Oops! Existing Home Sales Drop – More Bad Economic Reports Today

IF YOU DON’T OWN GOLD, YOU KNOW NEITHER HISTORY NOR ECONOMICS.  – Ray Dalio, Bridgewater Associates (one of the largest hedge funds in the world beside the Fed)

I’ll have LOT more on the matter of existing home sales sometime in the next 24-36 hours. But suffice to say that the stock market bubble bulls were looking for April existing home sales to come in at an SAAR “seasonally adjusted, annualized rate” of 5.22 million.  Not only did it miss that number badly, being reported at 5.04 million, but it was a 3.3% drop from March.

This just in:  folks, existing home sales should be rising from March to April, not declining. Especially with the wide proliferation of Government-sponsored 0-3% down payment mortgage financing at near-record low interest rates.  AND, that type of financing is now available down to a 580 credit score.  A 580 credit score is the equivalent of C-rated junk bond – i.e. about a 40-50% chance of default.

This report is a complete disaster, because it’s a “seasonally adjusted, annualized” rate. The actual number for April was likely shockingly low.  I have not had a chance to read the details, but I can guarantee that the National Association of Realtor “wizard,”  Larry Yun, will blame the drop on “low inventory.”  I don’t know about the rest of the country, but inventory in Denver is starting to pile up like dogs under a cat on a hot tin roof – especially at the $800k and over segment.

I will have more later, including a shocking report about some homebuilder insiders who are dumping their company’s shares at the same rate as they were in 2005.  It’s one of the companies I cover in my Homebuilder Research Reports, all of which make some of the best short-sell plays in the market.  Any money manager who owns homebuilders and does not consider the information in my reports is violating its fiduciary duty to its investors.

The U.S. Macro index has never dropped this quickly in its history (source:  Zerohedge, edits are mine – click to enlarge):


While we know that the Fed/US Treasury (PPT) is holding this pig up, at some point either the U.S. Macro metric has to start rising and converge back into correlation with the stock market, OR the stock market crashes.  At some point, unless the Fed goes “Weimar,” the stock market is going to crash.  That money coming out will FLOOD into the gold and silver – physical gold and silver.

The April Chicago Fed National Activity Index literally plunged to -.15 from the expected .10.  It’s hard to move the needle on this index.  While the reading was slightly higher than for March,  industrial production was -.16 and the consumption/housing component was barely above zero.

The Philly Fed index for May dropped to 6.7, missing Wall Street’s brain trust consensus estimate of 8.0 and declining from the 7.5 reported for April.

U.S. PMI Manufacturing “flash” index for May dropped from April and missed consensus.  It tumbled to its lowest level in 16 months and new orders plunged.

As I have written earlier this  week, the U.S. economy is crashing.  The only variable not crashing is the perception of a healthy system being conveyed by a stock market which has been imposed upon by perhaps the greatest Central Bank market intervention in history – at least in terms of sheer effort and dollar volume.  This is not going to end well for anyone.

10 thoughts on “Oops! Existing Home Sales Drop – More Bad Economic Reports Today

  1. Any thoughts on ways to be short homebuilders, without actually shorting them?
    I can’t short things anymore because of restrictions at my job, so I’m trying to look for alternatives.

  2. Dave, not just the US economy crashing, but the entire globes economy.

    The Baltic Dry Index (BDI) has been chopping sideways at it’s February’s low, which was low to begin with since the crash of 08! The (world) commodities tracking index (DBC) has the same action as the BDI with some items making new lows and with a downward trend.

    There are so many potential ignition points, any one of which will set ‘fire’ to this grotesque pile of world debt, that the resultant financial/societal conflagration will be studied and debated for centuries to come. Time grows shorter. Close now.

  3. http://www.zerohedge.com/news/2015-05-21/housing-recovery-real-or-memorex

    “Do you see the potential problem here? Speculators have flooded the market with a majority of the properties being paid for in cash and then turned into rentals. This activity drives the prices of homes higher, reduces inventory and increases rental rates which prices “first-time homebuyers” out of the market. The problem is that when the herd of speculative buyers turn into mass sellers – there will not be a large enough pool of qualified buyers to absorb the inventory that will lead to a sharp reversion in prices.”

  4. I have the strange feeling that the banker elite will kick this stock market to unimaginable highs (of course, 20k Dow in my eyes is only a question of time) before they pull the rug under it. Then making huge profits by going short. No matter what the news is, this market obviously knwos only one direction, and this is up. Never have seen such a thing. I think to remember that even in the .dot com bubble there were times of a market pullback. Not in this bull. Another comment I want to add: In my eyes they will raise the FEF funds rate by .25 points. They are already preparing the public for that. It’s being meant as a symbolic act. Look, we have saved the world in 2008, and now we are on the route to financial normality. Thanks to your wise central bank leaders. Of course you can’t raise rates in a detiorating economic environment, but nowadys in theses fake markets everything is upside down.

  5. Bezos have announced a new business today.

    If you buy 1 bag of charcoal for your garden it will be delivered by a spaceship from Mars directly to you free of charge!

    And you might even get money back as a bonus!

    The reaction from Wall Street was “bullish”

  6. http://www.zerohedge.com/news/2015-05-21/governments-message-heavily-indebted-students-dont-pay-us-back

    Dear XXX,

    Your loan servicer, Great Lakes Educational Loan Services, Inc., has contacted you or will be contacting you soon about your repayment options for your federal student loan. As you consider these options, the U.S. Department of Education wants to remind you that you may qualify for a repayment plan that calculates your monthly payment based on your income.

    You will likely qualify for an income-driven repayment plan if your total federal student loan debt exceeds your annual income. Under an income-driven plan, your initial payment could be as low as $0 per month.

    When you make payments based on your income, your loans are paid off over a longer period of time than the standard 10-year plan. While this reduces your monthly payment amount, it also increases the total amount you pay over time. But if you work for the government or a not-for-profit employer, you may qualify to have your remaining loan balance forgiven after 10 years of payments under the Public Service Loan Forgiveness Program.

    wtf… so go to school, the higher the debt the better because if your debt is higher than your annual income YOU PAY NOTHING! and if you work for the post office or DMV or some other loser organization subsidized by taxpayers then AFTER 10 YEARS you owe NOTHING!!! Gotta love it…

    beep beep

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