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Why Most Economists Are Confused About The State Of Today’s Real Estate Market

The Daily Ticker had a discussion earlier on whether or not the real estate sector was causing the economic slowdown or it was the economic slowdown was causing the real estate market to sag. 

Neil Irwin, senior economic correspondent at The New York Times says the slowdown in housing is slowing the broader economy. “If housing just returned to its longer-term role in the economy in terms of residential investment and construction activity, then we’d have a much stronger growth track,” Irwin tells The Daily Ticker in the video above.”We’d have an extra million and a half jobs.”

Here is what they don’t seem to get.  Most sectors within the US Economy, including the overall economy itself, are being artificially levitated by entirely too much credit within our financial system. With over $1 Trillion in credit being infused over the last 5 years alone and with interest rates at ZERO, both the US Economy and the real estate market are back in the bubble territory.

Again, this debate initiated by The New York Times confuses cause and effect. The real estate market and the US economy have nothing to do with each other from a traditional point of view and have everything to do with being the outcome of the same force. In short, they are both the outcome of the same credit cancer. Because they are both being artificially levitated by FED into the same speculative bubble territory, they will simply reverse and collapse at the same time when the bear market of 2014-2017 kicks into the high gear.

When?  Well, to get more information about the real estate market you can read my comprehensive report Real Estate Collapse 2.0 Why, How & When and for the overall economy/stock market you can read The Bear Market Of 2014-2017 Is Starting. Why, How & When 

credit bubble

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Why Most Economists Are Confused About The State Of Today’s Real Estate Market  Google

The Daily Ticker: Here’s what’s stopping the economy from fully recovering: Neil Irwin

The housing market is still recovering from a crisis that crushed sales and prices in 2007 and 2008, but the pace of that recovery is slowing and there are some signs it could be stalling out.

Existing home sales and new home sales were actually lower in March than in February — and lower than a year ago. And although March housing starts were higher than February starts, permits fell 2.4% lower.

Neil Irwin, senior economic correspondent at The New York Times says the slowdown in housing is slowing the broader economy. “If housing just returned to its longer-term role in the economy in terms of residential investment and construction activity, then we’d have a much stronger growth track,” Irwin tells The Daily Ticker in the video above.”We’d have an extra million and a half jobs.”

Investment in residential property accounts for the smallest share of the economy than at any time since World War II, Irwin wrote in a recent column for the times “Upshot”.

Home ownership has fallen to its lowest level in 19 years, according to the Census bureau. Only 64.8% of Americans, or about 74.4 million households, owned homes during the first quarter of this year, down from 65.2% in the fourth quarter of 2013.

A big reason for the decline in home ownership: “Young people are not forming households at the same rate they usually do,” says Irwin.

That’s an example of the economy holding back housing but the reverse is also true, says Irwin.
“You need a strong housing market to have a strong economy [and] you need a strong economy to have a strong housing market,” says Irwin.

And within the housing market, construction of multi-family homes is rising at a much faster rate than construction of single-family homes. Young people “who are striking out on their own are more likely to rent” apartments, explains Irwin.

On the positive side, construction jobs led the increase in all “goods-producing” jobs in the April jobs report released Friday. They rose by 32,000 for the month and are up 189,000 in the past year, with the bulk of the increase occurring in the past six months.

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The Secret Behind Jeremy Grantham Amazing Stock Market Timing Call.

Most financial media outlets were abuzz over an amazing and gutsy stock market timing call from one Jeremy Grantham, a veteran fund manager at GMO. His call?

Grantham believes the market bubble will burst around or after the 2016 presidential election. “That this year should continue to be difficult with the February 1 to October 1 period being just as likely to be down as up, perhaps a little more so. But after October 1, the market is likely to be strong, especially through April and by then or in the following 18 months up to the next election (or, horrible possibility, even longer) will have rallied past 2,250, perhaps by a decent margin. And then around the election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse, depending on what new ammunition the Fed can dig up.”

WOW. I am amazed. Mr. Grantham gives a 2 year time window and everyone is either praising him or saying that he is stupid for giving such an “exact” forecast.

Yet, as I have illustrated here many times before, the stock market can be predicted and forecasted well into the future and with exact precision. How/why? The stock market is not a random entity as most people believe. Quite on the contrary, it is exact. The stock market has a beautiful mathematical structure within itself. In simple terms, it moves in multi-dimensional space while tracing out it’s points of force in accordance to it’s own DNA sequence. Once that is understood, exact forecasts could be made. To the day.

For instance, this very same mathematical and timing work predicts a severe bear market between 2014-2017.When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day and not within a 2 year time window) and its subsequent internal composition, please CLICK HERE

jeremy-grantham-investwithalex

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The Secret Behind Jeremy Grantham Amazing Stock Market Timing Call.  Google

Business Insider Writes: Jeremy Grantham Makes A Very Specific Call About When The Bubble Will Burst

The stock market has already been volatile this year and investors are wondering what’s next.

The S&P 500 had a rough start in April, shedding about 3% halfway through the month, only to end up 0.6% for the month. The S&P 500 finished April close to a record high, while the Dow closed at a record high.

Many investors are wondering if we’re in a bubble or if there’s a correction coming.

In his latest quarterly letter, Jeremy Grantham, veteran fund manager at GMO, put out his “best guesses for the next two years.”

Grantham draws on John Hussman’s research that shows “an overpricing for the U.S. markets that ranges from 75% overpriced to 125% at the end of March.” Meanwhile Grantham writes that GMO “very much agrees with the spirit of this data, but our preferred measure for our 7-Year Forecast has the market slightly less overvalued at 65%.”

He also acknowledges that the bull market could already have come to an end even as he wrote his quarterly letter, but he believes “it probably (i.e., over 50%) will not end for at least a year or two and probably not before it reaches a level in excess of 2,250 on the S&P 500.”

Grantham believes the market bubble will burst around or after the 2016 presidential election.

  1. “That this year should continue to be difficult with the February 1 to October 1 period being just as likely to be down as up, perhaps a little more so.”
  2. “But after October 1, the market is likely to be strong, especially through April and by then or in the following 18 months up to the next election (or, horrible possibility, even longer) will have rallied past 2,250, perhaps by a decent margin.”
  3. “And then around the election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse, depending on what new ammunition the Fed can dig up.”

Grantham doesn’t think this time is different. But “given this regime of the Federal Reserve and given the levels of excess at other market peaks, I think it would be different to end this bull market just yet.”

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What You Ought To Know About The Obama Administration And Ukraine. Truly Disturbing

With May 9th WWII Victory Day (bigger deal than the Independence Day in the US), just around the corner in Russia, the situation in Ukraine continues to deteriorate into an utter chaos and an all out civil war. While the US Warmongers made their TV rounds on Sunday morning, blaming Russia for everything, calling for an all out economic war against Russia and going as far as calling for an actual military support, Russia remains on the sideline.  I find it quite fascinating when the criminal element in power points their finger at others to blame them for their own crimes. The problem is, most Americans buy it.

Obama Nobel Piece Prize

Anyway, here is the latest and what you need to know……..

One thing is for sure, the market doesn’t have any of this priced in. 

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What You Ought To Know About The Obama Administration And Ukraine. Truly Disturbing Google

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Weekly Stock Market Update & Forecast. May 3rd, 2014. InvestWithAlex.com

daily chart May 2 2014

Weekly Update & Summary: May 3rd, 2014

For the week the Dow gained 151 points (+0.93%) and the Nasdaq gained 48 points (+1.19%). As suggested in last week’s update, the market came back to close the gap that was opened up on April 25th. While the Dow did very well structurally this week, it continues to have two near term gaps to the downside, the one on April 14th and a large gap on April 16th. Indicating an upcoming correction. Further, there are a number of smaller gaps left leading all the way down to February 5th low.  We continue to believe that the Dow will close such gaps when the next bear leg develops at below mentioned time frames (please see mathematical analysis & timing section below).

WEEKLY REVIEW:

GDP Growth Collapses. Is The US Economy In A Recession Already?

We have argued, for quite some time, that the US Economy and/or economic growth is a giant Ponzi scheme perpetuated by careless FED policies and massive credit/liquidity infusion into our financial system. 

Take that ocean of liquidity away and you will something very ugly swimming underneath. With most of that liquidity going directly to speculation and driving most asset classes into bubble level valuations, today’s GDP growth number of +0.1% is quite shocking. Even for me.

GDP Slows to Crawl in First Quarter, Up 0.1% (Vs 1.2% growth consensus)

GDP Growth Investwithalex

Understandably, most economists will blame the weather and baby Jesus for the miss, but the story goes deeper than that.  According to some GDP observers the GDP growth would have been Negative 1.0% if it wasn’t for a temporary, government mandated and massive spending triggered by Obamacare.

Wait what?!?!….Are we in a recession already?

That in itself is irrelevant. What is relevant is that the stock market is sitting at an all time highs, the FED is talking about further tightening and you are most likely fully invested in the stock market. That is what’s really important.

Further, our mathematical and timing work confirms the notions above.Liquidity party or not, it shows a severe recession within the US Economy between 2014-2017. In the past, I have argued that we will be in “an official recession” by the end of 2014 or in Q1 of 2015. By the looks of it might happen faster than I thought.

Again, the FED will be forced to keep this liquidity party going while looking at new ways to re-inflate and stabilize the markets when the bear market of 2014-2017 kicks in. Expect a flat yield curve and much lower equity prices over the next few months/years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

 Will Corporate Earnings Drive Stocks Higher? Don’t Bet On It.

Breakout makes a compelling case that corporate earnings will continue to drive stock prices higher for the foreseeable future.

“Companies are getting incremental gains from revenue, holding the line on expenses, so at the end of the day we’re likely to see modest gain in earnings for the quarter, somewhere maybe around 5%,the economy here is going to reaccelerate ”

One big problem. Today’s earnings are an illusion at best driven by artificial credit infusion into our Economy by the FED. In fact, based on our rough calculations……if you take out the QE and other stimulus out of the corporate earnings equation, the S&P P/E ratio zooms up from about 18 today to 50 – 70 it really is. Making today’s market not only incredibly expensive (by any historical measure), but “are you f&#*ing kidding me” expensive.

s&p ratio

That is exactly what the vast majority of today’s investors (professional or not) miss. We have faced the exact same situation in 2007-2009 collapse when the P/E ratio zoomed up from about 20 at 2007 top to 128 in 2008 as supposed corporate earnings vanished into thin air. Expect the same thing to happen today as the bear market/recession of 2014-2017 show their ugly face and corporate earnings vanish once again.

What Today’s Job Report Shows About The Future Of The US Economy Is Shockingly Scary.

Here is what we got.

  • 288K new jobs added in April, far higher than 218K expected.
  • The unemployment rate tumbled down to 6.3% from 6.7%.
  • Labor participation rate collapsed from 63.2% to 62.8%

That’s great…..right? Not so fast there sparky.  If there was ever a fundamental setup for a massive bear market to start, we got it today. Think about it the following way.

As Janet Yellen has suggested on a number of occasions, jobs or job creation is her primary concern. Today’s job report validates her view that the US Economy is recovering at a good clip and that full employment is just around the corner. As such, further monetary tightening is now a certainty.  Yet, the reality is quite different……

  • Incredibly overpriced financial markets and most other asset classes.
  • Extreme levels of speculation driven by cheap money and FED printing.
  • An economy and a financial market environment that is entirely dependent on cheap credit and/or stimulus.
  • Technically negative GDP growth and slowing economy.

Job creation is a lagging indicator. As I suggested a number of times before, the worst thing the FED can do right now is tighten further.  I hate going back to 2007, but the “fundamental” setup we face today is identical to the one we have faced at 2007 top. Jobs were plentiful, markets were in extreme overvaluation and the FED was tightening. It was not until the mid 2008 (or well after the stock market peaked in October of 2007) that the unemployment rate started surging higher. Expect the same thing to happen now.

unemployment rate 3 investwithalex

Our mathematical and timing work confirms this notion. It shows a severe bear market between 2014-2017. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

MACROECONOMIC ANALYSIS:  

Ukraine/Russia/USA/EU/NATO  continue to  be the most important issue. In fact, I continue to believe that things will escalate significantly over the next few weeks.

As I write this (on Friday night), the situation in Ukraine is critical. 31 people die after radicals set Trade Unions House on fire in Ukraine’s Odessa  In short, we are witnessing the start of a civil war.  At this stage only one question remains. Will this be enough for Putin to go in and put a stop to all of this nonsense instigated by the US/NATO/EU ….-OR-…. will Putin play some sort of a long term strategic game against the West that very few of us are aware of? To be honest with you, I have no idea as this has become a very complex matter.  If I had to guess, if the civil war in Ukraine escalates over the next few days you will see the Russian Army invade, very quickly decimate any opposition and re-install Pro-Russian government.

This would be the best possible outcome for the Ukrainian people.  Unfortunately, such a move by Russia will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences.  As you can imagine, this would be incredibly unsettling for financial markets.  I can tell you one thing, the market does not have this event priced in. The upcoming week is critical.

TECHNICAL ANALYSIS THE FOR DOW JONES:  

Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. Same applies to the market action over the last few months. Yet, that in itself can be misleading as per our timing analysis discussion below.

Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.

Short-Term: Short-term trend remains positive for the time being. The Dow would have to break below 16,000 for the short-term trend to shift from positive to negative.

Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.    

MATHEMATICAL & TIMING ANALYSIS:  

(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public.  As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If  you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).

In conclusion, xxxx

Longer-Term Overview:

The next turning point is located at……

Date: XXXX 
Price: XXXX

TRADING: 

I am now fully committed to the XXXX side of the market with 11 individual positions taken at the prices outlined below. A lot of them have done incredibly well thus far and I hope you were able to benefit as well. I will be updating you of any changes or anticipated changes before they take place.

Remember, you should have an exact strategy and entry/exit points based on the forecast above. 

The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice. Please note, all of the positions below have been triggered.    

Stock Entry Point ($) Action Taken Stop Loss @
xxxx xxxx xxxx 91
xxxx xxxx xxxx 1250
xxxx 110 xxxx 121-123
xxxx 74 xxxx 80
xxxx xxxx xxxx 260
xxxx xxxx xxxx 460
xxxx 35 xxxx 39
xxxx 65 xxxx 70
xxxx 120 xxxx 120-130
xxxx 100 xxxx 108-112
xxxx 112 xxxx 120

Otherwise, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).

If You Are A Trader:  XXXX

If No Position:  XXXX

If Long: XXXX

If Short:  XXXX

CONCLUSION: 

An incredibly important week is coming up. We are now looking for our forecasts above to be confirmed over the next few trading days/weeks. I have also described what to anticipate over the next few months and exactly what you should do now. With increased volatility, multiple interference patterns and an incredibly important long-term turning points coming up over the next few months we must be very careful and risk averse here.  Those anticipating the moves and those who can time them properly will be rewarded appropriately.

Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start. 

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Weekly Stock Market Update & Forecast. May 3rd, 2014. InvestWithAlex.com Google

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Financial Media Clowns Are At It Again. Disturbing

Here we go again. Two perpetually bullish talking monkeys are, once again, beating up on the bears and their supposed inability to correctly call the markets. Of course, their forever bullish forecasts are always right on the money (if you haven’t noticed the Nasdaq is still down 20% from it’s top 14 years ago).

Now, you have a choice. You can listen and follow these clowns who write worthless articles and sound “pretty” on TV  -OR- you can follow a number of brilliant forecasters and money managers who make millions/billions. Hmmm, let me think about it….

(Click On The Picture To View The Video).

BREAKOUT IDIOTS

z32

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Daily Stock Market Update. May 2nd, 2014. InvestWithAlex.com

daily chart May 2 2014

A down day with the Dow Jones down 46 points (-0.28%) and the Nasdaq down 4 points (-0.09%). 

The market has, more or less, flat lined since it’s bounce rally termination point on April 22nd. Over the last 10 trading days the Dow barely moved in net terms, putting most investors and traders into the state of sleep (my subscribers knew of this likely development since April 24).

As I insinuated here before, low energy/flat markets/ low volume/no volatility periods are often followed by powerful and high velocity moves. Remember, it’s the market’s job to bore you to death and put you into a comfortable state of sleep before surging higher or slamming the market lower.  In fact, 1987 crash is a perfect case study of such a time.

While I am not suggesting that we will have a 1987 style crash here, I am suggesting that you should be very alert here. Based on our mathematical and timing work the bear market of 2014-2017 is just around the corner.

When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). 

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Daily Stock Market Update. May 2nd, 2014. InvestWithAlex.com Google

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Outrageous Secret Revealed: Who Is Insane Enough To Buy Stocks At Today’s Levels?

who is buying this market

Thanks to Bank of America and this chart from ZeroHedge we have our answer. While hedge funds and institutions (supposed smart money) were net sellers, retail mom and pop investors (supposed dumb money) more than picked up the slack since the 2012.

This sort of behavior is typical at market tops. Retail investors are always too late to the party and way too excited to pay exuberant prices for highly speculative stocks. Only to be shocked and swear off the stock market when the stock market proceeds to collapse.

Is it different this time? 

It’s never different. The only question is, how much longer will this insanity last and if you will be able to get out on time. Well, most investors never get out on time as they tend to liquidate their equity holdings closer to the bottom. As to when, our mathematical and timing work clearly shows that the bear market of 2014-2017 is just around the corner.

AKA…..right now would be a great time to get out.

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Outrageous Secret Revealed: Who Is Insane Enough To Buy Stocks At Today’s Levels?Google