Here Comes The Double Dip Pt. 3

[eXpat]

Homebuilder Confidence in U.S. Climbs to Five-Year High in May

Confidence among U.S. homebuilders jumped more than forecast in May, reaching a five-year high that signals an improving outlook for construction.

The National Association of Home Builders/Wells Fargo index of builder confidence rose to 29, the highest since May 2007, a report from the Washington-based group showed today. The gauge exceeded the highest projection in a Bloomberg News survey in which the median estimate was 26. Readings below 50 mean more respondents said conditions were poor.

Companies such as building products maker Ply Gem Holdings Inc. are benefiting as cheaper homes and mortgage rates at a record low combine to boost demand. At the same time, foreclosures remain a hurdle for new construction and property values, one reason a rebound in real estate is taking time to develop three years after the end of the recession.

“We have resumed the gradual upward trend in confidence that started at the beginning of this year,” Barry Rutenberg, chairman of the National Association of Home Builders and a builder from Gainesville, Florida, said in a statement. This comes “as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.”

Today’s report showed gains in measures of current single- family home sales, the outlook for the next six months and buyer traffic.

[...]

Keyword here is "Confidence"
Homebuilder Confidence Rises To 5 Year High As Actual Sales Remain Near All Time Lows

America may not sell many new homes (read - sales are near or at all time lows), but that does not prevent homebuilders from having a dream, or in this case confidence that soon, soon, SOON, things will finally improve. Sure enough, in May the NAHB homebuilder confidence soared to 29, from 24, on expectations of a 26 print. Of course, these numbers are completely meaningless, and only serve to get the algos ramping momentum in an upward direction. In the meantime, the reality of actual sales, can be seen on the chart below

http://www.zerohedge.com/news/homebuilder-confidence-rises-5-year-high-actual-sales-remain-near-all-time-lows
As opposed to "Reality"

[ritter]

California is way in the red again. $16 Billion. But, we've got a plan!

http://latimesblogs.latimes.com/california-politics/2012/05/jerry-brown-to-unveil-16-billion-in-cuts.html

[Daniel_Plainview]

As eXpat noted in the Greece thread:

Greece's Stock Market Crashes 4.5% In A Matter Of Seconds Following Collapse Of Government Talks

Following news that Greece has failed to form a government, the Greek stock market is crashing.

It went from being up modestly to down 4.5% in a matter of seconds. Meanwhile, click here to see how Greek banks are getting totally crushed.

From Bloomberg: "Anxious Greeks have withdrawn as much as 700 million euros ($893 million) from the nation’s banks since the inconclusive May 6 election, President Karolos Papoulias told party leaders yesterday, according to a transcript of the meeting posted on the presidency’s website today. Papoulias said he got the information from the head of the Bank of Greece, the central bank, George Provopoulos, according to the transcript."

Greek Bank CRASH

On the news that Greece is heading for new elections, this is the reaction of Greek banks stocks.

Remember, new elections are likely to result in victory for the left wing SYRIZAT party, which threatens a confrontation with the rest of Europe, which threatens to create the first step towards Greece's departure from the Eurozone.

You can see why banks are tanking.

[TheAntiDoomer]

NAHB Builder Confidence increases in May, Highest since May 2007

http://www.calculatedriskblog.com/2012/ ... es-in.html

Builder confidence in the market for newly built, single-family homes gained five points in May from a downwardly revised reading in the previous month to reach a level of 29 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This is the index’s strongest reading since May of 2007.

“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.”

“While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” said NAHB Chief Economist David Crowe.
...
Each of the index’s components rebounded from declines in the previous month. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April of 2007. The component gauging sales expectations in the next six months rose three points to 34.

Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the Northeast, and five-point gains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point decline, to 29.

[OilFinder2]

Thanks for posting that, eXpat. Notice how a rise in the homebuilder's confidence survey is a leading indicator to a rise in single-family sales.



In fact it's starting to resemble the rise in the early 90's.

[Cog]

According to your chart the sales of new single family houses is lower than it has been for 26 years. Is this the good news you are meaning to alert us to?

[OilFinder2]

According to your chart the sales of new single family houses is lower than it has been for 26 years. Is this the good news you are meaning to alert us to?

Actually, yes it *is* good news, because it means the only direction it can go is up!

[Armageddon]

Bad economy is wrecking Nascar

The National Association for Stock Car Auto Racing (NASCAR) has been considered America’s fastest growing sport, quickly becoming a national phenomenon. But a new economic study shows even NASCAR’s powerful engines haven’t been able to keep up with the Obama-era economy.


The study, from the pro-market think tank Public Notice and Race Fans 4 Freedom, finds that the economic downturn of the last several years has directly affected how NASCAR fans watch and enjoy their sport. Since 2009, race attendance per year has fallen below 4 million people, and the number has been declining severely as the unemployment rate has skyrocketed. The cost of attending—with higher gas prices, less disposable income, and diminished financial security—has increased.

According to the study, the value of the sport, too, is threatened by the poor economy, with the stock prices of racing team companies plummeting in the last five years and sponsors pulling back on funding cars. “The days of $25 million sponsorship deals appears to be over for the time being, sending teams scrambling for support,” the study reads. The result is a less competitive field with fewer racers.

“At the end of the day, these numbers really hit NASCAR fans’ quality of life,” says Liz Dyar, the founder of Race Fans 4 Freedom. Dyar adds that with nearly 75 million fans across the country, the NASCAR nation is a “great snapshot” of the country as a whole—and that with plenty of those fans in swing states like Virginia, North Carolina, and Florida, their views on the economy could impact the election.

http://www.weeklystandard.com/blogs/oba ... 44485.html

[OilFinder2]

Not only are the US, Canada and Mexico decoupling from the Eurozone, even Germany is decoupling from the rest of the Eurozone!



German economy roars ahead in first quarter

German gross domestic product grew a resoundingly strong 0.5 percent in the first quarter, far exceeding forecasts due largely to robust exports, signaling Europe's largest economy can remain a growth engine for the crisis-struck euro zone.

The economy bounced back from a contraction of 0.2 percent in the fourth quarter, shaking off any fears of a recession and beating even the highest forecast in a Reuters poll of 41 economists.

Preliminary data from the statistics office released on Tuesday also showed that growth compared to the same quarter a year earlier accelerated to 1.7 percent from 1.5 percent in the fourth quarter.

The consensus forecast was for growth of 0.1 percent on the quarter and 0.8 percent on the year.

"This is a very strong comeback. The decline in the fourth quarter was not the start of a recession but just an economic dip," said Joerg Kraemer, an economist at Commerzbank.

[...]

[Lore]

The German economy is nearly flat, flat like an old tire with a hole in it. They are the last bastion in a bad neighborhood. Seven or so EU countries are in recession and it's only by the skin of their teeth that Germany is keeping the whole apple cart from being upset.

[Daniel_Plainview]

NYT: Data Signal Economic Trouble in China

HONG KONG - As China’s leaders have been preoccupied with a political struggle leading up to a once-in-a-decade leadership change this autumn, there are increasing signs that the Chinese economy may be running into trouble.

China announced Thursday that growth in imports had unexpectedly come to a screeching halt in April — rising just 0.3 percent from the same period a year earlier, compared with expectations for an 11 percent increase. Businesses across the country appeared to lose much of their appetite for products as varied as iron ore and computer chips.

China has been the largest single contributor to global economic growth in recent years, and a sustained slowdown in its economy could pose problems for many other countries. Particularly exposed are countries that export commodities like iron ore and oil and depend on demand from China’s voracious steel mills and ever-growing ranks of car owners.

Exports, a cornerstone of China’s torrid economic growth over the past three decades, grew only 4.9 percent last month — half as fast as economists had expected. And a slump in new orders over the past month at the Canton Fair, China’s main marketplace for exporters and foreign buyers, suggests that overseas shipments by the world’s second-biggest economy, after that of the United States, may not recover quickly.

Growth in other sectors appears to be slowing, too, particularly in real estate. Soufun Holdings, a Chinese real estate data provider, released figures Monday showing that residential land sales in the country’s 20 largest cities had fallen 92 percent last week from the week before, as declining prices for apartments have left developers short of cash and reluctant to start further projects.

In a series of interviews over the past week, bankers and senior executives from provinces all over China, in a range of light and heavy industries, cited a broad deterioration in business conditions. Two of them said that some tax agencies in smaller cities had been telling companies to inflate their sales and profits to make local economic growth look less weak than it really was, while reassuring the companies that their actual tax bills would be left unchanged.

There are early signs of a credit crunch, at least among private sector companies. Many seem to be asking their suppliers for more time to pay debts and complaining of cash flow problems. Zhang Jinmei, the sales manager at Qitele Group, a company that makes playground equipment in the coastal city of Wenzhou, said that local investment and lending pools there were starting to charge higher interest rates for loans, a sign of worries about creditworthiness.

“The business environment is getting tougher and tougher,” said Tom Zhang,

FT: China trade: warning signals.

Whichever way you look at it, China’s latest set of trade figures is bad news. Not only did both exports and imports fall short of expectations, they missed by quite a way. Although the first half of 2012 was expected to be a tough one, analysts say action is needed soon if the Q3 rebound many have been pinning their hopes on is going to happen at all.

If the large jump in the trade surplus is the symptom, the economic illnesses look multiple. Exports have fallen to Europe for the second month in a row, which, from a trade perspective, makes this a low-point since the opening depths of economic crisis. That Chinese imports have fallen even faster is the greater worry. Many had hoped that Chinese shoppers (and builders) would rescue the rest of the world with a voracious appetite for everything. But that seems not to be the case, at least not until the credit taps are turned back on.

Mish predicts that China's growth will slow by at least 50%

I am [predicting] 3.5% average growth for the rest of the decade ... China is due for a "hard landing" which I define as less than 3.5% growth for the rest of the decade. I expect commodity prices will likely crash and the commodity producing currencies such as Australia and Canada will take a big hit as well. The Economist believes China will be the world's largest economy by 2018. I suggest 2030 may be optimistic and Chinese growth will average 3.5% or less for the rest of the decade ...

[TheAntiDoomer]

Industrial Production Rises the Most in More Than a Year
http://www.cnbc.com/id/47444167

U.S. industrial production posted its fastest growth in over a year in April, boosted by surging output at utilities and a rebound in manufacturing, the Federal Reserve said on Wednesday.

Industrial output grew 1.1 percent last month, the most since December 2010 and nearly twice the pace expected by analysts polled by Reuters.

[OilFinder2]

U.S. housing starts rise 2.6% in April to 717,000

Construction on new U.S. homes rose 2.6% in April to an annual rate of 717,000 units, while permits fell 7% to 715,000 one month after reaching a nearly four-year high, the government reported Wednesday. Economists surveyed by MarketWatch had expected housing starts in April to rise to total 690,000 on a seasonally adjusted basis. Housing starts in March were revised up sharply to 699,000 from 654,000, while permits were revised up to 769,000 - the highest level since September 2008 - from an original reading of 747,000. In April, permits for single-family homes, which account for three-quarters of the housing market, edged up 1.9% to an annual rate of 475,000. Permits for new construction are viewed as a gauge of future demand.

[vision-master]

Looks like a great place to live - NOT!!!!!!!!!!!!

[Daniel_Plainview]

Italy's banks shaken as economic slump deepens
As Greece erupts, Italy is moving into the eye of the storm. Its economy is contracting at speeds not seen since the depths of the slump in 2009 as draconian austerity bites, greatly increasing the risk of social revolt and a banking crisis. Soaring yields on 10-year Italian debt jumped 16 points to 5.86pc on Tuesday after Italy's data agency said the country is sliding even into deeper recession, with GDP shrinking 0.8pc in the first quarter.

With the world's third largest debt after the US and Japan at €1.9 trillion (£1.18 trillion), it is big enough to bring the global financial system to its knees. It is also in the front line of contagion as the Greek crisis metastasizes.

Yields on 10-year Italian debt jumped 16 points to 5.86pc on Tuesday after Italy's data agency said the country is sliding even into deeper recession, with GDP shrinking 0.8pc in the first quarter. Output is now 6% below its peak in 2008. Italy has been trapped in perma-slump for a decade, the only major state to suffer a fall in real per capita income since 2000.

Rising anger has led to a spate of violent attacks by terrorist groups over recent weeks, all too like the traumatic 'years of lead' in the late 1970s. The government is mulling use of troops to protect targets after anarchists shot the head of Ansaldo Nucleare last week and hurled petrol bombs at tax offices.

The unelected government of Mario Monti is carrying out net fiscal tightening of 3.5pc of GDP this year even though Italy's budget is near primary surplus. This is three times the International Monetary Fund's "therapeutic" pace. All key measures of Italy's money supply have been contracting at 1930s rates over the last six months.

Hans Redeker from Morgan Stanley said the EU's mishandling of Greece has put Italy in grave danger. "The irrevocability of the eurozone is a valuable asset, and they are throwing it away. Global investors are preparing for the day Greece leaves," he said.

The IMF said Italian bank exposure to the state is 32pc of GDP, including all forms of lending. "We are looking at this number very closely," said Mr Redeker. Almost half of this is owed to foreigners. Italy's central bank owes a further €278bn in 'Target2' claims to peers in Germany, Holland, Finland and Luxembourg, reflecting capital flight.

Italy's former premier Romano Prodi said the EU risks instant contagion to Spain, Italy, and France if Greece leaves. "The whole house of cards will come down", he said

Angelo Drusiani from Banca Albertini said the only way to avert catstrophe is to convert the European Central Bank into a lender of last resort. Otherwise Italy faces "massive devaluation, three to five years of hyperinflation, and unbearable unemployment."

The ECB's emergency lending may have made matters worse, encouraging banks to buy their own states' debt. It has led to an incestous inter-linkange of fragile banking systems and fragile sovereign states, each propping the other up. Many of the banks used ECB money to buy state bonds until they need to roll over their own debt. They are now nursing stiff losses.

Moody's downgraded 26 Italian lenders on Monday night saying the slump itself is the killer, joining a chorus of voices warning that too much austerity may be self-defeating. "Banks are vulnerable to the renewed recession in Italy, given their already elevated levels of problem loans and weakened profitability," it said. Moody's expects the economy to contract 1.9pc this year.

The Italian Banking Association ABI accused Moody's of an "irresponsible, incomprehensible, and unjustifiable" smear. "Moody's decision is an attack on Italy, its companies, its families and its citizens," it said, calling on the EU authorities to clamp down "severely" on rating agencies.

The agency said the "problem loans" of Italian banks have reached 9.3pc. The figure may be higher, given "concerns about the accuracy of reported non-performing loan measures." They depend on capital markets for 36pc of their funds. This source of finance has largely dried up.

[Daniel_Plainview]

Global lenders face 'killer losses' on Greek debt
Foreign holders of €422bn of Greek debt were warned to brace themselves for "killer losses" as coalition talks in Athens collapsed, threatening Greece's future in the eurozone.

The euro tumbled to a four-month low and European stock markets dropped as political leaders and economists warned that the next round of elections called in Athens amounted to a vote on Greek membership of the euro

“What’s at stake isn’t just the next Greek government,” said Guido Westerwelle, Germany’s foreign minister. “What’s at stake is the Greek people’s commitment to Europe and the euro.”

“A second vote means Greece is edging closer to the point where it’s inevitable they have to exit the euro,” Fredrik Erixon, head of the European Centre for International

Political Economy in Brussels, said. “No other course of events is now likely.”

As the Greek president, Karolos Papoulias, admitted defeat on coalition talks, Alexis Tsipras, leader of the radical Left-wing Syriza party which is leading the Greek polls, said he couldn’t “guarantee” the country would stay in the euro.

[AgentR11]

Looks like a great place to live - NOT!!!!!!!!!!!!

Ouch. I agree with VM. I couldn't be paid to live in such a place.

[dsula]

Looks like a great place to live - NOT!!!!!!!!!!!!

Ouch. I agree with VM. I couldn't be paid to live in such a place.

Come on guys, what's not to like. It will have a swimming pool (with hot whirl pool), a community room and is within driving distance to stores and entertainment. It will have a sound damping wall towards the side that borders the freeway and regular 12 feet walls everywhere else. It will be colored in 4 different browns and there's a choice of 2 floorplans. Each door is equiped with triple security locks and you can stay completely annonymous since it's not required to know or say hello to your neighbours. GO AMERICA!

[Daniel_Plainview]

Chris Martenson sounds the alarm ...

Get Ready: We’re About To Have Another 2008-Style Crisis

Well, my hat is off to the global central planners for averting the next stage of the unfolding financial crisis for as long as they have. I guess there’s some solace in having had a nice break between the events of 2008/09 and today, which afforded us all the opportunity to attend to our various preparations and enjoy our lives.

Alas, all good things come to an end, and a crisis rooted in ‘too much debt’ with a nice undercurrent of ‘persistently high and rising energy costs’ was never going to be solved by providing cheap liquidity to the largest and most reckless financial institutions. And it has not.

Forestalled is Not Foregone

The same sorts of signals that we had in 2008 are once again traipsing across my market monitors. Not precisely the same, of course, but with enough similarities that they rhyme loudly. Whereas in 2008 we saw breakdowns in the credit spreads of major financial institutions, this time we are seeing the same dynamic in the sovereign debt of the weaker European nation states.

Greece, as expected and predicted here, is a right proper mess and will have to leave the euro monetary system if it is to have any chance at recovery going forward. Yes, all those endless meetings and rumors and final agreements painfully hammered out by eurocrats over the past year are almost certainly going to be tossed, and additional losses are going to be foisted upon the hapless holders of Greek debt. My prediction is that within a year Greece will be back on the drachma, perhaps by the end of this year (2012). ...

If You Think Greece is Bad

Greece, of course, is tiny compared to Spain or Italy. The situation in Spain -- which is big enough to matter -- is truly dire, very large, and getting worse.

Spain has been playing fast and loose with the numbers, and that fact has now been revealed to the world. It’s not a pretty picture. ... And this is just the losses that Spanish banks face on their real-estate portfolios. They are also now facing losses on all the Spanish sovereign debt that they bought with their LTRO funding as well. Very simply, Spain now needs a massive rescue, and soon.

Meanwhile German citizens are all done with helping their southern neighbors. Merkel has used up all of her political capital on the rescues performed to date, and it is far from clear that any more help is politically doable here. The only way that I can see such help coming is under some terms other than drawing upon the savings of Germany’s citizens. Printing, perhaps, but even that is a dicey political proposition here.

If Spain drops here, then you can just set an egg timer for when Italy will go. And then France. The dominoes will rapidly fall from there. ...

[Daniel_Plainview]

Rumor: Moody’s said to downgrade 21 Spanish banks

Moody's is reportedly set to downgrade 21 Spanish banks according to a Spanish economic daily, thereby casting another blow to the banking industry in Europe.

­The move wouldn’t come as a surprise -Moody’s has been poised for the rating cut since February, when the agency announced it was planning to downgrade 122 financial institutions by May. The ratings of 114 banks from 16 European countries were put under consideration, with the downgrade risks mainly relating to the eurozone periphery.


The rumors of a possible Spanish downgrade come days after the agency cut the ratings of Italian banks. On May 14, Moody’s dropped the debt rating of 26 financial institutions, including the giant UniCredit, as Rome struggles with recession, tough austerity measures and 1.9 trln euro of outstanding public debt.


The banking sector across Europe is very much under pressure this year. In April, the IMF issued a report saying that the total assets of 58 largest EU banks are likely to be decreased by 7% (2.6 trln dollars) by the end of 2013. The decrease in assets is down to meeting the new regulatory framework of Basel III, as well as by the activity decline in the M&A and IPO sector, the latter being the main source of profit for investment banks and divisions.