drbubb

CORN vs. OIL Some know that I am intrigued by this correlation, and especially the idea that Corn prices have been leading Oil. If there is anything to it, the drops in Oil are not finished. A test of Oil's uptrend line is due very soon. Might we see some further sharp falls in Oil. If that comes, might Gold follow Oil lower?

From HPC's "market is being strangled" thread So who is fooled? As I said elsewhere, the "Hero-Buyers" are almost finished with their buying. They are running out of cash, and reasonably price credit. Only the dumbest, and most foolish of homebuyers are left. And they will soon be strangled too. They are trying to please sellers, at a time when they talked the market into withgolding cheap prices. Now, as you have said, they are left with a big hold in their flat-feet

MY PSYCHOLOGICAL MODEL - from the Backwards-looking people thread This is a common misconception. Many seem to think that: Builders sell homes, and that those home sales generate earnings, and then eventually the earnings are reported. Then, finally, the Builder share prices react to higher earnings. But it isnt like that. The Builders share prices react very quickly to changes in sentiment. They are way ahead of other indicators like Halifax and Nationwide indices, which are only reported after a long lag, of several weeks. (I have gone into this in great detail on other threads, and am not keen to repeat the arguments again. Here's something to bear in mind. Insiders within a Builder cannot buy their own shares, but they can buy - or sell - the shares of a competitor. So when they see things improving within their own company they can buy the stock of a competitor, and recommend it to friends, family, and others. Perhaps this is why it works so well.) The typical thinking here seems to be: Experts call the bottom, then people start buying a little, then prices move up, and the press notices it. People read about higher prices, and then get more positive, and then they rush out and buy. I dont see it that way. My model works like this: Prices get knocked down to low levels on bearish sentiment, and a few people spot bargains, while others who are selling just get so fed up that they stop cutting prices. As soon as the bearish sentiment hits an extreme, the market is ready to move higher. Prices (including share prices) stop falling, and start to move higher after the extreme has been hit. The share markets reflect it more quickly, and move up faster, as the sentiment begins to swing to less negative. Builder shares shoot up, and the supply/demand balance in the physical market begin to shift to more positive, and people start shopping more aggressively for homes and also approach their banks for mortgage finance. Property prices start moving up, and eventually, within a few weeks, it shows up in the Halifax and Nationwide indices. Experts notice it, and the media begins to report that their favorite experts, the media darlings, are beginning to see an upturn. The john-come-lates who follow the crowd overcome their fear as the read the positive news reports. But they are the last wave of buyers. (This is the point that I think we have reached in this bounce - "the lates" are buying now.) What I am expecting from here is: the Builders share prices are about to stall out and head lower. That will be a sign that the bullish sentiment has peaked, and the property market is beginning to get less bullish, and bearish feelings are beginning to creep back. At first, people wont notice it. Then they will say it is just a summer lull. But the number of properties for sale on the market will continue to grow. The sellers will be hoping that the buyers will return in September. Instead, they are likely to see falling stock market prices, which will help to undermine the bullish sentiment in the property market. As property prices start to slide, some sellers will worry, and drop their prices in a hurry, hoping to catch those few remaining buyers willing to pay full "rally prices." This will put the downwards price slide into motion. It will pick up speed as forced sales hit whatever bids are left in the market. Bears will realise they are "back in control" of the market, and back off on the prices that they are willing to pay. When prices slide below the Feb.2009 lows, then the panic will truly be underway, and the real crash will be upon the UK market. I would expect this stage to be reached in Q4.2009 or Q1.2010. But, of course, I offer no guarantees- delays are always possible.

Top: 206.52 (07/06) : 226.29 (06/06) - mid.2006 === CURRENT YEAR === Mo : comp20, - chg.% , CSXR, - chg.%, mom% dec : 150.56, -18.60% : 162.11, -19.22%, -2.31% 2009 - jan : 146.34, -19.01% : 157.96, -19.44%, -2.56% feb : 143.10, -18.67% : 154.60, -18.89%, -2.13% mar: 139.97, -18.72% : 151.36, -18.68%, -2.10% apr : 139.18, -18.12% : 150.34, -18.01%, -0.67% may : 139.84, -17.06% : 151.00, -16.83%, +0.41% jun : jul : .vs. the Top : -32.29% : 35mos -33.27% .vs. the Top : -32.61% : 34mos -33.56% (Max. Fall)

(1) The S&P/Case-Shiller Home Price Index ... fell 17.1 per cent in May compared to the same month last year. The index follows property prices in 20 cities across the US. Although house prices were still significantly lower than in 2008, the year-on-year fall was not as bad as that of April, when prices were down 18.1 per cent on the previous year. After 16 months of consecutive worsening monthly declines, starting in October 2007, there have now been four months in which prices declines have improved month-on-month. David Blitzer, chairman of the index committee, said: "This could be an indication that home price declines are finally stabilising". Meanwhile, the Conference Board, a private research group, said that its Consumer Confidence Index fell in July to 46.6 points, down from 49.3 points in June. A Reuters poll showed that economists expected a reading of 49. A reading of 90 or above means that the economy is expanding. It was the second consecutive monthly decline in the index, which is based on a survey of 5,000 households. /see: http://business.timesonline.co.uk/tol/busi...icle6730668.ece (2) “The pace of descent in home price values appears to be slowing” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005. In addition to the 10-City and 20-City Composites, 17 of the 20 metro areas also saw improvement in their annual returns compared to those of April. Looking at the monthly data, 13 of the 20 metro areas reported positive returns; and the 10-City and 20-City Composites reported positive returns for the first time since the summer of 2006. To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing”. “While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation.” Mr. Blitzer added.” /see: http://www2.standardandpoors.com/spf/pdf/i...ease_072820.pdf City of Index. : Index. : MoM. : Prev.M : Yr.onYr ======= Chicago........ : 123.68 : 1.1% : +0.0% : -17.5% Cleveland..... : 102.11 : 4.1% : +1.2% : - 6.2% Las Vegas..... : 109.49 :-2.6% : -3.5% : -32.0% San Francisco : 120.16 : 1.4% : +0.6%: -26.1% Tampa.......... : 140.35 : 0.0% : -0.7% : -20.8% Composite-10 : 151.00 : 0.4% : -0.7% : -16.8% Composite-20 : 139.84 : 0.5% : -0.6% : -17.1% Looks like our old favorite, Cleveland, may be the first to go positive, year-on-year. That one month gain of 4.1% was impressive.

Why not get OUT of Sterling with at least 50%, and return later? USD and Gold are two things I'd be looking at = = = Has anyone noticed this? - A nice drop in BDEV today (so far): BDEV 179.00 Change: -9.25 // Percent Change: -4.91% Open: 189.75 High: 190.00 Low: 179.00 / Volume: 1,262,081 The volume is rather light so far, so this might not amount to anything more than a dip. But it bears watching. Others: Chart PSN : -12.75p / Percent Change: -2.98% BKG : -16.00p / Percent Change: -1.96% UKX : -32.46 / / -0.71%

Why not get OUT of Sterling with at least 50%, and return later? USD and Gold are two things I'd be looking at = = = Has anyone noticed this? - A nice drop in BDEV today (so far): BDEV 179.00 Change: -9.25 // Percent Change: -4.91% Open: 189.75 High: 190.00 Low: 179.00 / Volume: 1,262,081 The volume is rather light so far, so this might not amount to anything more than a dip. But it bears watching. Others: Chart PSN : -12.75p / Percent Change: -2.98% BKG : -16.00p / Percent Change: -1.96% UKX : -32.46 / / -0.71%

Im still long Sterling, thru stocks, and so I bought a Put to protect the FX value. I hold some dollars, with the money earmarked for Gold, and Calls on Gold. And I'm long C$ in cash and in Junior mining shares

... From a HPC thread talking about "asking prices back at 2007 highs" ... As usual, people get it backwards. The DC Bounce hasnt cancelled anything. A few suckers have overpaid. So what? In general, prices remain 10-15% below their peaks, especially inb places like London, which is experiencing depopulation, which has a nasty negative impact on house prices. Let the fools throw away their money, and think they are being clever. The market will teach them a life-long lesson. When prices soon (by year-end or end Q1-2010, and maybe sooner) drop back below their lows of 2009, then the "RUG WILL BE PULLED" and bullish confidence broken for years or decades. That is exactly the function of a DC bounce, to destroy bullish sentiment for good, and allow the really nasty part of the cycle to begin - a sharp downwards slide in prices. As yourself, who do you want to listen to? The Bulls, who have shown so little understanding of the realities of this property cycle, or people who ahve called it correctly?

As a footnote for this thread on the i-Phone ... A EARLY WARNING of the end of the Dead Cat bounce?? I did something similar to that myself, when I noticed that this move had happened: That was BDEV on Thursday 2 April 2009: closing at 107p. +18p on good volume (8.45 million shares)* When I saw that result, I produced this posting for HPC: (dated Sat. 4 April 2009, at 2:05 am, 10:05 am HK time): A WARNING to would-be homebuyers... A "Dead Cat Bounce" may soon be underway ! A Global "dead cat bounce" in property will soon be underway, I reckon. I make the argument for this elsewhere , we even recorded a podcast about it yesterday. For many, this bounce may give a last chance to sell, and reduce debt before the second leg down into a Greater Depression hits. . . . I really want to save UK people from a probable Bull Trap, which may will fall into, if they buy on this "Dead Cat Bounce". They will then watch with horror as prices start sliding again, when rates begin their inevitable rise, probably 9-18 months from now. /more: http://www.housepricecrash.co.uk/forum/ind...howtopic=110340 I suppose that if I'd been sitting at a property auction and saw that happen on my phone, I could have started bidding more aggressively, confident that an upward break was underway. The web-connected i-phone is ushering in a new era. I will need to get one soon. == == By contrast, yesterday (Monday), BDEV showed this action: 188.25 Change: -1.75 / -0.92% Open: 192.25 High: 196.00 Low: 180.75 / Volume: 3,901,300 // BDEV-update BDEV is definitely looking "toppy", and indeed yesterday's action has several of the features that you would expect to see at an important top (opening gap up, big reversal, pick-up in volume.) But the action is not yet distinctive enough to say that a "breakdown with volume" has happened. We could get some confirmation this week. Or it may surprise me, and reverse again and go to new fresh highs. I will let the stock do the talking from here. But I do hope to be in a position soon where I can declare unequivocally that it looks as if the top-in-BDEV is in place. I hope to do that in early August. But even then, I will not be able to guarantee that the Top is done.

Finally, some good news for US Housing... US new-home sales post biggest gain in 8 years Purchases of new homes last month climbed 11 per cent, the biggest gain in 8 years, with the jump led by a 43 percent surge in the Midwest. Sales increased to a 384,000 pace, higher than forecast. Now here's the most bullish part: The number of houses on the market dropped to the lowest level in more than 10 years. Unsold homes fell a record 36% from last June. (8.8 months-to-sell) Why?: Falling prices, and near record low interest rates have lured buyers. One year drop in prices: from $234,300 to $206,200 (June to June-2009) Wells Fargo says sentiment has risen in 5 of the last 6 months. The Fed has committed $1.25 Trillion to purchase securities backed by home loans, and that has helped to bring rates down to a record low of 4.78% in April == == Builder Centex (CTX) ... update ...Looks like it wants to run to $11-12 soon. It could even make a run for the gap at $14-15. The vulnerability here is clear : What if rates rise again?

GOLD FUTURES WATCH / see: GoldWatch thread Commercials increased their Net shorts last week by about 22,000 cts., as GLD rose to $93.13. They have likely moved them a bit further, since GLD closed monday at $93.71 Week=== : $-GLD- CmLong - CmShort - Pct. = CmNetS / NCLong - Pct. NonC.Net / F-CmSht. - Pct 07/07/09 : 90.71 137,631 - 337,872 69.0% (200,241) / 194,828 - 39.8% +171,061 / 07/14/09 : 90.81 144,631 - 330,874 66.9% (186,243) / 187,333 - 37.9% +160,298 / 07/21/09 : 93.13 142,179 - 355,963 68.0% (213,784) / 203,538 - 38.9% +181,060 / A level which is BULLISH for Gold would be Comm'l Net Short (CmNetS) of 165,000 or less = = = LINKS: Gold COT Report, Comb :: http://www.cftc.gov/dea/options/deacmxsof.htm Gold COT Report, Futs :: http://www.cftc.gov/dea/futures/deacmxsf.htm

You're kidding? You mean like an Emelda Marcos museum? That sort of shoe room? That's alot of extra cost for the meaningless purpose of impressing others. We people visit us, they are impressed by how we managed to downsize so much, and live comfortably in so little space, with the help of some well-designed built in furniture. It works partly because we are on the 50th floor, and have views in three directions Other friends are copying the downsize move, albeit in their own ways. Right. I think she's operating on a 2005-7 paradigm: "Buy as much house as you can afford, and wait". Maybe she and her friends, just dont "get it" yet. It's hard to give up old obsessions sometimes. It's her life. She's free to do that. But if she's other-driven, she will feel increasing uncomfortable, as she realises the extra debt has robbed her of financial flexibility, in order to fulfill an outmoded dream.

Better get your money out od Sterling while there's still time I bought Sterling puts again yesterday. I sold July $171 puts at over $8.00 (a few days ago), and bought Sept. $171 puts at under $8.00

I think she may do okay. 4BR is a large place, far bigger than the 2BR I live in with my gf - we downsized from a place more than 50% larger in order to live closer to central HK. I dont mind, because we now have better access to HK's cultural and social life, and a much nicer and more useful (for us) clubhouse. So 4BR sounds like a place where she can have a family life. What does she do with all those extra bedrooms now? Still, she may regret it, since if she slips into negative equity, her choices will be limited. She may find herself trapped in her "dreamhouse", when it is no longer a dream. That can be a nightmare

"Since the credit crunch took hold, banks have demanded far tougher criteria for lending, asking buyers to provide between 25% and 30% of the price of a home as a deposit." 70% Loans can still be risky, as UK lenders will discover in the years to come

FOXTONS - more greedy than Goldman Sachs?? Buy-to-let landlords can claim million Thousands of buy-to-let landlords could be in line to claim millions back from estate agents as a result of a landmark High Court ruling yesterday against Foxtons. Mr Justice Mann ruled that leasing agreements made by Foxtons, which operates mainly in London, unfairly overcharged commission to landlords. The Judge described Foxtons' agreements as traps and timebombs. Foxtons, which lets some of the most expensive property in Central London, charged customers 11 per cent commission when a tenant continued to occupy the property for longer than the initial term of the lease, and an additional 2.5 per cent commission payment if a tenant agreed to buy the property from the owner. /see: http://www.singingpig.co.uk/forums/thread/813462.aspx

Like I used to say about the mainstream economists before the Bubble burst: "He's either lying or stupid !" I dont think he's stupid, so Ockum's razor applies

Why is no one talking about this? The depopulation is already showing up in the latest statistics, but people seem to be unaware The increase in taxes, is already causing quite a few highly paid people to leave, and I am sure that more are talking about it. Some of these people are arriving in Hong Kong now. It is a noticeable trend

For me, these were the key parts of the Moneyweek House price panel discussion Meantime: What a great time to be buying overpriced property ! THEY DIDNT TALK ABOUT IT this time, But by next year it might be a big subject: the DEPOPULATION OF LONDON This will happen as people lose their jobs, and move away, seeking a cheaper place to live. It might mean moving back to Poland, or city expats moving back to their countries of origin, or it might be redundant ex-goverment workers just going someplace where their redundancy money will go further. In Detroit, we have seen what decades of depopulation can do to a cities house prices. And we are beginning to see the same thing in California, where many prices are off 50%. Those "smart and well-to-do buyers" that Stuart Law was talking about are going to get very fearful, and reluctant to buy, when they see that rents keep crumbling, and there arent enough buyers around to absorb the forced selling.

Or is SPX a great short?

YELNICK MENTIONS NEOWAVE COUNT, may be changing Monday, July 20, 2009 The Problem With Breaking the June 11 High There is a lot of commentary on the prior few posts about Neely having to change his count if the Jun11 high is exceeded. Here is what he had to say about it this morning (emphasis added): It’s amazing the number of emails I’ve received lately trying to talk me out of my bearish scenario or asking what it means if June’s high is exceeded (which means they think I’m wrong). That alone favors my preferred scenario, but a move above June’s high is not a good thing, it’s a horrible thing. It means the bear market will last for years and economic conditions will get much worse than originally thought. This would put him in more alignment with Prechter's view, of a bottom in 2014 (+/- a year or so, with 2012 at the earliest); or if the government continues to intervene like FDR did in the '30s, this might stretch even longer, to 2017 - 2020. Currently Neely expects a rapid drop to the long term bottom, maybe as early as Jan 2010 (six months!). As an historical note, the last three deflationary depressions that followed a credit bubble all ended their first phase down in around 3 - 4 years: 1837-1841, 1873-1875, 1929-1932. Hence 2007- 2010/11 would have been consistent. This reflects the rapidity which a market can adapt to changing realities. A lot of ink has been spilled over why the 1930s lasted so long; but it was clear that by the time FDR took over in 1933 a recovery was in progress, and a quite strong one (given how far we had fallen). The policy question is why we went back down. Keynesians such as Krugman continue to argue that we did not stimulate enough, and that while FDR caused the recovery due to deficits, an attempt to go back to normal in 1937 (due to the apparent recovery) by lowering the deficit sent us back down. This argument is relatively easy to disprove, since the last two Hoover budgets (FY32 and 33) got us to around a 5% deficit per year, and FDR's first three budgets continued at around that level. In what respect were Hoover's stimulus insufficient and FDR's heroic? And even in 1937 spending continued to go up, albeit at a lower pace. More likely something else was going on, and a recent UCLA study found it in the ill-guided attempts by both Hoover and FDR to keep wages and prices high in the face of deflation. This prevented the market from clearing; high wages kept unemployment high, and high prices kept capacity underutilized. In any event, the record of massive stimulus is that it does not work and may deepen the problem if done poorly; just look at Japan twenty years after their credit collapse in 1989. Monetarists such as Bernanke continue to argue that the Fed failed to provided sufficient liquidity. This comes out of Milton Friedman's trenchant work that blamed the prolonged and deep fall in the '30s on failures of the Fed. Yet in the heart of the recent crisis, Friedman's co-author criticized the policy reaction as fighting the wrong war: the problem back then may have been liquidity, but the problem today is bank insolvency. Liquidity helps avoid bank runs; but does not repair insolvency, which is due to overleverage and bad loans. At 30:1 leverage, a mere 3.3% of bad loans means you go insolvent. In this case, as asset values collapsed (real estate in particular), banks found they had insufficient collateral for their loans. The problem is much worse in Europe than here: while our bank assets (loans) are around 2:1 of GDP, according to John Mauldin it is 4:1 in the Eurozone, 5:1 in the UK and an incredible 7:1 in Switzerland. We clucked at the "zombie banks" in Japan after their 1989 collapse, and yet have left our money center banks in the land of the living dead. Yves popped over some thoughts which he might prepare in a guestblog later this week. He notes that markets outside the US are not confirming this rally, nor are currency or bond markets. Regardless, if we break the SP956 pivot point, look for an enthusiastic piling on and a sharp rally. We almost hit it today. Potential turn dates for a summer peak center around the second week of August, after the coming lunar eclipse in the first week of August that follows an Asian solar eclipse this week. /more: http://yelnick.typepad.com/yelnick/ Neely's June forecast: http://yelnick.typepad.com/yelnick/2009/06...115703c00d8970c

Andrew Butter is managing partner of ABMC, an investment advisory firm, based in Dubai ( hbutter@eim.ae ), that he setup in 1999, and is has been involved advising on large scale real estate investments, mainly in Dubai. He ought to know what a Bubble "smells like" by now. Or maybe he has proven that he has no sense of smell, since he's stuck himself in a bubble business

From the Goldstock thread... BTW, GOLDSTOCK.co.uk is NOW LIVE with the new look - - - Any one using it regularly ?? Chris Carolan has an interesting cyclical model for Gold compare: .... /source: http://carolan.org/2009/02/12/gold-solunar-update/

From the Puetz "Crash Window" thread - the last one was mind-blowingly accurate : ==================== Under the Puetz Window theory, this is what you look for: The Market will be at a ( Turning ) high point on the First Full Moon following a Solar Eclipse when that Full Moon is also a Lunar Eclipse. From this Full Moon / Lunar Eclipse peak a ( Trend change will begin ) Down Trend will begin and it will end 6 Days BEFORE to 3 days AFTER a Full Moon that is within 6 weeks of the Solar eclipse. That suggests some sort of Peak on the Lunar eclipse day (Aug. 6th), and then a crash into a day which is 23 - 31 days later, that is: the first week in September. This chart should cover the period involved: Aug/Sep.2009 Puetz "Crash window" / SPY chart ... update I also went back to look at the previous one : Feb/Mar 2009 Puetz "Crash window" / SPY chart ... w/o notations