Back in the studio for the regular appearance with Kudlow tonite.
The topics will be Dow Rally, The Economy, Sentiment, and Earnings. Guests include Diane Swonk (Mesiro Financial), Brian Wesbury (1st Trust Advisors) and Stephan Abrahms (Trust Company of the West).
Should be rather interesting.
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Maybe you can bring up the 30% price cuts in Florida to justify your stance. Saw that at Global Economics Analysis
have fun with the cheerleaders. it’s gonna be a drunken frat party tonight.
“Diane [Swonk] is a true Goldilocks, it is the ‘Goldilocks Economy’ that’s a fairy tale.” – BR 09/27/06
A keeper and I love that woman seeing as she agrees with my $48 oil.
Like KirkH, check out Mish for a reference to DR Horton slashing 30% off prices in So Fl.
I was at a conference with Chris Thornberg of UCLA and he was stating the Conventional Wisdom position that there have to be big regional job losses (a la So Cal Aerospace in 90s or Houston Oil in 80s) for major price decreases.
In the 90’s So Cal home prices took 6 3/4 YEARS to fall 30% on average. This time, in some areas, prices have fallen that much already.
What Thornberg is not taking into consideration is the “blow-off” period of rampant speculation in 2004-2005 fueled entirely (at least in CA) by option ARMs caused the builders to ramp up production, and we are only beginning to see the front end of the supply overhang.
I think when the history books are written about this madness, ironically the builders will be seen to have suffered more by the Mortgage Industry’s abandonment of lending standards/outright fraud than the ignorant borrowers who signed on the dotted line.
As for Diane Swonk, I can’t believe she calls herself an economist…
Maybe I missed it by why have you not been on?
Big about face by Stephan Abrams. He was pounding the table for the miners, oils, industrials after the May meltdown. No longer. This was the first time I heard him acknowledge that something other than a soft landing is even a possibility.
But permabull Brian Wesbury will be as hard to turn as Kudlow. His call for 5.5% yields on the 10 year by year end is a pretty bold call. And 6% Fed Funds early next year? It’s kinda scary, because I remember 3 or 4 years ago he came in second only behind Ed Hyman in one of those WSJ polls of economists.
Kudlow was on at 8pm all last week, and has been on a political tear for a while — they are back (for now) to regular prograsmming.
I’d love to get Noah, Rutledge and and Herb back into the group rotation.
Also, I have a very cool program Larry signed onto — more about this next week . . .
Anybody else tired of the Dynamic Duo shouting match each week? I’d like to see Kudlow hand out a pistol and tell them to play Russian Roulette.
Lol. How about they fight it out with baseball bats? Whoever is left standing wins the argument.
And so we have the recurrent tension in the Kudlow show. Is it about stocks or political hacks yelling at each other? If hacks then move it to 8:00 permanently.
he was stating the Conventional Wisdom position that there have to be big regional job losses
i wonder what industries have been driving employment growth nationwide? maybe, residential construction? or how about, “finance” — which happens to encompass, oh, i dunno, mortgage underwriting? hrmm…
“But permabull Brian Wesbury will be as hard to turn as Kudlow. His call for 5.5% yields on the 10 year by year end is a pretty bold call.”I think that’s a very reasnable call.In all likelihood we have seen a bottom for 10 year treasury.But how can he be bullish if he is expecting the long end yields to rise.Shouldn’t that be very bearish for the housing market, consumer spending and hence the economy?Twisted sentiment I say.
We haven’t yet recognized the jobs slow down even though the monthly report has fallen from 170K to 120K. Luckily, the economy only needs 120K for full employment from last years 170K ?
The Ford cut back of 110 K jobs times the 3 multiplier will wipe out 3 months job growth (good jobs). The housing market has not finished tidyng up before they turn out the lights.
I think everything will be fine.
The builders will still be making money even if prices drop further. As long as they can sell a house for more than it cost them to build it, they will be profitable. I doubt the cost of building a house has increased by more than 50% since 2000. If commodities continue to collapse, then the cost of buidling a house should be at most 10-20% above what it was in 2000. That is the price floor that the builders can handle. They are still wildly profitable at prices being 2.5 times what they were in 2000. They will still be profitable if prices fall another 40%. The reason they are not planning more construction is that they only make a profit if there are enough buyers to buy all the houses. And it is easy to see that many parts of the country have an excess supply of houses now. House prices could easily drop below the cost of replacement and stay there for 5 or more years.
Diane is Goldilocks for sure. She is still asleep in the baby’s bed dreaming about soft landing and not aware that the bears have returned home.