Buying and Selling: Cats Don't Bounce

The June numbers for existing home sales are out, and as you might expect, they are nothing to crow--or meow--about:

The 1.3 percent decline, which was in line with expectations, represented the third drop in a row and the eighth in the past 10 months as the nation's once-booming housing market has shifted to a slower pace in the face of rising mortgage rates.

By region of the country, sales fell 3.5 percent in the Northeast and 2.3 percent in the South last month. Sales were unchanged in the West and the Midwest.

I'll be very interested to see the new home and building order data for Midwest markets. It's interesting that consumer confidence continues to hold steady, even in the face of a literal mountain of economic data that points to some really bad news in the offing. Money quote:

We have no choice. That fact that we are selling off the US piece by piece because we have to (not because we want to) is further proof that our current consumption binge is not sustainable.

For now foreigners have been willing to finance our deficits for a mere 5% interest rate. While I suspect this can continue for a while it is a big mistake to assume this arrangement will last forever. The only solution will be to sell off more US assets, stop spending, or hope to god the rest of the world gets as crazy as we are about buying stuff on debt. The latter will only help us if we have a manufacturing base in the US.

Amen!

Oh, if you ever wondered what the term dead cat bounce meant... :)

(Note: Mish's article is really long, but watching him dismember the Motley Fool is akin to the "Best of Ridley Scott" fast-forwarded--just awesome. All killer, no filler.)

Posted at July 25, 2006 04:05 PM

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The June numbers for existing home sales are out, and as you might expect, they are nothing to crow--or meow--about: The 1.3 percent decline, which was in line with expectations, represented the third drop in a row and the eighth in the past 10 months as the nation's once-booming housing market has shifted to a slower pace in the face of rising mortgage rates. By region of the country, sales fell 3.5 percent in the Northeast and 2.3 percent in the South last month. Sales were unchanged in the West and the Midwest. I'll be very interested to see the new home and building order data for Midwest markets. It's interesting that consumer confidence continues to hold steady, even in the face of a literal mountain of economic data that points to some really bad news in the offing. Money quote: We have no choice. That fact that we are selling off the US piece by piece because we have to (not because we want to) is further proof that our current consumption binge is not sustainable. For now foreigners have been willing to finance our deficits for a mere 5% interest rate. While I suspect this can continue for a while it is a big mistake to assume this arrangement will last forever. The only solution will be to sell off more US assets, stop spending, or hope to god the rest of the world gets as crazy as we are about buying stuff on debt. The latter will only help us if we have a manufacturing base in the US. Amen! Oh, if you ever wondered what the term dead cat bounce meant... :) (Note: Mish's article is really long, but watching him dismember the Motley Fool is akin to the "Best of Ridley Scott" fast-forwarded--just awesome. All killer, no filler.)