This Looks Like the Opposite of an Opportunity

Saw this today.

First, Whitney didn't predict squat. She "predicted" that Citigroup was in trouble in Fall 2007 a week before Chuck Prince resigned and that Merrill Lynch and Lehman were in trouble two weeks before they collapsed. That's called being Captain Obvious. I started telling people to get out of real estate in December 2005, ratcheted it up in December 2006, and set off flares in April 2007. Where's my genius award?

Second, given the cost of financing and the lack of regulation of buyers, all this opportunity is going to do is going to do is concentrate yet more wealth in the hands of the 1%.

Q2 GDP

And then there is the latest GDP report, showing growth of over 4%.  Trump of course crowed about how fantastic the figures are and how they will keep going up.  I can only hope that on some level he realizes that simply isn't true.  The markets reacted with a predictable "Meh" and slid some, probably for the wrong reasons, including that this wasn't as high as projected.  Personally, I think it's bilge.

"Why?" you ask.  Well, first, GDP really isn't a terribly good measure of economic health, especially in times like these where wealth is accumulating at the extreme top end of the scale.  99% of the population could be living like Bronze Age goatherders, but so long as the top 1% is making it and spending it, GDP says the economy is great.  Let's put it this way: If the economy is doing so well, where is the job growth, where is the wage growth.  They simply aren't happening.

Second, Q2 figures are probably gamed, even more than usual.  The "tax reform" refunds arrived, and while the overwhelming majority of people didn't receive enough extra to matter (My taxes actually went up, thank you very much.), the folks on top received piles, which they spent, thus increasing GDP.  Also, everyone knew tariff wars were coming with Q3, so they packed as much buying and selling as possible in Q2 to avoid them.  Finally, everyone knew the Fed would continue to hike interest rates in Q3, so everyone got their financing and cut their deal in Q2.

In other words, expect Q3 GDP to drop, probably be quite a bit.

Oh Yeah, Real Estate's Booming Again!

So, October new home sales climbed more than expected in November, and mortgage rates are once again at historic lows.  Let's break out the champagne!

Or not.  First, the increase was still pretty pathetic when compared to a healthy market.  Second, the banks are getting money at effectively 0% from the Fed, which means there is upside to any mortgage rate they use; too bad the Fed can't keep it going, so that bit of rocket fuel is bound to go away.  And third, the entire increase can be attributed to buyers rushing to lock in the tax credit or to funds making bulk purchases of vacant new construction.  The former is unsustainable, and the latter just means there will be case lot sales of houses come Spring as the funds try to flip and take their profits, which means the market will be driven down just as people start to list their houses for the peak season.