“Seven deadly innocent frauds of economic policy” translation to spanish

Forward by James Galbraith

Forward by Alejandro Nadal




Posted in 7DIF, MMT |

mortgage purchase apps down yet again

And cash buying is down.

Still doesn’t bode well for sales…

Slump in mortgage rates fails to rally home buyers

By Diana Olick

Oct 22 (CNBC) — More proof that low mortgage rates are not the key to home ownership today: Mortgage rates dropped to their lowest level in nearly 18 months last week, causing an 11.6 percent rise in mortgage applications, according to the Mortgage Bankers Association (MBA). The gains, however, were driven entirely by refinances, just as they have been for several weeks.

Refinance applications jumped a whopping 23 percent week-to-week on a seasonally-adjusted basis; volume was at the highest level since November 2013. Mortgage applications to purchase a home saw no boost at all from lower rates, falling 5 percent from one week earlier and 9 percent from a year ago.

Posted in Housing |

LA import and export volumes

LA area Port Traffic in September: Imports Highest since 2006, Exports Soft

By Bill McBride

Posted in Trade |

Existing home sales

Not much to get excited about here.

Sales are far below that of prior recoveries, and lower prices is a sign the ‘long cycle’ is over:

Existing Home Sales

Existing home sales rose a solid 2.4 percent in September to a higher-than-expected annual rate of 5.17 million. Year-on-year, however, sales remain flat at minus 1.7 percent. Condo sales were the strongest in the month, up 5.2 percent to a 0.610 million rate though sales of single-family homes rose a solid 2.0 percent to a 4.56 million rate. Year-on-year, condo sales show no change with single-family homes at minus 1.9 percent.

The strength in sales moved supply off the market, to a total of 2.30 million homes and condos on the market vs 2.31 million in the prior week. Supply relative to sales fell to 5.3 months vs 5.5 months in August.

Home prices have been falling, which of course are a plus for sales, and are down 4.0 percent on the month to a median $209,700. Year-on-year, the median price is up 5.6 percent.

Posted in Housing |

This Wasn’t Supposed To Happen

Who would’ve thought?

This Wasn’t Supposed To Happen

Posted in Uncategorized | Tagged |

Growth in Housing Starts

Note the highlighted changes in housing starts last year vs this year.

For the economy to grow as much this year as last year, all the pieces have to grow as much, and if any piece doesn’t grow as much, another has to grow that much more to make up for it.

Furthermore, single family is what’s declined, and as a single family unit costs more than a multi family unit, in $ terms it’s worse than this chart shows.

And so far I haven’t seen anything growing that much more than the drop in the rate of growth of housing


Posted in Housing |

Bloomberg on the Shale Boom

We’re Sitting on 10 Billion Barrels of Oil! OK, Two

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Posted in Comodities, Oil |

NAHB Housing Market Index, IP

This is the home builders index which has been influencing forecaster’s optimism for housing. Note that it’s stalled well below levels of prior cycles, and that there are far fewer home builders this time around as well:

Housing Market Index

The drop this month in interest rates isn’t driving up demand for housing, based on weekly mortgage bankers data for purchase applications and now on the housing market index from the nation’s home builders which is down 5 points to 54. The key in October’s report is the traffic component which is down a full 6 points to 41. Lack of traffic points to lack of interest including lack of interest from the important group of first-time home buyers. The report’s two other components are also down with present sales down 6 points to 57 and future sales down 3 points to 64.

All regions show declines in their composite scores especially the Midwest which is down 8 points to 53 and the West which is down 7 points to 54. The South, which is by far the largest region for new homes, continues to lead, at 59 for a 4 point dip in the month. The Northeast is by the smallest region for new homes and trails in this report at 40 for a 2 point dip.

New home builders can’t blame high interest rates or high unemployment for the weakness in their sector. Housing starts for September will be posted tomorrow morning at 8:30 a.m. ET.

NAHB: Builder Confidence decreased to 54 in October

All three HMI components declined in October. The index gauging current sales conditions decreased six points to 57, while the index measuring expectations for future sales slipped three points to 64 and the index gauging traffic of prospective buyers dropped six points to 41.

Looking at the three-month moving averages for regional HMI scores, the Northeast and Midwest remained flat at 41 and 59, respectively. The South rose two points to 58 and the West registered a one-point loss to 57.

Industrial Production keeps chugging along, reversing last month’s dip so the two month average is about the average annual growth rate:

Posted in Housing |

NFIB, Mtg apps, retail sales, Empire State

Today’s releases are causing analysts to reduce their GDP forecasts for Q3, which ended Sept 30. Note the difficulty in forecasting the past when considering the difficulty in forecasting the future…

This was released yesterday, turned down from not so good levels:

NFIB Small Business Optimism Index

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Mtg purchase apps down and cash sales down as well, makes it problematic for total sales to rise?

MBA Purchase Applications

The steep drop underway in mortgage rates is sharply stimulating demand for refinancing but isn’t yet doing much for home purchases. The refinancing index surged 11.0 percent in the October 10 week as the average rate for conforming loans ($417,000 or less) fell 10 basis points in the week to 4.20 percent which is the lowest average since June last year. But in contrast, the purchases index fell 1.0 percent in the week for a year-on-year decline of 4.0 percent.

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Bank mtg lending way down from a year ago, flattish this year:

At Wells Fargo and Chase, mortgage lending inches up

By Ruth Mantell

Oct 14 (MarketWatch) — Wells Fargo the country’s No. 1 mortgage originator, said it made $48 billion in new home loans in the third quarter, a hair up from the prior quarter, and down 40% from the year-earlier period. Meanwhile, J.P. Morgan Chase JPM the second-largest mortgage lender, said its third-quarter originations hit $21 billion, up from $17 billion in the second quarter, and down 48% from a year earlier. Some qualified borrowers can’t get a mortgage because of many lenders’ strict standards that aim to shield banks from the financial risks that come with the possibility of having to buy back a questionable loan, said John Stumpf, chairman and chief executive at Wells, on aTuesday conference call.

Recall last month when retail sales were up an unexpected .6% I wrote about how 13 state had tax holidays in August which may have moved sales forward from September, which just came out weaker than expected at -.3%, leaving the down trend intact:

Retail Sales

As expected, auto sales and gasoline sales tugged down on retail sales in September. But core numbers were weaker than expected. Retail sales in September declined 0.3 percent after jumping 0.6 percent in August. Analysts forecast a 0.1 percent dip for September. Excluding autos, sales slipped 0.2 percent after gaining 0.3 percent in August. Expectations were for a 0.3 percent increase. Excluding both autos and gasoline sales dipped 0.1 percent, following a jump of 0.5 percent in August. Expectations were for 0.5 percent.

Within the core, softness was seen in declines furniture & home furnishings, building materials, nonstore retailers, clothing & accessories, and sporting goods & hobbies. Gains were posted for electronics & appliances (likely iPhones), health & personal care, general merchandise, and food services & drinking places.

Today’s report is very mixed. It was not surprising that a downswing in autos after a strong August pulled down sales. And the same was expected for gasoline prices pulling down sales. But core sales eased despite a surge in electronics sales. Core sales eased after a very strong August. On a very positive note, food services & drinking places gained a robust 0.6 percent, matching the pace for August.

I don’t put much stock in these as they seem to follow the stock market, as this exceptional drop seems to confirm. Or maybe the stock market leads weakness…

Posted in Equities, Housing |

Weekly credit update comments

I got this email supporting the idea that bank credit expansion has been at the expense of non bank lenders, with low total credit growth.

As previously discussed, I don’t see the credit growth necessary to sustain the 3%+ GDP growth being forecast. Instead, I see the q1 negative growth and H1 total growth of only 1.2% as indicative of the underlying trend.

Warren: With respect to the recent “surge” in bank credit, please see below info that I prepared from Z.1. I recall you once suggesting that the expansion in bank credit may be attributed to banks taking share from non-bank lenders. Based on below table and graphs, that appears to be the case. When you combine bank and non-bank lenders (what I refer to as “Bank & Non-Bank Finance”), growth in credit market assets is essentially zero/nominal over recent periods, and you can see the recent increase in bank credit appears to be largely offset by a decrease in non-bank credit. Most non-banks are essentially “agents” of banks in my opinion so should view together for macro perspective. Note below that my definition of “Adjusted Credit Market Assets” is the FRB’s definition plus money market, rev repo and security credit. Not sure if this is the “correct” way to view things and I could be way off base but figured may be worth passing along. Also, for the “Insurance & Inv Mgmt” Sectors, I think the growth there may support your demand leakage narrative (but excludes equities). Thx

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Posted in Banking, Credit, Fed |