Yellen caps a busy week of FOMC rehash when the T word is revisited, claims will show a downtrend as more unemployed starve to death, and housing prices should stabilize in the wake of jawboning irates up 25% off the lows. Pulling QE is like removing an Alien face hugger--it never should have been there in the first place, but removing it kills the patient.
With inflation low, that kills the chance for washing the dollar down the drain, which makes debt seem so less threatening, as long as you're willing to have $50 cups of coffee as a result. They were a nickel in the 30's, and since we're still in a Depression unless you work for fast food or Walmart, you probably are out of one of those well paying jobs this administration has been promising for 8 years, and hasn't delivered. Thursday Friday 22/23 are hot days in August economically speaking. GLTA
Aug 19 Multiple Bill Announcements
Aug 20 0745 Goldman Strore Sales,
Aug 20 0830 Chicago Fed Activity
Aug 20 0855 Redbook
Aug 21 7:00 AM MBA Mortgage Index 08/17 - NA NA -4.7% -
Aug 21 10:00 AM Existing Home Sales Jul - NA NA 5.08M -
Aug 21 10:30 AM Crude Inventories 08/17 - NA NA -2.812M -
Aug 21 2:00 PM FOMC Minutes 7/31 - - - - -
Aug 22 8:30 AM Initial Claims 08/17 - NA NA 320K -
Aug 22 8:30 AM Continuing Claims 08/10 - NA NA 2969K -
Aug 22 9:00 AM FHFA Housing Price Index Jun - NA NA 0.7% -
Aug 22 10:00 AM Leading Indicators Jul - NA NA 0.0% -
Aug 22 10:30 AM Natural Gas Inventories 08/17 - NA NA 65 bcf -
Aug 22 2:00 Fisher Speaks
Aug 23 ?? Yellen Speaks
Aug 23 10:00 AM New Home Sales Jul - NA NA 497K
If Yellen spoke Friday, she did so in a closet. And MSFT Balmer announced leaving the scene so profound, it literally carried the entire market. Maybe they should all quit! Congress too, before it declares war on Syria. Oh that's right, Congress hasn't declared any of the half dozen wars we have fought for about 60 years now.
Here we go, candidate for Fed Chairman Yellen is jellin this morning, but the big booger bear after yesterdays' Nasdaq halt fiasco is the crashing new home sales, imho. The real impact of higher interest rates has dried up zeal for new homes, but existing homes are commanding higher prices with the demand steady. Demand based price accretion, real supply and demand, who'da thunk that would survive into the 20th Century? In the meantime, since we can't figure out if the rebels or the govt in Syria is using chemical weapons, it's a neat excuse for us to start infiltrating Vietnam style so we can set up the next war.
Wars are always helpful in times of economic contraction.
Here come claims, but the FOMC notes actually recognized the partimers and low paying jobs part of the problem, and rising interest rates slowed housing, but the numbers tomorrow on prices and sales will reflect the last looky loos, not a good stat to bet a rising market. Ben's got a dilemma, nobody is buying our bonds at these yields, and to provide fresh suckers from abroad, he's got to increase yield on the backs of the stock market rally. I think the entire 18% plus another 7% will unwind from here.
If no news days are taking a percent out of the market, imagine what Wed-Fri will do when the tschit hits the fan. Silver has crawled up from minus 1.5% to minus 1% after some spectacular stair step gains from the low. No consolation tho.
It will be hard for existing home sales to gain traction the 20th, as all eyes are inexplicably drawn to the premature bond buying taper that will be parsed from month old FOMC notes, which will take the steam out fo a market that firmly believes stimulus is more important than economic strength, and by the way, there IS NO economic strength built on part time and McJobs valued at $25,000 per year. Those are only good high paying jobs, if you're from downtrodden Chicago, or Bankrupt Detroit. All those cracks in the fledgling recovery, all we need is another weak 2.5% decline and all those program trades kick in to drag the market into a death spiral. The roulette board of odd even up down silver gold days is in full swing, as a 1/2% is taken off the top of the recent pop in silver. Was that a dead cat bounce into a headfake, on the hope that QE to infinity reigns and FOMC stops deluding itself, as Davidowitz would say? You won't get a rewrite of the script we heard last month, so awtzhit is the big sneeze end of week, which, if general market breaks even, is a miracle. For "good" economic news is bad news, because it depends on the fickle market and not the puppet masters behind the curtain, however dumb that belief.
One thing is certain, when the meager home buyers start to dry up because they can't afford the interest rate pops new cash flow requirements, now a full car payment higher than they were at the low--a number in excess of all the Bush and Obama tax giveaways, something has got to give. And a recovered stock market is port of first call. GLWT
In my area this home borrowing rate increase has eliminated those buyers for lower priced homes who formerly were able to move out of apartments and into houses with the payment comparable to their rent. This Im afraid includes my Daughter who is a social worker with a college degree.