'Unexpectedly': Existing home sales drop in December

Obama II market opens flat to negative. Photo: B. Hurley/AFR

WASHINGTON, January 22, 2013 – Not much to say this morning as the market opened flat, then dipped down as reported existing home sales numbers dropped “unexpectedly” in December. Big deal, actually. 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 investment while all 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 Gen Y folks would actually be able to buy affordable housing from retiring Boomers. Boomers, of course, “unexpectedly” woke up one morning to discover their own mortgages are underwater, so they’re unwilling to lower prices enough to get the market moving, since they’d planned to use that moolah to cruise the world until the end of days.

Gen Y, 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 Gen Y. At any rate, what’s “unexpected” about real estate sales slowing during the holidays, aided and abetted 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 a consumer price inflation increase of 0.5% next month, what are the odds, exactly, of that number hitting 0.5% precisely? Mmhmm. 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 does get tedious. But what this does accomplish is hype. Headlines like this are the equivalent, in economics reporting, of the old journalistic cliché, “If it bleeds, it leads.”

Unfortunately, this kind of hype generally serves its purpose in subtle ways. If everything is “unexpected,” then we live in a world of perpetual crisis, so we’ll always need those blow-dries on TV to tell us what to do.

Not.

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 of the next couple of months as the battle of the budget continues in Washington with 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—come up against another party that has none but refuses to acknowledge that fact.

In short, we suspect that this spring’s budget negotiations will end up just like Charlie Brown when he believes Lucy—again—when she swears she won’t pull the football away at the last moment. In this real life “Peanuts” drama, the Repubs are always Charlie Brown because they simply don’t have enough imagination to play the part of Lucy.

All this means that we’re likely 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. We’re putting together a sample portfolio with this kind of orientation, and we’ll present it for your viewing pleasure as soon as it’s done over on our companion column, “The Prudent Man,” which we tend to reserve these days for our longer dissertations.

Meanwhile, as for today, “unexpectedly,” we have very little to say. 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 services mostly agree that we’ve gotten overbought here 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.

We’ll be back, hopefully with more substantive stuff, on the morrow. Have a good one.

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.

Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.

Follow Terry on Twitter @terryp17

 


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Terry Ponick

Now writing on investing, politics, music, movies and theater for the Washington Times Communities, Terry was formerly the longtime music and culture critic for the Washington Times print edition (1994-2009) before moving online with Communities in 2010.  

 

 

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