said Tuesday.
- The Conference Board said its Consumer Confidence Index fell to 75.0 this month from a revised 87.3 in January.
- The reading was the lowest since the index registered 64.8 in February 2003, just before the U.S. invaded Iraq, researchers said, and was far below the 83.0 expected by analysts surveyed by Thomson/IFR.
- The expectations index, which measures consumers' outlook over the next six months, fared even worse. The expectations index dropped to 57.9 from 69.3 in January. The February figure was a 17-year low, the Conference Board said, standing just a bit above the 55.3 of January 1991.
- "The weakening in consumers' assessment of current conditions, fueled by a combination of less-favorable business conditions and a sharp rise in the number of consumers saying jobs are hard to get, suggest that the pace of growth in early 2008 has slowed even further," Franco said in a statement accompanying the report.
Home Prices Drop 8.9% in 3 Months
- U.S. home prices lost 8.9 percent in the final quarter of 2007, Standard & Poor's said Tuesday, marking a full year of declining values and the steepest drop in the 20-year history of its housing index
- "We reached a somber year-end for the housing market in 2007," said one of the index's creators Robert Shiller. "Home prices across the nation and in most metro areas are significantly lower than where they were a year ago. Wherever you look things look bleak."
- The S&P/Case-Shiller home price indices, which include a quarterly index, a 20-city index and a 10-city index, reflect year-over-year declines in 17 metropolitan areas with double-digit declines in eight of them.
- Home prices also plunged 5.4 percent from the previous three-month period, by far the largest quarter-to-quarter decline in the index's history. The previous record was the revised 1.8 percent drop in the third quarter of 2007.
- Miami continues to lead the weakest markets, posting a 17.5 percent annual decline. Las Vegas and Phoenix followed with a 15.3 percent drop each. Los Angeles, San Diego, San Francisco, Detroit and Washington, D.C. all recorded double-digit annual declines.
- Only three metro areas -- Charlotte, N.C., Portland, Ore., and Seattle -- showed year-over-year increases in prices, but Seattle's growth was up a slim 0.5 percent. (go Seattle! Got a lot of readers there!)
US Home Foreclosures Soar in January
- The number of homes facing foreclosure jumped 57 percent in January compared to a year ago, with lenders increasingly forced to take possession of homes they couldn't unload at auctions, a mortgage research firm said Monday.
- Nationwide, some 233,001 homes received at least one notice from lenders last month related to overdue payments, compared with 148,425 a year earlier
- The worsening situation came despite ongoing efforts by lenders to help borrowers manage their payments by modifying loan terms, working out long-term repayment plans and other actions
- January's tally represented an 8 percent hike from December. (that's a heck of a sequential increase, thankfully it will be all fixed by 2nd half 2008)
- One dramatic trend last month was a 90 percent spike in the number of properties that were repossessed by banks, compared to January 2007. "It suggests that there's little or no equity in a lot of these homes, because they're not even being sold to investors at auctions, and it suggests a continuing weakness in a lot of markets in terms of real estate sales," Sharga said. (remember, we are going to a country full of upside down home owners, people who are UNDER WATER - they owe more than their home is worth - and it's getting worse by the DAY)
- A wave of adjustable rate mortgage resets expected in May and June threatens to push many other homeowners into default.
- Nevada led the nation, with 6,087 properties receiving at least one filing, up 95 percent from a year earlier but down 45 percent from December, the firm said. Rounding out the top 10 states with the highest foreclosure rates were California, Florida, Arizona, Colorado, Massachusetts, Georgia, Connecticut, Ohio and Michigan.
Wholesale Prices Jump in January
- Battered by bad economic news, consumer confidence plunged while wholesale food, energy and medicine costs soared, pushing inflation up at the fastest pace in a quarter century.
- The Labor Department said Tuesday that wholesale inflation jumped by 1 percent in January, more than double the increase that analysts had been expecting.
- The January inflation surge left wholesale prices rising by 7.5 percent over the past 12 months, the fastest pace in more than 26 years.
- Food prices, which have been surging because of increased demand stemming from ethanol production, rose by 1.7 percent last month, the biggest monthly increase in three years. Prices for beef, bakery products and eggs were all up sharply.
Again, I don't take stock in government reports, surveys, and the like - they are all inaccurate and subject to clever subtle changes to make things look better than they are. But it certainly is some amusing reading when overlaid to a market running hard and fast. People will say it is all priced in... highly doubtful. In the end, stock prices are a reflection of corporate profits. The Kool Aid of the past month or so has been, yes we're in a rough patch but by 2nd half of 2008 things will be all fixed. Sometime in the next 4 months that will change to (mark my words) yes we're in a rough patch but by 1st half 2009 things will be all fixed. So we will rally on a false belief in the Fed's power to fix everything, and a false belief in full year 2008 estimates based on a roaring economy/consumer coming back like magic to the economy once we hit July 4, 2008. So as long as this is the religion on the Street, we can get counter trend rallies of large proportion.
We went through the exact same thing in September/October 2007 when the market rallied in the face of continued bad news on "this is a 2nd half 2007 issue, everything will be better by 1st half 2008" mantra. Notice how the theme never changes, only the dates? :)
Again, we'll let the charts tell us when to change views and join the Kool Aid drinkers in full "see no evil, hear no evil" stride. If the S&P 500 can make it out to 1420+ or so, then a longer term downtrend will look to be broken. We did break S&P 1370 which has been a thorn in the side of bulls for a while now. The next resistance level is the 50 day moving average at S&P 1390. 10 points away - we'll see how the market handles that point.
While I am a bear on the economy (Main Street) I always respect Wall Street works in it's own parallel universe - when the technical condition of the market improved in September 2007, I put my "see no evil, hear no evil" googles/earlplugs on and went into Kool Aid bull phase - it is useless to fight a stampeding herd of Kool Aid toting bulls, so if we get to a similar stage I will go find my goggles/earplugs once more. But first the technicals must confirm the Kool Aid.
