King Report:



Let’s say that an aging baseball slugger who had abused performance-enhancing drugs for over a decade had a horrendous collapse in his hitting statistics. So the team put him on even stronger doses of steroids, HGH, testosterone, dianabol, insulin, protein shakes, creatine, glutamine and unknown powerful designer pharmaceuticals.

The team had him do Olympic and ballistic [weight] lifts, plyometrics and intense ‘core’ training. Though the slugger’s home runs and RBIs had fallen over 30% from the previous year, he started to hit one more HR per month and a few more RBIs.

This is the US economy and financial system. Trillions of dollars have been poured into the system and economy and trillions more have been pledged to buttress troubled entities. There have been nationalizations, record stimulus and various inducements for consumer to spend more money. And all this is producing is modest m/m gains or smaller losses!

At some point the US, like the slugger, must come off the juice, or the artificial boosts will blow them up.

Even though MLB has a shoddy enforcement and drug testing record at least it isn’t the entity injecting the massive amount of unnatural stimulants.

Upon further review yesterday’s economic data was not as jiggy as initially thought.

MarketWatch on New Home Sales:   Sales for last month, while 13.4% lower than in July 2008, are up 31.6% from the January bottom, the data showed…Government statisticians have low confidence in the monthly report on new-home sales, which is subject to large revisions and large sampling and other statistical errors.

In most months, the government isn’t sure whether sales rose or fell. The standard error in July, for instance, was plus or minus 13.4%…The government says it can take up to five months to establish a statistically meaningful trend in sales…
For all of 2008, 485,000 homes were sold. In 2007, it was 776,000…   [How can 433k now be good?] Sales rose in three of four regions, led by a 32% rise in the Northeast [from 3k to 4k] and followed a 16% gain in the South.  Sales rose 1% in the West but fell 8% in the Midwest.

If one takes the time to read the details of the US Census’ report on New Home Sales, they will find that Not Seasonally Adjusted, New Home Sales are DOWN 31.1% year-to-date!  They will also find that NSA July sales increased only 3k from June (39k from 36k) or 8%.

Of the 39k New Homes sold in July, 28k or 72% are less than $300k in price, 86% are less than $400k and only 16k are completed houses… The median home sales price in July fell11.5% y/y and 0.1% m/m to $210,100.   

The headline m/m SA figure (+9.6%) that is being hailed has a 13.4% margin of error according to the US Census Bureau.  The NSA YTD figure (-31.1%) has a margin of error of 3.2%.

Mark Hanson: We are celebrating estimated 2009 annualized sales that are forecast to be down 12% from 2008…We will add our caveat about all the unnatural stimulants that have been injected to get home sales to improve to -12% y/y estimated…The NAR estimates that first-time buyers are 30% of home sales. This is another unnatural usurpation of the natural recovery cycle.

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