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On The US Economy…

  • Written by Syndicated Publisher No Comments Comments
    May 10, 2014

    The economic reports for March and April, which were supposed to prove the economic slowdown in the winter months was all weather related, are still not doing a great job of it.

    Retail sales, manufacturing, and jobs seem to be bouncing back. Auto sales are holding their own.

    But reports from the important housing industry, which has a history of leading the economy in both directions, have been disappointing, at least so far.

    To remind you of just a few of the disappointments:

    Existing home sales were down 0.2% in March, continuing the downtrend that began last summer, well before weather could be blamed. New home sales plunged 14.5% in March to an annualized pace of just 384,000, well below the consensus forecast of 450,000. After plunging from 56 in February to a dismal 46 in March, the confidence of homebuilders ticked up to just 47 in April, missing even the cautious consensus forecast of a recovery to 49. New Housing Starts were up 2.8% in March, to an annualized rate of 946,000. However, that significantly missed the consensus forecast for 990,000 new starts. And in spite of the uptick, starts were still down 5.9% from a year ago, the biggest decline since April 2011, and permits for future starts fell 2.4%.

    The National Association of Realtors’ Housing Affordability Index, which compares household incomes with home prices and mortgage rates, fell 16% in the 12 months through February, the most recent month for which data is available.

    And yesterday came evidence that the Fed, which has continuously said it is encouraged by the housing recovery, has finally taken the evidence into account. In her mostly positive testimony before Congress, Fed Chair Janet Yellen said, “One cautionary note, though, is that readings on housing activity – a sector that has been recovering since 2011 – have remained disappointing so far this year, and will bear watching. . . . . The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery.”

    We will be getting two more recent reports on housing next week, with the Housing Market Index, measuring the confidence of the nation’s homebuilders, and the Housing Starts report for April.

    If the frantic construction activity I’m seeing in my area of Florida is any indication it could be a big number.

    But, in my newspaper column a couple of weeks ago, I suggested keeping an eye on the home-builder stocks as an indication for housing’s recovery. And so far they are not looking all that encouraging.

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    Putin can move Russia’s market in both directions too.

    Russia’s economy has been in  trouble and its stock market has been reflecting that since early 2013.

    So far this year it plunged further, about 20% in February alone, when the Russia/Crimea crisis hit.

    It recovered half of that collapse when that concern was resolved to Putin’s satisfaction.

    It plunged again when Russia-backed insurgents began taking over buildings and areas in the rest of Ukraine.

    But it spiked up yesterday when Putin said Russian troops have been pulled back from Ukraine’s border, and called for Ukraine to postpone a scheduled May 11 referendum  on autonomy.

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    It seems Putin can control the Russian market, if not its economy, with a few positive or negative statements, a similar situation to what we have in the U.S. with the statements by the head of the U.S. Fed.

    The Dow plunged 129 points on Tuesday on concerns about the economy, but bounced back 117 points yesterday on Fed Chair Yellen’s positive outlook on the economy in her testimony before Congress.

    To read my weekend newspaper column click here:  ETFs or Short-Sales to Profit from Market Downturns-

    Subscribers to Street Smart Report:

    In addition to the information in your secure area of this blog, there is an in-depth Markets Update (Stock market, gold, bonds) from last evening in your secure area of the Street Smart Report website .

    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. 

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