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Case Shiller is Late Again- 3/29/23

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DrStool Dean of Stock Proctology

DrStool

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I used to rant about this constantly but I've let it go in recent years. Nobody cares that the most widely followed measure of US house prices uses horseshit methodology that renders it useless as an indicator of current conditions. Meanwhile, had you been following the NAR's near real time home price data that comes from MLS sold prices from last month, you would already have been well aware that house prices were collapsing. 

image.png

https://cdn.nar.realtor/sites/default/files/documents/ehs-02-2023-overview-2023-03-21.pdf

Case Shiller uses a 3 month average of recorded closed sales. That represents contracts reached on average 5-6 months prior to the report date. It's like reporting stock prices from last November. 

Now the NAR isn't perfect. It uses BS terms like "existing" home sales, when the data actually shows closed sales. The NAR's Pending Home Sales are the actual contracts. That's real time from the month before the release. 90-95% of contracts close. "Existing" is just the rubber stamp of the actual meeting of the minds when the price was set, a couple of months before.

Then the NAR conflates the price data from the more recent month with the old sales volume. It's stupid. But the fact is that the price data is good, comprehensive, and no BS, meetings of the minds between buyers and sellers through the Realterror middleman.  So if you want to know where the market is as close to now as possible, use the Relators pendings for current sales volume, and existing for current sales prices. 

Redfin also uses current MLS national data, and they draw pretty charts.

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Quote

In February 2023, U.S. home prices were down 1.2% compared to last year, selling for a median price of $386,536. On average, the number of homes sold was down 22.3% year over year and there were 324,900 homes sold in February this year, down 418,359 homes sold in February last year.

https://redf.in/HWWlQ6

Another even realer real time measure of house prices is the weekly average mortgage balance of newly granted more-gouges. That comes from the kind folks at the Mortgage Bonkers Ass. That's down 3.3% year over year as of March 17. That's as real time as it gets.  


source: tradingeconomics.com

Prices are seasonal, with a peak in June and trough in January, but the size of the decline is unprecedented with the exception of 2007-2011. That's still to come. 

Market rents are also collapsing. That's for another post. 

None of this is reflected in CPI of course, because CPI uses made-up bullshit for housing prices. I have called attention to this scam repeatedly through the years. The smart alecks at the BLS (Bureau of Liar Statistics) outsmarted themselves. Because of the lag they built in to their construction of what's called Owner's Equivalent Rent, the substitute for actual market prices of houses and actual market rents, the CPI housing component is about 6-12 months behind the reality of the marketplace.  So while the method suppressed CPI on the way up, putting Jerry and the Ratemakers to sleep, it is now inflating the inflation. General price trends are not as high as the CPI says. 

CPI's purpose was never to measure general inflation anyway. Its purpose was to promote the indexing of labor contracts and government bennies at a lower rate than actual inflation. Originally house prices were included in CPI. In the seventies, during another great housing inflation, that became problematic. So the Reagan Administration removed house prices from CPI in 1982. The BLS

On the other hand, the PPI for final demand for finished consumer goods doesn't include housing at all, and that's been sticky. So we have asset deflation and consumption goods sticky inflation. Great. 

The thing is, see, the inflation rate follows the size of the Fed's balance sheet. Uncle Miltie Friedman was right.

Quote

Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.

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So now the question is what happens with the new BTFD emergency lending programs. Will the effect be an instant surge CPI (phonetically - sippy), or the PPI (poopie)  or the Fed's favorite, PCE (pissy) follow? 

I doubt it. Here's why. Because emergency lending is diffent dan QE! I splain: Fed’s Reaction to the Big Mahoff Panic Ain’t Your Daddy’s QE. 

Now, on to our usual look at the intraday slop. 

First, here's the 2 hour bar perspective on the ES S&P 500 24 hour fuguetures. Ohmygawd! This would be so bullish if they clear 4015. The last ditch resistance line for the bears would then be 4040. And after that, da moon. 

-nnxj

Here's our usual 1 hour bar perspective. The 2-3 day cycle projection is 4020. 

-nnx-

Furthermore, absolutely nothing doing for the bears unless they get it back under 3965. Which looks really unlikely from here. Watch Out For This If the Market Comes Unstuck

But if they stay under 4014, does that mean there's a chance?

For moron the markets, see:

If you're serious about the underlying forces of supply and demand that drive the markets, join me!

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DrStool Dean of Stock Proctology

DrStool

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For the week ended March 28, there were 30 charts with multiple buy signals as of the last two trading days. There were 5 multiple sells. Non-subscribers click here for access. Technical Trader subscribers click here to download the complete report.

Two weeks ago there were 3 buys and 482 sells. But the Fed changed the game a few days later, and all those sell signals were turned on their heads. As I wrote in the Liquidity Trader analysis that weekend, given the uncertainties around just what current monetary policy even is, let alone what the effects will be, I wanted to stand aside and watch for a week. At least. Now that things have shaken out a bit, it’s time to take another look at the individual charts to see if anything looks good for a trade.

Nothing did on the short side. And the longs were completely uninspiring. The one that I liked is dull, but the chart has room for a pop. That’s xxxx. Non-subscribers click here for access.

All of the shorts that were on the list save one, hit their stops and were dropped as of that point. There’s one left. I adjusted the stop on that.

That’s all for this week. Yawn.

I think I’ll take a nap.

Table and charts below (subscriber version).  Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

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DrStool Dean of Stock Proctology

DrStool

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51 minutes ago, fxfox said:

Credit Suisse whistleblowers say Swiss bank has been helping wealthy Americans dodge U.S. taxes for years


https://www.cnbc.com/2023/03/29/credit-suisse-whistleblowers-say-bank-has-been-helping-americans-dodge-us-taxes.html

 

I am SHOCKED! Who would have ever thought that???

😂

Shocked, shocked, that there has been gambling going on in this establishment. 

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