I wanted to start with a great video here from Howard Davidowitz. This is one of the best reality checks I have heard in awhile.
I couldn't have said it better myself. We will see peaks and troughs over the next several years, but the trend will remain downward because we have dug ourselves such a deep hole.
The data that came out this morning was flat out ugly although the markets managed to pare it's losses later in the day..
Geez...Does it get any worse than this?:
This isn't a collapse folks it's a total meltdown. Housing is so beyond screwed it isn't even funny. We pulled all of the demand forward via the housing credit. We are now left with a wasteland that has no buyers.
Some mortgages friends that I speak to say the phones are not ringing and many properties have not even been looked once at despite multiple price drops. Home sales fell at least 20% in all regions of the country according to the june report..
Like any other bubble we will see complete capitulation in housing. I suspect if the numbers continue to look like this it will be much sooner rather than later.
Another ugly chart:
"A modestly rising trend to initial claims for unemployment insurance has become apparent. Claims rose 13,000 last week to 472,000 following a slightly-revised 17,000 decline during the prior week. Consensus expectations were for 455,000 claims and they've inched higher from the February low of 439,000. Nevertheless, last week's figure was down from the recession peak of 651,000 reached in March of 2009. The four-week moving average of initial claims also has crept up to 466,500."
Keep in mind the jobless claims trend is rising as millions of unemployed are falling off of their claims because they ran out of benefits.
I thought we were in an economic recovery? This has become the biggest joke. This country was sold a bag of false promises by the talking heads in Washington DC and the media.
Isn't it time that we stop listening to these clowns?
I expect the jobs number will be quite bad tomorrow.
The Bottom Line
It was another red day on Wall St. We are pretty oversold here so I wouldn't be surprised to see a bounce here if the jobs number is anywhere close to expectations.
Longer term the outlook just keeps getting uglier by the day.
I wanted to chat a little bit about gold and the Euro before I finish up. The recent short Euro/long gold trade looks like it may be unwinding.
Gold got crushed today. There was talk of forced liquidations on Zero Hedge. Not sure if this is true or not. I think gold was due for a bit of a correction myself. The panic first seen in the European debt crisis seems to have abated(although I believe this is far from over). This could have had an effect on demand for gold.
There was also a lot of chatter in the credit markets about austerity and the Euro. It appears that traders are betting that the severe austerity cuts in Europe are going to make the Euro move higher versus the dollar. This made a lot of sense the more I thought about it although many questions still remain across the pond.
IMO...The US better hop on the austerity train because the dollar could get crushed here if deficits start to shrink in Europe as ours continues to soar.
Let me restate that there are a lot of "if's" in this equation, and the huge move that we saw on the Euro today could turn out to simply be a blip on the radar.
However, I found today's move in the Euro to be very interesting and something worth watching.
That's it for today all. I might have something small up tomorrow. Off for the holiday.