Economic Reports and Nattering's 05/01/2007
Summary: You wanna dance? You gotta pay the piper..... and this is just the beginning of the dance. Some minor natterings proceed the grim reports....
As consumer spending pulls back and credit standards rise... Auto sales sinking or taking a very long drive off a short pier...
ISM doing an "early spring" head fake as stagflation rages and the economy contracts...
Pending home sales without the "no downs" and sub primes showing a shrinking buyers pool.
Nattering's: The subprime, ARM reset and housing sector debacle is just starting to cut like a knife....
Industrywide, full-size pickups, which account for 22% of vehicle sales for Detroit's automakers, were down 10% in 2006, according to Autodata Corp.
Sales for the segment were down another 4.6% for Q1 2007. Why? Simple math...
Fewer construction workers build 33% fewer homes, as a result, truck demand has slumped along with the housing market.
In recent years, revolving credit & auto sales, like home sales, have been boosted by loose lending standards.
Standards are about to tighten and further reduce the buyers pool by choking available credit. Toss in rising ARM mortgage payments, energy, utilities & food...
this leaves the overleveraged and maxed out US consumer along with the house of cards McJobs economy on the razors edge...
The perfect storm is brewing, the economy is slowing, consumer spending falling, stagflation raging and real estate values about to take a serious plunge.
And the Fed can neither raise, nor lower... As the situation worsens over spring and summer, consumer and investor ebullience will wane and turn to remorse and a rude awakening...
The happy "daze" of "walkie talkies" prattling on their blue tooths; whilst quaffing $5 mochas twice a day; going out for $12 "nacho" lunches; maid service and dry cleaning on credit will come to an abrupt end.
This latest generation of conspicuous spenders whom have never seen a downturn, will get the "cleansing" high colonic they so badly need...
Auto Sales: Nissan -18%; Toyota -4.3% its 1st monthly decline in 2 years. Chrysler +1.6%; Autos -20%; Trucks +11%; sales volume -10%; YTD -2.9%
Ford -13%, 6th straight decline; Autos -24%; Trucks -6%. F series pickup trucks -12% and YTD -14%.
GM will release numbers later today, and is expected to have at least a 3 to 7% decline.
ISM Index Apr 54.7 vs prior 50.9 Full Report
Inside the number: April reading highest since May 2006. Some perculation? 11 of 18 industries "expanding".
Good news... New orders up 58.5 vs 51.6; highest in 14 months; Production up 57.3 vs 53; Employment up 53.1 vs 48.7.
Bad news... stagflation raging as Prices Paid up 73 vs 65.5... YTD Jan 53 to Apr 73... Capital spending down as leadtimes since Jan 108 days growing to 115...
Worse news... Supplier Inventories down 46.3 vs 47.4, 9 straight months in contraction...
Supplier Deliveries down 50.2 vs 51.3 and slowing (over 50) for the 46th consecutive month.
Customer Inventories down 47 vs 48; YTD contracting from Feb 53 to 47
News flash: Slowing deliveries and contracting inventories at supplier and customer levels means the economy is slowing, not growing.
Pending Home Sales Mar -4.9% vs prior +0.7% Full Report
Inside the number: Down to 104.3 vs prior 109.7 hitting a 3 year low, Yoy -10.5%; since 2005 at 124.4; this index has fallen 16.1%.
David "Liar" Lereah, the NAR's chief economist, "we're starting to see the effects of a decline in subprime lending and tighter lending standards." That's right Dave, "just starting" is the operative phrase....
Dave also predicted that home sales will be "relatively sluggish" in Q2 but that a "modest uptrend" is on the horizon for the second half of 2007. Uh-uh, sure thing Dave...
Why the media is suddenly paying attention to PHS is beyond me. Pending means Purgatory or Limbo, neither sold, nor for sale and no guarantee that the deal will go through.
There are 2 forward looking housing statistics, new permits issued and construction spending. And there are 2 other useful housing stats; existing home sales and new home sales.
Having lots of "pending" sales is a nice way for local realtors to make their markets appear "active" to potential buyers. PHS is nothing more than a traffic report, stacked with lookie loos (unqualified buyers) and shills.
Those shills being Realtors owning long term investment properties that list with no intent of selling, another "buddy" realtor then makes an offer, so the property is pending.
This unsavory yet very common practice makes the market look "perky", when really its quite dead. PHS does not take into consideration the "drop out" ratio from these faux "buddy" deals and FSBO's.
As consumer spending pulls back and credit standards rise... Auto sales sinking or taking a very long drive off a short pier...
ISM doing an "early spring" head fake as stagflation rages and the economy contracts...
Pending home sales without the "no downs" and sub primes showing a shrinking buyers pool.
Nattering's: The subprime, ARM reset and housing sector debacle is just starting to cut like a knife....
Industrywide, full-size pickups, which account for 22% of vehicle sales for Detroit's automakers, were down 10% in 2006, according to Autodata Corp.
Sales for the segment were down another 4.6% for Q1 2007. Why? Simple math...
Fewer construction workers build 33% fewer homes, as a result, truck demand has slumped along with the housing market.
In recent years, revolving credit & auto sales, like home sales, have been boosted by loose lending standards.
Standards are about to tighten and further reduce the buyers pool by choking available credit. Toss in rising ARM mortgage payments, energy, utilities & food...
this leaves the overleveraged and maxed out US consumer along with the house of cards McJobs economy on the razors edge...
The perfect storm is brewing, the economy is slowing, consumer spending falling, stagflation raging and real estate values about to take a serious plunge.
And the Fed can neither raise, nor lower... As the situation worsens over spring and summer, consumer and investor ebullience will wane and turn to remorse and a rude awakening...
The happy "daze" of "walkie talkies" prattling on their blue tooths; whilst quaffing $5 mochas twice a day; going out for $12 "nacho" lunches; maid service and dry cleaning on credit will come to an abrupt end.
This latest generation of conspicuous spenders whom have never seen a downturn, will get the "cleansing" high colonic they so badly need...
Auto Sales: Nissan -18%; Toyota -4.3% its 1st monthly decline in 2 years. Chrysler +1.6%; Autos -20%; Trucks +11%; sales volume -10%; YTD -2.9%
Ford -13%, 6th straight decline; Autos -24%; Trucks -6%. F series pickup trucks -12% and YTD -14%.
GM will release numbers later today, and is expected to have at least a 3 to 7% decline.
ISM Index Apr 54.7 vs prior 50.9 Full Report
Inside the number: April reading highest since May 2006. Some perculation? 11 of 18 industries "expanding".
Good news... New orders up 58.5 vs 51.6; highest in 14 months; Production up 57.3 vs 53; Employment up 53.1 vs 48.7.
Bad news... stagflation raging as Prices Paid up 73 vs 65.5... YTD Jan 53 to Apr 73... Capital spending down as leadtimes since Jan 108 days growing to 115...
Worse news... Supplier Inventories down 46.3 vs 47.4, 9 straight months in contraction...
Supplier Deliveries down 50.2 vs 51.3 and slowing (over 50) for the 46th consecutive month.
Customer Inventories down 47 vs 48; YTD contracting from Feb 53 to 47
News flash: Slowing deliveries and contracting inventories at supplier and customer levels means the economy is slowing, not growing.
Pending Home Sales Mar -4.9% vs prior +0.7% Full Report
Inside the number: Down to 104.3 vs prior 109.7 hitting a 3 year low, Yoy -10.5%; since 2005 at 124.4; this index has fallen 16.1%.
David "Liar" Lereah, the NAR's chief economist, "we're starting to see the effects of a decline in subprime lending and tighter lending standards." That's right Dave, "just starting" is the operative phrase....
Dave also predicted that home sales will be "relatively sluggish" in Q2 but that a "modest uptrend" is on the horizon for the second half of 2007. Uh-uh, sure thing Dave...
Why the media is suddenly paying attention to PHS is beyond me. Pending means Purgatory or Limbo, neither sold, nor for sale and no guarantee that the deal will go through.
There are 2 forward looking housing statistics, new permits issued and construction spending. And there are 2 other useful housing stats; existing home sales and new home sales.
Having lots of "pending" sales is a nice way for local realtors to make their markets appear "active" to potential buyers. PHS is nothing more than a traffic report, stacked with lookie loos (unqualified buyers) and shills.
Those shills being Realtors owning long term investment properties that list with no intent of selling, another "buddy" realtor then makes an offer, so the property is pending.
This unsavory yet very common practice makes the market look "perky", when really its quite dead. PHS does not take into consideration the "drop out" ratio from these faux "buddy" deals and FSBO's.
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