The Banking and Strategy Initiative

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Housing Recovery 2012: The summer verdict from the Pending Home Sales data (US Economy)

FB options continue to provide relief to traders and speculators as they bet on a $25 pitstop and a below $20 price for the new Billboard Top 100 ( sorry, that should be the NASDAQ 100) on the options. The Pending Home Sales index based on Contract signings is finally out with a not so promising verdict for 2012 May and June as was evident from the uneasy gap between housing starts and closings and the low number for Single Family Housing. If the Housing permits data also breaks down, the new shoots in firming prices ( still down 67% in Las Vegas and Dallas) or in multi Family Rentals that seemed encouraging to individual investors even as PE brings new dollars to US and London real estate. The April Pending Home Sales data is down 5.5% after a last rush above 100 in the last month which meant Existing home Sales were up in April.

Individual investors though continue to stay away and the 5.5% drop in Pending Home Sales also means that after the drop in existing home sales in may and june we will have precious little left to cheer production data and Jobs for the still on track 2.5% – 3% US recovery in 2012. Romney is on of course running a tight challenge to Obama, though he cannot seem to run a tight ship (despite being so experienced in culling costs (jobs) at his client companies). Maybe Warren Buffet should be President.

An important data item is being mentioned somewhere else though in a little derogatory tone, where we are still encouraging of the fact. The mention – most of the US GDP recovery can be attributed to Auto Sales (perhaps, now that retail sales are not growing 5%  but 3% ). The data trackers continue to mention the impact of Auto Sales as 70% of the GDP. As we have traced in the months since October 2011, the Auto sales have indeed been a big contributer and with the American going for change and benefiting the Used car market also, the benefit to consumer credit data both in terms of a stimulus and in terms of keeping revolving credit down, has been beneficial to say the least. Another important factor from Autos leading the recovery is that Americans have greatly aided the MidWest in its recovery and then some.

Meanwhile March April data has not helped the fixed income Markets in the US, matching the fall in German yields. German 10 Y yields are now 1.34% and US 1.7% meaning that there is an oversupply of investors in the market. The 52 Week auction in the meantime stuck to its 0.185% yield third time in a row even as yields do not seem to stop from dropping.

Neither Apple and the Tech/Google gang nor the banks however are looking in a good condition though June might bring better surprises from Retail and  indeed Tech that got a real raw deal after Q1 and the Hedge Funds might report some accumulation in these apart from the new ones up at Ira sohn or indeed the omnipresent Disney. Bank of America and Sears continue to be of interest to the largest posse of Domestic and International investors looking at the USA and Commodities and thus most Energy and Mining plays could not launch themselves in Q2 either because of the mostly off factories and demand in China.  Meanwhile the MBA report also petered off in the Purchases despite a couple of bumps last month as Refi continues to dominate the Housing Finance signings

 

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