Let’s see. Between July 2007 and January 2009, the median US residential housing price plunged from $230k to $165k or by 30%. That must have been some kind of super “tax cut”.
In fact, that brutal housing price plunge amounted to a $400 billion per year “savings” at the $1.5 trillion per year run-rate of residential housing turnover. So with all that extra money in their pockets consumers were positioned to spend-up a storm on shoes, shirts and dinners at the Red Lobster.
Except they didn’t. And, no, it wasn’t because housing is a purported “capital good” or that transactions are largely “financed” at upwards of 85% leverage ratios. None of those truisms changed consumer incomes or spending power per se.
Bulls and bears trading left jabs, and the black boxes just doing what they do, churning the market based on inputs of geopolitical and geo-financial (it’s not a word, I know) angst and inflammatory headlines. All while a group of interest rate manipulators huddle to try to find the ‘just right’ (ref: Goldilocks) statement to put together tomorrow.
I have one tech company up 5% and the other down 5%. But cash is by far my best holding right now.
As a decidedly non-committed bear I took my own advice and covered all short positions as SPY hit target. I managed some nice bear trades and still managed to lose money on balance so far this week. That argues to me that I am not smarter than the market this week and thus, should act accordingly.
As for gold and gold miners, I really don’t know right now. My already small exposure was eliminated on the pop after yesterday’s breakdowns. But I tell you folks, if I see the combination of weakening forward-looking data (I could not care less about November’s ‘Jobs’ or Industrial Production) and commodities continuing to implode relative to gold, I for one will be on high alert. Also, it’s a prime tax loss selling week. So how real or materially important is that selling in the miners, other than to provide a potential trading opportunity?
Bigger picture, the final piece of the puzzle for gold bugs is the US economy and its headline stock indexes. This is a very interesting, no compelling market environment for geeks who live for this stuff. Certain markets and ratios are blowing off (up and down) and it is really fascinating. Something seems about to change after these terminal moves blow out (cue Silver 2011 reference).
 btw, volatility aside, the stock market has not at all broken its short-term downtrend.
Now it gets interesting because early in the bailout process the Fed talked about achieving certain employment milestones before hiking interest rates. Here we are at the 10th consecutive month with 200,000+ job gains (321,000 in November) and the jobless rate down to 5.8% and still there is a question on when or whether ZIRP will be withdrawn?
Well I am a visual learner so I for one can never get enough pictures to inform my thinking. Pardon the redundancy in this chart’s frequent appearances in NFTRH…
The rectangular red box is zero interest rate policy (ZIRP), which is 6 years old this month. If we play it straight we would be expected to believe what the mainstream believes, that the “Great Recession” is a thing of the past and that something built of abnormal policy can proceed per normal metrics and assumptions when abnormal policy is removed. I don’t buy it.
As noted recently, like Agent Mulder “I want to believe” because frankly being a gold bug or a non-conformist in this environment flat out sucks. As I have noted previously, it is much better for my family’s situation if gold goes back to the hell it came from and the US economy really does continue onward and upward, post-policy.
Many are arguing that startups, and more specifically hi-tech startups are in a bubble. I’ve argued it myself herein and with colleagues over the past several months. Accelerators and Angel groups are popping up everywhere, from Akron to Auckland and everywhere in between. Money is flowing like champagne on an oligarchs yacht!
To the casual observer, and even to some of the VC world’s most prominent insiders the exuberance is creating some concern. On September 25th Marc Andreessen tweeted this (amongst 17 additional posts on the same subject):
When market turns, M&A mostly stops. Nobody will want to buy your cash-incinerating startup. There will be no Plan B. VAPORIZE.
Well, we have been thinking that the strength in USD could start to take the top off the party here in the US. Today’s data, combined with the Semi Equip. book-to-bill data is backing that up. The caveat is that no one day, week or month should be taken in a vacuum. But still…