Media Appearance: Kudlow & Company (12/27/06)

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Once more unto the breach, dear friends, once more;

Back in the studio tonite, at 5:30 – 6pm.  The topics will include THIS, as well as the market rally, Holiday Retail Sales activity, New Housing data, and of course, other more amusing economic data.

Guests include the forthright John Rutledge, and Art Laffer and Jim Huguet (author of Great Companies, Great Returns).   

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UPDATE: December 27, 2006 7:20pm

A classic example of "leaving it in the locker room." No only did I only get in two wishy washy  sentences, but the best stuff came during the commercial breaks between segments.

We went over the long and short sectors, individual names, and nothing made it on the air.

Best line: the day I throw in the towel and flip Bullish, is the day you want to shor tthis market to all hell.    

Better luck next year

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A few random thoughts about these items:

1) Its the last week of the year, volume is thin, and mutual fund are having some fun.

2) November’s new sales numbers are encouraging, but recall just how subject to revision this data is:

The Census Bureau counts a house as sold when the contract is signed. If a buyer cancels the contract, however, Census does not readjust the numbers. Thus, sales are overstated — and inventories understated — for the month the house is initially sold. (And when that house is sold, the reverse happens).

Note that the homebuilders have been reporting cancellations in the 30%+ area — you can see why these initial numbers are suspect.

3) The sharp 15.6% drop in mortgage applications reported by the Mortgage Bankers Association for purchase loan applications confirm implies that new Home Sales may be overstated.  Wait for the revised New Home data.

4) Lastly, the following email comes to us via a Lennar sales person — note that these homes are being sold, with add-ons, at greatly reduced prices, and in some cases, at a loss (click for email)

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You are only ½ mile East of US 75 across from Twin Lakes State Park & minutes from Siesta Beach, rated one of the finest beaches in the world or Saint Armands Circle, the Rodeo Drive of Florida or maybe hop on down to a concert at the Van Wezel or a play or maybe an opera at Sarasota’s magnificent opera house. In short you are at the center of all Sarasota has to offer but without living in all the hustle & bustle of the West side of the Trail.

Our homes at Red Hawk Reserve define comfort, grace and luxury but yet are very affordable. Of course all our homes come with everything included ‘EI’,

From swimming pool & spa to crown molding, trey ceilings as per plans, all top of the line stainless appliances & much, much more to make your home truly your castle!

Come by for a visit and see truly affordable luxury at its best!

Let’s play, Lets make a Deal !

Year End Sale!

2 Grande St. Charles’s 3200 sq.ft loaded with pool & spa
Site 127 orig. $837,900 now $619,900
Site 132 orig. $853,400 now $639,900

Oxford LTV 3600 sq.ft. site 142 loaded with pool & spa
Orig. $878,900 now $719,900 save $159,000

Grande Chatham LTV 3900 sq.ft. site 140
Orig. $902,900 now $772,142 save $130,758

All homes are loaded with pools & spa!

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What's been said:

Discussions found on the web:
  1. Cherry commented on Dec 27

    Always wait for revision. Really one half year of revision in reality. They can “base” upward revisions one month and then downward the next, then downward the next month, before upward again lol. Though mostly down in downturns and up in upturns. But it takes them 6 months before they can actually get the general range of number lol. Generally NHS’s are about 1.000 or 200-300 off the peek. I would suggest 750 is a good bottom point, at the tale end of a recession, before they sluggishly start to average upward again.

    FWIW, you should tell Kudlow the housing market is taking a nasty dump this month. Demand is down, down……..down. Worst since June-August “death spiral”. If it continues into January, it will real beginning of the housing bust as production(the best way to moniter housing) moves from average rates to below average rates.

  2. RealBeast commented on Dec 27

    I was just out in Northern California and the most exclusive Toll development (Norris Canyon in San Ramon) knocked over 10% off their list prices and nothing is selling.

  3. jjr commented on Dec 27

    Is anyone else paying attention to the technical breakdown in the long bond, as evidenced by TLT? IMHO, this is not a good development at all for the equity markets. It is quite troubling. I guess the bond traders don’t window dress.

    This intoxicated 2006 market is in for a nasty hangover come 2007.

  4. dblwyo commented on Dec 27

    Barry – having given up TV for religious reasons are you all available on-line somewhere ?

    Just-in-Case you get this aforehand [ :) ] Nov’s sales are up MtoM but down over 16% YtoY. For housing to ‘recover’ means that, in a slowing economy, annual sales growth must remain at the high end of a range stretching back several decades. Highly unlikley – would expect a reversion to the mean.

    In any case permits have fallen off a cliff and are accelerating and are lagged by 6+ months by completions and construction employment. Calculated Risk projects another 500-600K jobs to be lost in the next 2-3 quarters unless the aforementioned 2 stand. dev. growth in sales continues of course.

    All that before we get to MEW declines !

    Of course mentioning any of this would cement your reputation as the bear’s bear rather than the fact-based & hypothesis-testing analyst we know.

  5. theroxylandr commented on Dec 27

    >>> Of course mentioning any of this would cement your reputation as the bear’s bear rather than the fact-based & hypothesis-testing analyst we know.

    Right. Better keep your mouth shut, or they will redicule you. The smart will understand the meaning behind the words, or just will stop by to this blog and read the words :-)

  6. Barry Ritholtz commented on Dec 27

    I can only call ’em as I see ’em.

    If I were all that smart, I would find something more productive to do this week then schlep to NJ for 20 minutes of econ-o-chatter.

  7. Mike_in_FL commented on Dec 27

    JJR — Yes, I am (watching the long bond, anyway). I put a chart up on my blog showing the uptrend line break on the continuous future. It’s a thin holiday week of course, so it’s tough to make much of any moves in stocks or bonds. But it definitely bears watching, especially when a big reason for the bounce in home sales appears to be the decline in rates off the June/July high.

    http://interestrateroundup.blogspot.com

  8. Eclectic commented on Dec 27

    Ben Dover says to pass along his best wishes for everyone that’s short…

  9. MAS (San Diego) commented on Dec 27

    Take a shot whenever Rutledge mentions China or Laffer says “You’re exactly right Larry”.

  10. Eclectic commented on Dec 27

    I don’t suppose the current status of the economy could be laid out any better than Roubini did in his Dec 27 piece.

  11. Eclectic commented on Dec 27

    Barrry,

    It’s a few minutes before you appear on Kudlow, and I reckon he’ll be a-eatin’ on yo ass.

    I’m a-gonna knock back thissl heer4re bourvurbon adf nd dssiet codcvke and watcgh yeewww skirmm.s

  12. jjr commented on Dec 27

    Mike_in_FL, I do try to check in on your blog daily. Keep it coming. I agree that it’s a thin week everywhere, so not to read too much into prices this week. But TLT has decidedly broken down, and ^TYX has decidedly broken out. I’m not entirely sure what this is telling us. It is not good for the mortgage market, if this is a trend developing.

    I don’t think it’s particularly good for the stock market either. Jeff Saut recently discussed the possibility that rates go up next year from a heating up economy. I would offer up the possibility that the FOMC could be caught between a rock (the Economy) and a hardplace (the dollar), and simply not do anything … or God forbid raise rates into a weakening economy.

    It hasn’t made sense to me that the 30yr bond has had such low yields, except that foreigners have been buying and the MBS/CDS market has impacted pricing. I wonder how much the growing problems w/ mortgage defaults are causing bond investors to demand higher yield? The yield curve is going to de-invert, no doubt. But what happens if it’s by the long end rising instead of the Fed dropping the short end, as the market has been predicting?

    Eclectic, what about those who were short in CLWT today? I was. If that’s Ben’s best wishes, keep ’em coming. Does none of you perma-bulls pay attention to the grossly speculative activity in more and more marginal issues, and know what this tells you about the market cycle? When does the dreck rise?

  13. DD commented on Dec 27

    tell laffer his money will be no good soon…the buttons on his shirt will be worth more than his dollars…

  14. Eclectic commented on Dec 27

    Wull jjr,

    Pardon me fer fergittin’ tha’chew’s a na’chl-born genius!

  15. Eclectic commented on Dec 27

    S-o-a-r… damn, what a word! S–o–a–r!!

    It’s even fun to say it.

    Soar… Soar… Soar…

    I’m gonna gotemlts slerrsleep tiinite sayinggg sooaarrrr!!!

  16. scm0330 commented on Dec 27

    ok, lonetime lurker and first time poster…finally breaking the seal. Barry, I offer you respect and admiration for your thoughtful views, and you’re a regular stop on my blog watching, BUT: too often I smell from you cherry-picking and glass-half-full perspectives on the data; I know, and can appreciate, flaws in the data but, you know what, usually the market trades off the dumb info, not the smart info; as someone posted a few days ago, it’s entirely possible (probable?) that in this hugely diverse economy, sure enough we have some rolling recessions in housing, Detroit autos, etc. but we still hang in (may God Bless Liquidity, and China); Barry, don’t stop what you’re doing, but I’m about to consign you to one end of the seesaw, with perhaps (I can hardly believe I’m saying this) a toad like Cramer at the other, and with the truth and, more importantly, the money-making, somewhere closer to the center.

  17. scm0330 commented on Dec 27

    sorry, I meant “glass-half-empty”…it was the vodka talking.

  18. DD commented on Dec 27

    how the hell are you short a 31million dollar company…the long end rises when the foreigners come calling for their debt, and we have to tell them we spent it all and then some. That’s when all this comes to pass and the american people realize what has been done to them. Personally none of this bothers me…i will move somewhere nice like Mumbai. But when the Chinese come calling for their money and we tell them NO on the old debt and here comes the funny part…that we need even more money…and for them to please re-peg the yuan to the $ because this 4dollar role of toilet paper is killing us! We want our cheap goods back!! People like Barry will need all types of artificial limbs and expensive drug cocktails(especially the ones that make sexy time possible). But the Chinese say “NO!” until we pay up on the old debts…that’s when decades of suppressed inflation show up in your laughable CPI. anyhow…bored of this…have a happy new year btw…

  19. Larry Nusbaum commented on Dec 27

    Barry: what do you mean “and mutual funds are having some fun. “?

  20. Barry Ritholtz commented on Dec 27

    Today is the last day (T+3) for any rejiggering of portfolios — anything purchased tomorow or Friday won’t clear to show up as owned in 2006

    That, and of course, window dressing.

  21. Larry Nusbaum commented on Dec 27

    and, what advantage does that give a fund? Do they not want something they buy (and sell) to show up in the printed holdings?

  22. void commented on Dec 27

    “The day I throw in the towel and flip Bullish, is the day you want to short this market to all hell.”

    Isn’t this the fear that keeps one from recognizing the trend that is going against them?

    I am 70%+ in cash with dabbling long and short positions – all short term – so am no raging bull.

    But when I used to trade less frequently I would many times get stuck in similar positions. Would stick to my guns, then the market would break in my direction and with the break in tension, I would be tempted to quickly exit with losses – smaller than maximum but still significant losses.

    Whereas if I admit I am wrong early then I preserve the actual and emotional firepower to re-apply when the time is right.

    My 2 cents of hard learned wisdom.

    Best wishes to all.
    Sanjeev

  23. Teddy commented on Dec 27

    Heads up to Ron Sen whose latest blog entry quotes John Succo as stating that foreign central banks are buying more of our stocks and less of our debt to preserve their capital. This would explain the action in TLT and stocks today. But what are foreign central banks preserving? Their mercantilism is creating excess money in their local currency with consequent inflation because it’s awfully hard to sterilize the money needed to satiate US credit needs.

  24. Donaldo commented on Dec 27

    Larry,

    What he means is that if Mutual funds want some stock to show up/not show up in their portfolio, they have to buy it/sell it by today, else the positions won’t clear by the end of the yera and the stock won’t show/will still show up as owned in the mutual fund portfolio.

  25. Richard commented on Dec 27

    70% in cash? how many others here are way overweight in cash? all you had to do was drop it in the DOW index fund and you’d be up almost 17% YTD. people people, being a bull or a bear doesn’t have to be a religion you’ll die for. great for cocktail party chatter but not for making money.

  26. Cherry commented on Dec 27

    70% in cash? how many others here are way overweight in cash? all you had to do was drop it in the DOW index fund and you’d be up almost 17% YTD. people people, being a bull or a bear doesn’t have to be a religion you’ll die for. great for cocktail party chatter but not for making money.

    Yup, then it all comes down and you enjoy that position of cash even more.

  27. ac commented on Dec 27

    I would expect the MBA numbers to continue down in coming quarters reflecting the further tightening of credit. I believe we are now officially at the point of the entire credit bubble bursting.

    The credit bubble bursting will be reflected in coming data. Those alarmed by the current foreclosure activity, NPL numbers, and delinquency rates had better get accustomed to continued headlines reflecting an over-leveraged consumer.

    This will also lead to a bursting of the private equity bubble, funny thing is, the end tickets are yet to be booked & inventory is high. People screaming about massive liquidity are about to get a wake-up call in coming months

  28. M.Z. Forrest commented on Dec 28

    Take a shot whenever Rutledge mentions China or Laffer says “You’re exactly right Larry”.

    I didn’t watch. How many drinks do I get?

  29. whipsaw commented on Dec 28

    hmm, well my take is that markets are doing well mainly because once you throw the keys to GS, you can expect that for a while regardless of what the economy is doing. But the “Mysterious Bid” that has been in place since July appears to be mostly Asian banks and I suspect that we will find out all about why that is a bad thing in due course. In the interim, the long side is clearly the right side.

    BR blew it on his macro predictions for this year, but I attribute that mainly to manipulation and now would describe it as a timing issue more than anything else. We’ll see what happens next, but I am pretty sure that the market is going to display some unusual seasonal behavior.

  30. Eclectic commented on Dec 28

    No, seriously… it was a good show. You said more with facial expressions than words… unless that was gas… or you were just dodging Kudlow’s pencil.

    Most fun was “clown car” comment from Rutledge, which conjurs a beautiful description of just what that entourage amounted to.

    Bernanke must’ve thought to himself: “Hmmm, let’s see now, how can I take these first few fleeting public perceptions of my wisdom and judgment and turn them into silly putty?…. Oh, yeah, I know… I’ll hop a plane with Paulson and we’ll go play the Chinese a set of ping-pong doubles!”

  31. Teddy commented on Dec 28

    What’s happening with AAPL? And what’s happening with Sarbanes? Let’s see what the Democrats do about corporate welfare.

  32. Leisa commented on Dec 28

    I tried to catch BR, and I did see a great inhalation for some wind behind the sail of some erudite commentary when there was a cut to the break–a dancing, elfin Kudlow.

    Barry, I have to say thank you for that link. After xmas a.m. festivities, I proceeded to elf most of my beloveds and friends. I even elfed Tim Knight and Bill Cara. It was terrific fun–and really something special to share with your kids. Nothing is so cathartic as a good belly laugh and that was certainly the wellspring of many in my circle.

    Re Rutledge’s “clown car” comment. Yes, it was so funny, but I think that Paulson and Bernanke are anything but clownish. I see Bernanke as a thoughtful, measured Fed chair, and he seems committed to raising some of the more danker issues (those issues generally consigned to mildew in the basement of public discourse)into the light of public discourse. AG always seemed much too amused with himself–and his last call that the housing market has bottomed (this was prior to HOV declaring that they hadn’t forecast a bad enough scenario and had to write down assets some more) was the very essence of clownishness.

  33. jay commented on Dec 28

    just a thought: we know that there is a major flaw in the calculation of the number (contract cancellations are not counted). however, don’t lose sight of the trend from last month as the same flaw was inherent in last month’s data.

  34. MAS (San Diego) commented on Dec 28

    M.Z.–
    Rutledge mentioned China 2 times.
    Laffer said “You’re exactly correct Larry” 1 time.

    3 shots.

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