Logo Background RSS


More Signs Of Slowdown In Housing?

  • Written by Syndicated Publisher No Comments Comments
    September 13, 2013

    So far this week Bank of America, Wells Fargo, JP Morgan Chase, and Citigroup, have reported that the slowdown in mortgage financing and re-financing is prompting them to close some mortgage processing offices and lay off employees. Wells Fargo says it will cut 2,300 jobs, JP Morgan “several thousand”.

    Blaming higher mortgage rates for the decline in re-financing, and the combination of higher mortgage rates and higher home prices for softness in new mortgage applications, they apparently believe changes are taking place rapidly. Wells Fargo said Monday it expects third-quarter originations may fall 29%, while JP Morgan said it expects volumes in the second half of the year to decline as much as 40% from the first half levels.

    That sounds dramatic, but the fall-off is mostly in re-financing activity, less so in new mortgages for home purchases.

    Meanwhile, the Mortgage Bankers Association reports that mortgage applications plunged last week to their lowest level in almost five years as the the average rate on 30-year mortgages rose to 4.8%.

    Lots of investors probably feel like this.

    With bonds down for the year, gold down for the year, the stock market volatile, hedge funds having their worst year in years, and cash paying next to nothing, many investors probably feel like famed hedge fund manager Stanley Druckenmiller, founder of Duquesne Capital, and former portfolio manager for George Soros’ Quantum Fund. He has one of the hedge-fund industry’s best long-term track records of the last 30 years.

    He made a rare public appearance, in an interview on Bloomberg TV yesterday, in which he said he’s “lost” regarding the market this year.

    “My guess is I believe the market is topping . . . But right now I’m lost. I don’t play when I’m lost because I know in the future I won’t be lost. . . . . I like to be patient.”

    On the Fed dialing back on QE stimulus he said, “How in the world does anyone think when the actual exit happens that prices are not going to respond?”

    But no fear among individual investors.

    This week’s poll of its members by the American Association of Individual Investors (AAII), released last night, showed a big jump in bullish sentiment to 45.5% from 35.5% last week, and a drop in bearishness to only 24.6% from 31.3% the previous week.

    Nothing like a positive week after such an ugly month of August to reverse sentiment. (Bullishness was 45.1% and bearishness 22.6% July 25, just before the ugly August. And it had plunged to only 28.9% bullish, 43% bearish by August 22, when the sell-off was about to end).

    To read my weekend newspaper column click here:   No Clarity Provided For Investors Or The Fed

    Subscribers to Street Smart Report: In addition to the charts and recommendations in your secure area of this blog, the new issue of the newsletter is in your secure area of Street Smart Report.com from yesterday.

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more.