Posts tagged gyrations
Here’s The Story Behind The Worst June Ever For Housing
Jul 26th
Ignore all the month to previous month comparisons. May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.
The Census Bureau reports New Home Sales in June were at a seasonally adjusted annual rate (SAAR) of 330 thousand. This is an increase from the record low of 267 thousand in May (revised from 300 thousand).
The first graph shows monthly new home sales (NSA – Not Seasonally Adjusted).
Note the Red columns for 2010. In June 2010, 30 thousand new homes were sold (NSA). This is a new record low for June.
The previous record low for the month of June was 34 thousand in 1982; the record high was 115 thousand in June 2005.
The second graph shows New Home Sales vs. recessions for the last 47 years. Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000 … This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000.
And another long term graph – this one for New Home Months of Supply.
Months of supply decreased to 7.6 in June from a revised 9.6 in May (revised from 8.5). The all time record was 12.4 months of supply in January 2009. This is still very high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate.
The final graph shows new home inventory.
The 267 thousand annual sales rate for May is the all time record. This is a very sharp downward revision.
The 330 thousand in June is the worst June on record. With all the gyrations, it is difficult to see what is happening month to month, but overall this was a very weak report.
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This guest post previously appeared at Calculated Risk >
New Home Sales: Worst June on Record
Jul 26th
Ignore all the month to previous month comparisons. May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.
The Census Bureau reports New Home Sales in June were at a seasonally adjusted annual rate (SAAR) of 330 thousand. This is an increase from the record low of 267 thousand in May (revised from 300 thousand).
Click on graph for larger image in new window.
The first graph shows monthly new home sales (NSA – Not Seasonally Adjusted).
Note the Red columns for 2010. In June 2010, 30 thousand new homes were sold (NSA). This is a new record low for June.
The previous record low for the month of June was 34 thousand in 1982; the record high was 115 thousand in June 2005.
The second graph shows New Home Sales vs. recessions for the last 47 years.
Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000 … This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000.
And another long term graph – this one for New Home Months of Supply.
Months of supply decreased to 7.6 in June from a revised 9.6 in May (revised from 8.5). The all time record was 12.4 months of supply in January 2009. This is still very high (less than 6 months supply is normal).
The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate.
The final graph shows new home inventory.
The 267 thousand annual sales rate for May is the all time record. This is a very sharp downward revision.
The 330 thousand in June is the worst June on record. With all the gyrations, it is difficult to see what is happening month to month, but overall this was a very weak report.
America Movil: Promising Latin American Wireless Play
Jun 15th
Filed under: Stocks to Buy
High-profile Latin American wireless provider America Movil SAB de CV (AMX), first discussed here on June 24, 2009 at a price of $36.47, has weathered the market’s recent gyrations very well, and I obviously still like the shares here.
America Movil remains a new business titan with promise. Look for America Movil to post 10-12% revenue growth in 2010, followed by 11-14% revenue growth in 2011, led by improving performance in two, key markets: Brazil and Mexico. Subscriber growth should remain in the strong 9-11% range, in 2010, and margins will likely increase slightly.
Continue reading America Movil: Promising Latin American Wireless Play
America Movil: Promising Latin American Wireless Play originally appeared on BloggingStocks on Tue, 15 Jun 2010 16:30:00 EST. Please see our terms for use of feeds.
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Latin America – Mexico – America Movil – América Móvil – Business
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Four Stocks Raising Dividends and Expectations
Jun 4th
I am not a stock trader; I am a dividend and value based long-term buy-and-hold investor. When I add a stock to my dividend portfolio, it is my intention to hold the stock forever. I am not smart enough to time the daily gyrations of the stock market. When stock prices start dropping, our primal instinct of flight kicks in and we want to sell. In many cases that is the time to be buying. However, sometimes selling a stock is the right thing to do. In determining when to sell a dividend stock, I have one hard and fast rule:
Yeah, Yeah, Enough About Goldman, Can We Get On With The Rally?
Apr 21st
Can you spot the Goldman scare in the chart below?
This is the Volatility Index (VIX). Look closely. Follow the long declining volatility trend, and then you’ll see the Goldman scare as the small spike in the lower right corner. A blip relative to past gyrations.
The market has stopped caring about Goldman. Maybe it’s because the case looks increasingly shaky. Or maybe it’s because Goldman’s legal troubles have little relation to the business prospects of most listed companies.
My Own Private Cloud
Mar 30th
Cloud computing is the hot buzzword these days. This seems to be true whether you’re trying to find a safe online environment for your toddler or implementing some new mortgage technology. Everyone wants to be in the cloud or at least have their software there, but few seem to understand what it really means and, more importantly, which benefits accrue from the cloud and which from what you put in that cloud.
This is not a new problem. We went through the same marketing gyrations when we were all excited about OnDemand software, and Software as a Service (SaaS) before that. We saw the same general confusion when people started selling Services Oriented Architecture (SOA) as an improvement over Active Server Pages (ASP).
Battle of the buzzwords, one could conclude. But that’s not totally it. There are actual technology enhancements hiding behind each of these terms. Some are more subtle than others, but once they move out of the software engineering or R&D departments and over to marketing, they get reduced to whatever sound bite is most likely to gain traction in the marketplace. The danger here, of course, is that companies will begin to believe that their buzzword is the innovation. That’s never the case.
We’re seeing quite a bit of that floating in and out of the cloud right now.
Jacob (Gaffney, my editor) sent me an interesting piece of SPAM e-mail just this morning. Another company marketing a “private cloud” for kids, where everything would be safe and no one would ruthlessly rip away a child’s innocence. Hundreds of words, many of them buzzwords, and not a single comment about what the company will actually put in this private cloud, other than it would be warm and fuzzy, safe and sound.
This company will probably get funding, too. A quick trip to their webpage gives one access to more marketing speak, the promise that all basic services are free (though no mention of what they actually are) and an invitation to sign up and provide another data point to the company’s investors. And what do the site’s visitors get in return? Well, a visit to the cloud, of course. A huge welcome message fills the company’s home page.
This will probably work fairly well for people who have no idea that the cloud is simply a cluster of web servers sitting behind a node on the Internet, which, by the way, is exactly what the internet has been since the very beginning of its existence. The only difference between the so-called cloud computing of today and the original Internet is that users can now store their own software on these servers and execute it on their local computers through a web browser instead of simple HTML and little applets designed to run on those early browsers.
By that way, that’s not an insignificant advancement in computing. But no one is talking about how virtualization evolved out of screen scraping software to provide a user experience similar in most respects to that provided by software on a local machine or a local area network even though it’s delivered through a wide area network, like the Internet. No, instead, they just say, “Welcome to the Cloud,” like that’s what makes it cool.
To me, that’s like welcoming someone in off the street in front of my office and then releasing the confetti and striking up the band. “Welcome to the atmosphere! Smell that air? You’re breathing bona fide atmosphere, my friend. Drink it in! Our basic services are all free! Fill out this form so I can impress my investors.” That’s a little too P.T. Barnum for me.
I couldn’t care less about the cloud. It means nothing to me. Sure, having your software distributed across a server farm in a secure environment with anywhere access and automatic load balancing with seamless cutover in the event of a disaster is great. Knowing that server virtualization is allowing the data center managers to squeeze the most performance out of every server in the farm is fine and dandy. This is all great, but it’s also all commoditized. Data centers are not the source of competitive advantage. They are a basic requirement for cloud-based computing. Everyone in the game has to have one and they’re all pretty much the same, if they’re any good at all.
At the end of the day, it’s the software you put in your cloud that makes all of the difference. Any time a company spends more time talking about the cloud than the software, I know I’m just talking to another clown—or someone who thinks I’m one.
What Do Baseballs, Gravity & Program Trading Have In Common?
Mar 11th
(This post originally appeared on the author’s blog)
This post is intended to provide you with a deeper understanding of where I think our markets are going, how we got here, and why. I concluded my previous post with the question: “How should we model our current and future markets? Should we base them on previously proven market making strategies or should we venture into the unknown/unproven (algo/program) territory?
First, lets compare our current and past markets bullishness.One argue in years past bullishness was supported by a fundamentally strong market/economy correct?… Well then our current similarly bullish trending market MUST be supported by fundamentals! No problems here! If you are saying to yourself, “This guy is nuts, our current market is nothing like the past!”, you are in the right mindset to continue reading.. Though much to your dismay I am not nuts!
My brief thesis is as follows:
I believe the current speed of communication combined with the proliferation of electronically correlated markets have created a unrealized/unproven medium for gov/banks to simulate a healthy market via trading trickery regardless of where true market fundamentals lie.
In past buying the buying of fundamentally strong markets was rationalized, warranted and encouraged because the economy *appeared intact and growing. During these markets, dips were bought, fresh retail money gushed, thus was no need for “intervention” as we trended for 15 years until 1999-2000. Then 9 years of wild gyrations commenced, which turned out to be the markets way of informing the street the house was burning(still burning IMO). The (still) burning house which took 9 years of smoldering to ignite now has “crashed” “bottomed” and “almost recovered” in one year. CNBC would say; “Crazy, This is a record recovery!” Well, not really considering we are in an age which information is delivered instantly and a few key players control the entire market ebb/flow via ETF’s and free money(TARP/SLPs).
The few key players I mentioned above(we are all very aware of them) “thought up” a way to ramp our markets via trading trickery. “Thought up” meaning: Once the major banks realized there was a natural liquidity vacuum that was not going to plug itself, they devised a way to put our markets on life support.
*The easiest way to jump start a heart is a shot of adrenalin, the markets needed a shot of adrenalin after 2008. The markets syringe was filled with cash, injected directly via preferred share purchases and the creation of Supplementary Liquidity Providers. It was widely known major banks “pre 2008 crash” had been working with algorithms and HFT trading, though “pre cash injection” banks did not have the adequate ammo, regulatory head nod and or a real reason to release the unproven programs in full scale. Post crash & cash injection it was a different story. Once the banks concluded the best way to revive our markets was to put the new found piles of cash to work in the market via HFT and algorithmic program trading.This was only possible after the banks received a regulatory under the breath “go ahead”. The programs were released in full scale around Dec 2008 and have not been scaled back since. Now that all the firms know the “trading trick” they have by chance or design engineered a very focused and highly coordinated “recovery” which completely ignores the absolutely garbage/depressing fundamentals. The programs have created a market which naturally falls at any given moment until the programs step in “throwing” the market back into the air.
None of this would have been possible if not for the recent IT advances in trading technology. Now that the technology is readily available, our markets are now 100% running on what was intended to be temporary “life support”. At some point the programs will run out of money and the markets will then search for natural bids, *If any exist. The following analogy might help you better visualize how these programs are indeed keeping the markets from seizing up.
Think back to when you were a kid tossing a baseball onto the roof of your house/garage. Remember how hard it was to, first predict where the ball would roll off and second to catch the ball ounce it erratically popped off the gutter? Think about doing this for a year without dropping the ball once. It is not possible right? Now replace the baseball with “the index(s)” and your glove/arm with “life support programs”, when the programs ramp us hard the index(s) are being thrown back onto the roof. As the index(s) trickle back with gravity they approach the edge of the gutter, (or support) the index(s) reacts unpredictably before plunging towards the “life support programs”(glove). Since they are so fast, their gloves are always in place to catch the ball. The program then throws the ball back up onto the roof.. and repeat, repeat. Sometimes the ball(index) gets a bit closer to the ground causing the programs to scramble around the driveway wildly, though the ball is always eventually scaught.
Until we can throw the ball over the roof effectively putting an end to the cycle we are playing with fire betting against gravity. Eventually what goes up and is not securely held in place with permanence (FUNDAMENTALS) must come down. So are we on our way to 20 more years of up trending? Probably not. The markets need a real catalyst that will naturally keep the ball from rolling back off the roof, the life support programs created by banks are simply playing pitch and catch with only one participant, it can only last so long before the fun is over.
In closing I will leave you with an alternative theory explaining why our current markets are they way they are: Basic economics 101 tells us it is possible with enough capital and knowledge of the market to cause distortion in perceived real “demand” thereby cornering a market *artificially driving the price higher. Or for those who did not sit through Dr. Self’s Econ 101; “to purchase enough of a particular stock, commodity, or other asset to allow the price to be manipulated“, much like crude traders the past year(s). Could this be what is happening to our markets on a huge scale? Perhaps the “true demand” or market price(s) remains drastically lower? If this is the true what will happen when the manipulator is outed, or exits the market? Am i saying this is happening, not exactly, though I do believe massive collusion is possible if enough parties are “in the know”.
The most boring yet most widely believed explanation i have for you is: The buying could just be systematic “price discovery” programs pushing the index(s) up to resistance levels to reveal if fresh buying will follow. Either way, if we keep going up why not ride it….Only time will tell.
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