The economy is starting to really fall out of bed. I know who someone who has been selling steel buildings for the last 12 months who told me that his company is 20% below its projected business plan this month. Both the NAR and the Census Bureau released their existing/new home sales reports for December. The NAR claims a small bounce in sales occurred during December. The Government would have us believe in a large bounce in new home sales. BOTH reports are heavily contradicted by supporting data reports (like mortgage purchase applications.
I have not had time to thoroughly sift through those two reports or the most recent homebuilder earnings reports (DR Horton and Pulte). I’ll have a lot more to say on those matters sometime this weekend and IRD reiterates its “look out below” forecast.
Today the NAR released its Pending Home Sales index for December and it showed an unexpected plunge of 3.7% (.5% gain was expected) from November. It was the second biggest monthly plunge since May 2010. Pending home sales (and note, the report is an “index” based on estimates from data samples) are based on contract signings. New homebuilders are experiencing roughly low-mid 20% in cancelled contracts.
Surprisingly, despite the move higher in the Dow Jones Home Construction Index (DJUSHB) this week, several readers bought my homebuilder short reports. One of my short-sell picks is down over 24% since I published it on July 30th. This is despite the S&P 500 rising 2.6% in the same time period. At some point soon, I am going to update my current reports with the respective companies’ latest earnings and news. But I am also going to raise the price by $5 as I re-publish the updated reports (anyone who has already purchased the reports can email me for a complimentary copy of the updates).
Also wanted to link this article from the Financial Times today about Russia buying record amounts of gold. Recall, the rumor a couple months ago, obviously floated by the bullion banks, was that Russia was dumping gold. Of course, ex post facto, it turned out that Russia added a lot more gold to its holdings over the last few months:
Russia accounted for about one-third of central banks’ gold purchases last year as the country spent more on the metal than at any time since the break-up of the Soviet Union amid escalating tensions with the west and a collapse in the value of the ruble.
Central banks around the world bought a net 461 tonnes of gold in 2014 — 13 per cent higher than the previous year and the second-highest level since the collapse of the gold standard in 1971 — as they continued to diversify their currency reserves following the financial crisis. They have added 1,800 tonnes to their holdings in the past six years.
Moscow’s shopping spree of the yellow metal was driven by a desire to shift away from a dependency on the dollar and provide support to the beleaguered ruble. Russia’s currency has lost half its value against the dollar in the past year on the back of the plunging oil price as well as western sanctions. The central bank’s foreign currency reserves, mainly US and European government bonds, have also fallen.
You can read the rest of the article at the Financial Times (for some reason I can’t publish with a link to the FT but the title is “Russia Buys Record Amounts Of Gold”).
The Orwellian smoke blowing from Wall Street and DC is getting immensely thick. I’m not sure anyone in the brokerage industry, Congress or the White House is capable of telling the truth even if they felt compelled. I have a spooky feeling our system is really starting to fall apart behind the scenes…