WASHINGTON, January 22, 2013 – U.S. stock markets market opened flat, then dipped down this morning as reported existing home sales numbers dropped “unexpectedly” in December. But that’s not really a big deal in reality.
Existing house sales (the term we prefer) nearly always turn down in December. After all, what family wants to thrash out a final deal to part with their biggest life investment while the pressures of the Christmas holidays are coming to a head. So what’s “unexpected” about that?
Actually, what would be really unexpected would be a situation where the younger generations would actually be able to buy affordable housing from retiring Boomers. Many Boomers, of course, “unexpectedly” woke up one morning in 2008 to discover their own mortgages were underwater. Now, they’re unwilling to lower prices enough to get the market moving, since they’d planned to use all that moolah from the sale of their primary residence to cruise the world until the end of days.
The leading edge of the millennial generation, of course, can’t afford to accommodate this, so they rent and don’t buy. One Aussie writer posted a photo of one possible yet “unexpected” housing solution that we’ve posted above, but we suspect this won’t much appeal to the rising generation here. At any rate, what’s “unexpected” about real estate sales slowing during the holidays, aided by the fact that an awful lot of housing remains overly large in square footage. And overly priced as well?
Headline writers across the boards need to get a clue. If, say, economists expect consumer price inflation to increase by 0.5% next month, what are the odds of that number hitting 0.5% precisely? Answer: Not very good.
But for our headline writers, that means if the actual rate comes in at 0.4% or 0.6%, or any other number for that matter other than 0.5%, that other number is wholly and entirely “unexpected.” It gets tedious. But what this does accomplish for media types is hype. Headlines like this are the equivalent, in economics reporting, of the old journalistic cliché, “If it bleeds, it leads.” Gotta make money some way.
Unfortunately, this flavor of hype generally serves its purpose in subtler ways. If everything is “unexpected,” then we live in a world of perpetual crisis. Ergo, we’ll always need those blow-dries on TV to tell us what to do.
Let’s vow to keep our own counsel during the dark and gloomy days of Obama II, which commenced yesterday. We’ll need to avoid thinking in hype if we’re to navigate the shoals over the next couple of months as the battle of the budget continues in Washington.
There’s no “expected” outcome in sight except for the fact that the Republicans—whose hearts are in the right fiscal place but who’s intellects rarely achieve focus—will likely get scammed again. That’s what happens when one party that claims to have moral scruples—the Republicans—comes up against another party that has none whatsoever but refuses to acknowledge that fact.
We suspect that this spring’s budget negotiations will experience the same fate as Charlie Brown when he believes Lucy—again—when she next swears she won’t pull the football away at the last moment. In Washington’s real life “Peanuts” drama, the GOP always stand in for Charlie Brown because they simply don’t have the imagination to envision the predictable trickery of Lucy Democrats.
For traders, the situation means we’re probably entering a period of market backing and filling. Nimble trading will be one way of making money here, although high-yielding stocks will prove a safe port for small investors at least through the end of this year.
Right now, the market looks directionless, so we’re scooping up what profits we have, moving money around a bit, but mostly parking it for now. Our various advisory services mostly agree that we’ve gotten overbought in the short to intermediate terms. So it’s best to scoop out profits of 5% and above if you have them rather than let the HFTs come in and get them first, leaving you holding the bag.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any ar500ticle under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
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