Wednesday, July 19, 2006

Wednesday Economic Roundtable

First on the docket is the MBA Mortgage Index, from Marketwatch:

Mortgage applications fall 4.6%

Applications for mortgage loans at major U.S. banks fell by a seasonally adjusted 4.6% last week, the Mortgage Bankers Association reported Wednesday.

Applications were down 31.3% from a year ago.

The purchase index sank by 6.2% to a level 19% lower than a year ago. The refinance index fell 1.6% to a level 46% lower than a year ago.

From Bloomberg:

U.S. June Consumer Prices Rise 0.2%; Core Rises 0.3%

Consumer prices in the U.S. increased for a sixth straight month in June and costs excluding fuel and food rose more than forecast, suggesting Federal Reserve policy makers will keep raising interest rates.

Prices paid by Americans rose 0.2 percent after May's 0.4 percent increase, the Labor Department said in Washington. Excluding food and energy, so-called core prices rose 0.3 percent for a fourth straight month and exceeded the 0.2 percent median estimate in a Bloomberg News survey of economists.

Core prices increased 2.6 percent from June 2005, the biggest year-over-year rise since 2002, leaving inflation farther above the Fed's comfort zone. The report comes less than two hours before Fed Chairman Ben S. Bernanke presents his semi-annual economic report to Congress.

``Inflation pressures are picking up,'' Mike Moran, chief economist at Daiwa Securities America Inc. in New York, said before the report. ``Underlying conditions still carry inflation risk, with energy prices staying high and not much slack left in the economy.''

Core inflation has increased 0.3 percent for four straight months, the longest such stretch since January to April 1995. Medical care, rents and airfares all rose last month.

From the Associated Press:

Housing construction drops 5.3 percent

Construction of new homes fell by 5.3 percent in June, the Commerce Department reported Wednesday in another signal that the once-booming housing market is beginning to slow.

Builders started construction on new homes at a seasonally adjusted annual rate of 1.85 million units last month.

Applications for building permits, considered a good sign for future activity, fell for a fifth straight month, dropping by 4.3 percent in June to a seasonally adjusted annual rae of 1.862 million units.

Other topics for discussion today:

Bernanke's testimony to Congress, which is set to begin at 10 this morning. The topic will be updated as information becomes available.

Caveat Emptor!
Grim

47 Comments:

Anonymous Anonymous said...

You are a buyer who has good finances and savings in the bank for a downpayment....you are in the driver seat...not some slick con-job realtor or some johnny come lately grubbing seller looking to stiff you with an overpriced house.

This tag team know the market is going down now....do not give on anything. A reversal of the past. Nice to be on top buyers.

NO BIDS NO NOOOTTTT""""ING!

Okay 25-35% Bids off of 2005 peak prices ONLY!
Bababbababa
Bob

7/19/2006 06:32:00 AM  
Blogger wfmukerm said...

we need a BOB/NNJREB 'index' graph.

I would like to see the the historical volume variances of upper case vowels in Bobs postings and the correlation with prices. Maybe I haven't been paying close attention (busy at work) but he seemed to be missing for a couple of days, during which time one of my 25% underbids was actually entertained but then declined by a seller (who accepted some other bid, no idea what the winning bid was, yet) and my apt. buyer backed out of our deal.

think there might be a booya effect here.

also, the pharamacom that produces Tylenol posted profits yesterday - isn't that one of those "tell-tale" signs? People getting headaces while trying to balance checkbooks?

7/19/2006 06:47:00 AM  
Anonymous Anonymous said...

I'm still trying to figure out how mortgage apps are down 20-30 percent year-over-year but sales are just off 7 percent.

Are that many people getting turned down for mortgages?

Lindsey

7/19/2006 07:42:00 AM  
Blogger NJGal said...

Do we know if these mortgage app numbers include refinancing? If they do, Lindsey, that may be why there's a disparity - otherwise, I'm with you in the "I don't get this" camp.

7/19/2006 07:46:00 AM  
Anonymous Anonymous said...

adding...

Interesting, Marketwatch noted thed discrepancy between apps and purchases, but gave no kind of explanation.

Lindsey

7/19/2006 07:50:00 AM  
Anonymous Anonymous said...

Purchase apps down 19 percent

Lindsey

7/19/2006 07:51:00 AM  
Blogger grim said...

Based on the PPI numbers yesterday and CPI numbers this morning, my gut feel indicator puts the probability of a 25 bps hike at 70%.

grim

7/19/2006 07:58:00 AM  
Blogger Richard said...

this report guarantees a 25bps increase in august. after that is a crap shoot right now.

7/19/2006 08:00:00 AM  
Anonymous Anonymous said...

So what towns here in NNJ will give
the best value when the bottom falls out??

Englewood Cliffs, Edison, Woodcliff
lake, Parsippany, Wayne,

I'm looking.

The prices still seem high.

7/19/2006 08:08:00 AM  
Blogger grim said...

richard,

The futures market agrees, probability based on fed funds futures is around 90%.

grim

7/19/2006 08:14:00 AM  
Anonymous Anonymous said...

Ladies and Gentlemen:

We have Stagflation.

Slowing economy with inflationary
pressures.

It's over.

7/19/2006 08:44:00 AM  
Blogger skep-tic said...

don't sales figure lag the mortgage numbers? mortgage numbers come out weekly. sales only come out after closing, which is usually many weeks removed from offer/acceptance.

I would expect that continued decline in purchase applications should show itself in future sales numbers

7/19/2006 09:06:00 AM  
Anonymous Anonymous said...

and don't forget the japan
carry trade business is finished.

7/19/2006 09:10:00 AM  
Anonymous Anonymous said...

"I'm still trying to figure out how mortgage apps are down 20-30 percent year-over-year but sales are just off 7 percent."

With all the money being made in RE over the last few years, you can probably reason that some of the recent purchases are in cash.

7/19/2006 09:14:00 AM  
Blogger RentinginNJ said...

FromWSJ:
In congressional testimony, Bernanke said the recent rise in inflation is "of concern" to the Fed, and economic moderation "seems to be under way." Full article coming soon.

7/19/2006 09:21:00 AM  
Blogger DebtVulture said...

Ryland just reported. In May the said that orders were down around 35%. For the quarter ended June, net orders were down almost 40%, implying that the order rate for them got worse in June.

7/19/2006 09:21:00 AM  
Blogger skep-tic said...

negative feedback running full tilt

7/19/2006 09:23:00 AM  
Blogger grim said...

Transcript of Bernanke's testimony.

Testimony of Chairman Ben S. Bernanke

7/19/2006 10:15:00 AM  
Anonymous Anonymous said...

Anonymous said...
Ladies and Gentlemen:

"We have Stagflation.

Slowing economy with inflationary
pressures.

It's over."

7/19/2006 09:44:13 AM


could not agree more

7/19/2006 10:15:00 AM  
Anonymous Anonymous said...

I'm still looking in Englewood,
but am concerned about the gangs.

let's Crips, Bloods,Latin Kings,
M 10's..

Maybe this is not a good idea

7/19/2006 10:30:00 AM  
Anonymous Anonymous said...

Anonymous said...
"I'm still looking in Englewood,
but am concerned about the gangs.

let's Crips, Bloods,Latin Kings,
M 10's..

Maybe this is not a good idea"

7/19/2006 11:30:39 AM


Don't let that dissuade you, it "takes a village". After all it is "society's fault" so get in their and make your contribution!

7/19/2006 10:42:00 AM  
Blogger Richard said...

i don't see how a slowing housing market helps anyone who isn't already in the game. prices are multiple standard deviations above median income. is that supposed to be good for people who want to buy a home?

usually when you use a hammer on everything some things get crushed. this time it'll be the would-be homebuyer as stagflation sets in.

7/19/2006 10:44:00 AM  
Anonymous Anonymous said...

Our boyfriend Mendenz is throwing
the questions at BB now.

7/19/2006 10:47:00 AM  
Anonymous Anonymous said...

"Don't let that dissuade you, it "takes a village". After all it is "society's fault" so get in their and make your contribution!"

O.K. Sounds a little socialist.

So then let the village pay my mortgage and let the village pay my ER bill every time somebody maglites me.

7/19/2006 11:21:00 AM  
Anonymous Anonymous said...

Remember there is stealth inflation.....

These numbers are fudged, this is a mirage.

Inflation is worse than the Fed wants you to know, because they don't want panic in the markets. Panic is the worse thing that could happen. For sure, feds ups its rates again.

SAS

7/19/2006 12:35:00 PM  
Blogger chicagofinance said...

"I believe that the initial market reaction to the speech probably reflects an incorrect interpretation," wrote Stephen Stanley, chief economist at RBS Greenwich Capital, who believes Mr. Bernanke's testimony was based on the Fed's thinking prior to the release of today's CPI number, and that an August rate increase is likely.

7/19/2006 02:19:00 PM  
Blogger chicagofinance said...

I don't like the work that Benny is producing. I think he is starting to appear like a hack.

7/19/2006 02:21:00 PM  
Anonymous Anonymous said...

Chicago..you mean the Mona Lisa grin could possibly be induced by self-deceptive illusions of independence?

I've been lookin for AGs testimony from 3rd Q94 - 1st Q95 and can't find it.

Trying to count, if any, the number of references in 94 to any need to fight misplaced consumer expectations of inflation.

7/19/2006 02:34:00 PM  
Anonymous Anonymous said...

pat

7/19/2006 02:34:00 PM  
Blogger grim said...

"Hack" is a pretty strong word. Why do you say that?

7/19/2006 02:44:00 PM  
Anonymous Anonymous said...

He's not found a way to control the stock market fluctuations.

People are starting to smile behind their handkerchiefs. New hobby.

It's like watching a little chihuaha pull around a a fat lady in a flowered dress.

In a way, kind of funny. Until she has a stroke in front of you.

7/19/2006 02:49:00 PM  
Anonymous Anonymous said...

pat

[Sorry, having some difficulties today on this blog.]

7/19/2006 02:50:00 PM  
Blogger chicagofinance said...

grim said...
"Hack" is a pretty strong word. Why do you say that?
7/19/2006 03:44:23 PM

His job is to be objective and consistent, and avoid being unduly influenced by external parties that have starkly different agendas. He must be apolitical and he must be neutral business.

I think he is appearing intimidated by the job.

He's looking a bit like ARod with the game on the line.

7/19/2006 03:03:00 PM  
Blogger Shailesh Gala said...

Old article, but good read.

HOUSING BOOM GOES BUST IN LOS ANGELES By BENJAMIN J. STEIN
Published: August 17, 1981

7/19/2006 03:27:00 PM  
Blogger Flop that house said...

Shailesh Gala,

Could you direct me to some of your previous graphs showing histroical mortgage payments, median house prices, CPI etc

7/19/2006 03:33:00 PM  
Anonymous Anonymous said...

Grim:

Say, thanks for letting me hang out on your blog for a while.

Each person's unique input has been very helpful and informative.

Good luck to all here in any future real estate endeavor!

Bye!

Pat

7/19/2006 03:38:00 PM  
Blogger grim said...

Pat,

Are you leaving?

7/19/2006 03:43:00 PM  
Anonymous Anonymous said...

Elvis, has left the building

7/19/2006 04:11:00 PM  
Anonymous Anonymous said...

So this is what is going to happen on every go 'round right - looks like a rate hike is inevitable, stock marked slowly sags, ben makes a 'soothing' speech, stock market juts upward, rate gets hiked anyway, market sags...

7/19/2006 04:47:00 PM  
Anonymous Anonymous said...

chicagofinance said...
I don't like the work that Benny is producing. I think he is starting to appear like a hack.

What do you expect from a Bush appointee? Most people handed jobs in this administration are not selected because of their qualications. They're selected to kiss butt and nod in agreement.

7/19/2006 08:16:00 PM  
Blogger grim said...

In defense of Ben..

This testimony was likely prepared prior to the PPI and CPI numbers being released. One wonders if the testimony would have been the same if it had been scheduled for next week..

grim

7/19/2006 09:27:00 PM  
Anonymous UnRealtor said...

"Most people handed jobs in this administration are not selected because of their qualications. They're selected to kiss butt and nod in agreement."


Right, and this is would be a trait only of Bush appointees... Anyway, back on Earth, Condi Rice, Colin Powell, Donald Rumsfeld, Ari Fleischer, John Bolton, Tom Ridge, John Roberts, and others -- all extremely qualified and top performing individuals who serve their country with pride and distinction.

It must be awful to go through life blinded by partisan hatred.

7/19/2006 09:31:00 PM  
Blogger chicagofinance said...

This comment has been removed by a blog administrator.

7/19/2006 09:31:00 PM  
Anonymous Anonymous said...

Right, and this is would be a trait only of Bush appointees... Anyway, back on Earth, Condi Rice, Colin Powell, Donald Rumsfeld, Ari Fleischer, John Bolton, Tom Ridge, John Roberts, and others -- all extremely qualified and top performing individuals who serve their country with pride and distinction.

What the *#$@ are you smokin?!

I got a nice bridge to sell ya, pal.

7/19/2006 11:08:00 PM  
Anonymous Anonymous said...

If anyone is blinded be party lines, it's the Republicans. If you really take a hard look, the party is spiraling downward at a quick pace. There is infighting and way too much extremism from the neocon contingent in the party. (see Paul Mushine's column in today's Ledger). It boggles my mind that 30 - 35% of the country continues to back this president.

If you notice the list of people you consider "competent" I could argue most of them, the others quit out of frustration.

7/20/2006 06:12:00 AM  
Blogger Roadtripboy said...

Pat! Don't go! I'll miss your sense of humor!

-Roadtripboy

7/21/2006 08:49:00 PM  
Blogger Roadtripboy said...

This comment has been removed by a blog administrator.

7/21/2006 09:02:00 PM  

Post a Comment

<< Home