1NVEST0R MAND1R1 maen SAHAM bener

belajar MANDIRI, akan JAUH LEBE SUKSES (SEJAK 210809)

ihsg naek turun sejak 31 Juli 2009 : 030909 3 September 2009

Filed under: Uncategorized — bumi2009fans @ 6:14 pm

03/09/2009 – 16:51
Sektor Tambang Pimpin Rebound IHSG
Asteria
ihsg_3m_tren020909

(inilah.com /Dokumen)
… jika disimak dari grafik sejak 31 Juli, maka tren 2200-2400 adalah lorong jebakan yang membunuh minat investor menanam lebe banyak investasi di bei … tampaknya meredanya sinyal beli masuk ke jenuh jual merupakan ekspektasi akan terjadi membal besar di September ini justru, walau pun saat jenuh jual masih akan berlangsung 1-2 pekan ini, tapi membal mumbul akan terjadi juga jelang Lebaran … batas atas 2400 akan terus menerus menjadi uji tuntas apakah setelah Lebaran (23 September 2009) ihsg bisa lepas lorong jebakan tersebut sementara medium bollinger bands pun makin melewati 2300 … 2500 sebenarnya sudah menjadi batas atas saat minggu kedua Agustus, mungkin akan terulang lagi di minggu terakhir September …

INILAH.COM, Jakarta – Indeks Harga Saham Gabungan (IHSG) akhirnya berhasil rebound dan menembus level psikologis 2.300. Penguatan saham-saham unggulan yang dipimpin sektor tambang, melambungkan indeks.

Pada perdagangan Kamis (3/9), IHSG ditutup menguat 36,321 poin (1,59%) ke level 2.322,246. Indeks saham unggulan LQ 45 naik 6,982 poin (1,57%) ke level 451,237 dan Jakarta Islamic Index (JII) naik 1,58% menjadi 375,64.

Bursa saham Indonesia dibuka langsung menguat 0,38% ke level 2.294 dan terus bergerak naik hingga sesi siang bertengger di angka 2.315. Gencarnya aksi beli investor terhadap saham-saham unggulan berhasil mengangkat bursa sehingga ditutup di level 2.322.

Seorang pengamat pasar modal mengatakan, IHSG kembali menguat seiring melonjaknya bursa regional Asia, seakan terlepas dari melemahnya bursa Wall Street dan rendahnya harga minyak dunia. Para pelaku pasar kembali memburu saham-saham yang relatif “murah” usai anjloknya IHSG pada perdagangan kemarin.

Penguatan IHSG terus berlangsung hingga penutupan perdagangan, meskipun secara fundamental belum ada berita positif dari kawasan regional. Kondisi pembalikan arah ini terjadi secara teknikal, menyusul anjloknya bursa kawasan dua hari terakhir.

Pelaku pasar saat ini masih menunggu kepastian arah pergerakan ekonomi dunia. “Pengetatan likuiditas yang kabarnya akan diterapkan pemerintah Cina, saat ini baru sebatas wacana, belum menjadi kebijakan,” katanya.

Hampir semua sektor terpantau menguat, dipimpin saham tambang yang naik 3,07%, disusul sektor industri dasar 2,4%, perdagangan 2,02%, kemudian perkebunan, properti dan infrastruktur yang naik 1,8%, konsumer 1,5%, manufaktur 1,1%, dan finansial 0,8%. Hanya sektor aneka industri yang masih tampak melemah sore ini.

Saham sektor tambang yang menguat antara lain PT Indo Tambangraya Megah (ITMG) terangkat Rp 450 di posisi Rp 23.450, dan PT Bayan Resources (BYAN) naik Rp 250 ke level Rp 5.750, PT Bumi Resources (BUMI) naik Rp 175 ke Rp 2.900, PT Bukit Asam (PTBA) naik Rp 150 ke Rp 12.750, PT International Nickel (INCO) naik Rp 100 ke Rp 4.300, dan PT Aneka Tambang (ANTM) naik Rp 75 menjadi Rp 2.275.

Perdagangan di Bursa Efek Indonesia mencatat volume transaksi sebesar 6.183 juta lembar saham, senilai Rp 4,072 triliun dengan frekuensi sebanyak 86.527 kali. Sebanyak 184 saham naik, 35 saham turun, 43 saham stagnan.

Emiten-emiten lain yang mengalami kenaikan terbesar antara lain PT Astra Agro Lestari (AALI) menguat Rp 400 menjadi Rp 20.700, PT Indofood (INDF) naik Rp 175 menjadi Rp 2.775, dan PT Telekomunikasi Indonesia (TLKM) naik Rp 150 menjadi Rp 8.400,

Sedangkan beberapa emiten yang melemah antara lain PT Astra International (ASII) turun Rp 250 menjadi Rp 29.050, PT Lippo Karawaci (LPKR) turun Rp 10 ke Rp 660, serta PT Ciputra Development (CTRA) turun Rp 10 menjadi Rp 740.

Sementara bursa-bursa regional bergerak variatif. Indeks komposit Shanghai naik 4,8% pada 2.845,02, setelah menyentuh level tertinggi di 2.854,16. Sedangkan indeks komposit Shenzhen naik 5,5% menjadi 956.69.

Penguatan ini dipicu adanya ekspektasi bahwa otoritas bursa China akan memperlambat langkah penawaran saham baru, dan meredanya kekhawatiran pasar tentang berlebihnya pasokan.

Bursa saham Tokyo ditutup melemah atas koreksi saham eksportir, menyusul penguatan yen atas dolar AS. Namun, terangkatnya saham logam seiring naiknya harga emas ke posisi US$978.50, menahan kejatuhan bursa lebih dalam. Indeks Nikkei turun 65,82 poin (0,6%) pada level 10.214,64 dan indeks Topix turun 7,04 poin (0,7%) pada level 942,77.

Indeks Kospi di bursa saham Korea berakhir flat, dengan naik tipis 0,37 poin pada level 1.613,53. Ada tarik menarik sentimen antara profit taking di saham teknologi dan otomotif dengan kenaikan di saham perbankan.

Indeks Hang Seng naik 239,68 poin (1,23%) ke level 19.761,68. Indeks S&P/ASX turun tipis 8,6 poin (0,19%) ke level 4.429,6 dan Straits Times menguat 21,45 (0,83%) di posisi 2.591,38.

Sore ini, bursa Eropa bergerak mixed, dengan aksi beli terbatas. Investor menunggu berita konferensi bulanan bank sentral Eropa (European Central Bank) dan laporan tenaga kerja AS.

Indeks Dow Jones Stoxx 600 naik 0.1% pada 230.8, indeks FTSE 100 di London 100 turun 0.05% ke level 4.815,4, indeks DAX di Frankfurt naik 0.1% pada 5.322,9, dan indeks CAC-40 di Paris naik 0.1% ke level 3.578,2. [E1]

 

Hello world! 21 Agustus 2009

Filed under: Uncategorized — bumi2009fans @ 7:58 am

Welcome to WordPress.com. This is your first post. Edit or delete it and start blogging!

 

tetaplah mencintaiku: KEJEPIT, enak kok 16 Maret 2009

Filed under: Uncategorized — bumi2009fans @ 10:58 am

Clashing ideologies behind the global financial crisis

Ross Gittins
March 16, 2009 – 12:01AM

Let me let you into a little secret that will help you make more sense of the never-ending debate over the global financial crisis, what caused it and what should be done about it.

As all the professional participants in these debates well understand but rarely, if ever, acknowledge, whatever theory or empirical evidence they quote, the position they take gets back to their “priors” – their previously formed beliefs and values.

On the face of it, what’s being argued over is people’s beliefs about markets – whether the market can be trusted to get things right, to allocate resources efficiently and to manage itself, or whether the market will always get things wrong, having been manipulated and exploited by the rich and powerful.

At the intellectual level it’s an argument about whether “market failure” – failure to act in the self-correcting way described in neo-classical economics textbooks – is, in practice, a big problem or a fairly minor one. At one extreme you have people with quite naive faith in markets; at the other you have people who seem utterly unaware that markets have any dynamism about them, that when problems arise markets respond to them.

But it’s probably more enlightening to see the dispute as being not about the properties of markets so much as about the proper role of government.

The popular interpretation of the global financial crisis is that, in a situation where financial markets in the United States and elsewhere were largely unregulated, a lot of Wall Street bankers and other fat cats got carried away by their own greed and eventually brought the whole system down on their heads, causing great pain to millions of innocent bystanders.

The obvious answer, it follows, is for governments to leap in and start regulating everything so the fat cats are kept on a leash and ordinary people get a fair shake.

But if you listen to people such as Professor John Taylor, of Stanford University, you find they have a radically different interpretation of the causes of the crisis. The problem lay not with the unregulated financial markets, but with misguided government intervention in those markets.

Alan Greenspan, for instance, held interest rates too low for too long, thus distorting the prices to which the market responded. The US Government was actually encouraging banks to lend to sub-prime borrowers, not to mention spending far more than it raised in taxes and thus running protracted budget deficits.

We could debate the merits of those particular arguments – there’s merit in many of them – but that would miss the point. Like many on the right of politics, Taylor is interpreting whatever happens in a way that fits his priors: his deeply held conviction that markets never get it wrong, but governments always do.

I think it was Ronald Reagan who said “government is always the problem, never the solution”.

Some people who think that way have grave doubts about whether governments should be stepping into the market to rescue failing banks, let alone – God forbid – nationalising them.

And people with an anti-government view have doubts about whether governments should use their budgets to attempt to stimulate economic activity during recessions. They believe government attempts to “manage” the macro economy are futile at best (because of fancy theories such as “rational expectations” and “Ricardian equivalence”) and counterproductive at worst.

(Of course, they’re also mindful of the fact that the US already has a net public sector debt far exceeding 40 per cent of GDP, a constraint that doesn’t apply to us.)

People who think governments almost always get it wrong also tend to believe governments do far too much already and make us pay far more tax than we should.

One of the things governments do is redistribute income from the better-off to the less well-off by making higher income-earners pay higher rates of income tax and by using means tests to exclude the better-off from receiving government benefits.

All this, I suspect, helps explain why we inherited from the US a debate about the stimulatory effectiveness of one-off cash bonuses versus a “permanent” tax cut, complete with an appeal to Milton Friedman’s “permanent income hypothesis”.

The anti-government types’ attitude would be, if you must do something, then cut my taxes. They’d see this as returning to them money they shouldn’t have had to pay in the first place, and returning a sum proportionate to what they’d had to pay. The trouble with cash bonuses is that they’re redistributive – low income-earners get back proportionately more than they paid, whereas high income-earners get back proportionately less.

I don’t want to imply that Taylor shares the more extreme beliefs I’ve described. He is respected among economists as the inventor of the Taylor Rule – a formula central banks may use to decide when to raise or lower interest rates.

But this reminds us of a long-running dispute among economists that rests as much on priors as on evidence: whether central banks should be allowed to exercise their discretion in setting interest rates or whether they should be bound to follow a pre-determined rule (such as a target for the growth of the money supply).

See the connection? Those who distrust governments want to tie their hands to rules.

Where do I stand in this debate? Somewhere in the uncomfortable, no-simple-certainties middle.

I have great respect for the power of market forces and the constraints they impose on the rich and powerful, not just ordinary punters. But I also believe markets are perfectly capable of getting it wrong, with or without bum steers from regulators.

I’m happy to blame regulators for the global financial crisis, not because their interventions let the market astray, but because they should have had the experience and good sense to protect the market from its own folly. The proof that sensible regulation could have kept the banking system out of serious trouble is right here in Australia. We kept our banks under a tight rein; they hated it, but now they’re laughing.

I believe governments can and should manage their macro economies. In doing so they need to exercise discretion, not blindly follow mechanical rules.

I believe governments can and do achieve more good than harm with their activities. I’d like to see them do more redistribution of income, not less.

There’s little doubt we’re entering a new era of reregulation and government activism. But I share the anti-government types’ fear that we could overreact and go too far in the opposite direction. Intervention is a tricky business.

Ross Gittins is the Herald’s Economics Editor.

This story was found at: http://business.smh.com.au/business/clashing-ideologies-behind-the-global-financial-crisis-20090315-8ywj.html

 

menunggu keajaibAN: depressed2depression2… he3 10 Maret 2009

Filed under: Uncategorized — bumi2009fans @ 10:28 am

How to Handle Your Job and Finances If There’s a (Yikes!) Depression
by James Pethokoukis
Sunday, March 1, 2009
provided by

Brace yourself, America. What if the already terrible economy gets even worse? And not just a little bit worse, but a lot worse? Look at it this way: If you put a group of brainiac economists together in a room and told them to create a computer model of a Great Depression 2.0, the key ingredients would probably be a) plunging stock prices, b) collapsing home values, c) soaring unemployment, and d) a banking system on the verge of complete implosion.

More from USNews.com:

• 15 Best Small Businesses to Start in 2009

• 30 Best Careers for 2009

• America’s Best Places to Retire
And do we have all those terrible factors in play today? Check, check, check and check. But there are also some big positives to counterbalance those huge negatives, such as a Federal Reserve that is lowering interest rates and printing money, as well as trillion-dollar government plans to stimulate the economy and keep people in their homes.

But things can get a lot nastier without reaching a total Great Depression scenario where the economy shrinks by 25 percent and unemployment soars by 25 percent. So just how bad might the economy get? And if there is a mini-depression, what should you do about it? Your questions, our answers.

More from Yahoo! Finance:

• Why Credit Card Issuers Will Pay You to Go Away

• Airlines Slash Fares to Fill Up Empty Seats

• New Cars Are Now Almost as Cheap as Used Cars
Read Other Related Stories
Give it to me straight — where’s this economy heading? There are some positive signs out there. Really. A highly respected economic model from the Federal Reserve Bank of New York predicts the recession, already 16 months old, will end this year. And White House economists are predicting a strong rebound over the next three years. But many private forecasters are far gloomier, predicting tepid growth going forward for several years and unemployment rising to at least 10 percent next year and staying elevated. This is the “long recession” scenario, similar to what happened in Japan after its real estate and banking crisis in the 1990s. Certainly, the battered stock market is giving few signs that investors see brighter days ahead. Research by Harvard University economist Robert Barro has found that big market drops raise the probability of an outright depression, defined as a GDP drop of 10 percent or more. As Barro concludes: “The stock-market crashes of 2008-09 in the United States and other countries provide ample reason for concern about depression.”

How can I keep my job? Workers are spending an average of 2.8 hours each day worrying about job security, according to a recent survey. Here’s a tip: worrying about it won’t save it. This downturn is your cue is to stick your head out and become a somebody: lead a project, suggest an overhaul, work overtime, and develop relationships at work. If you’re stuck in a job with little upward mobility, the best career move may be to head back to school while the opportunity cost is smallest. “It’s time to take that hit,” says Peter Morici, an economist at the University of Maryland. Just get a degree with obvious payback at a good institution: “Go to a school with brand loyalty among employers in the region where you want to find a job,” Morici says. If you’re out of work but not interested in going back to school, you may best survive the recession by taking a job at a lower pay grade. While on the hunt, consider offering to work part-time for free in an industry you’re hoping to learn, suggests Katy Piotrowski, author of The Career Coward’s Guide to Career Advancement. Free work is a boon to a struggling company, and you’ll only add to your skills, your resume, and your contacts.

My home has already lost a lot of value. Can it really fall much further? Home prices at the national level have already plunged nearly 27 percent from their 2006 peaks, and Richard Moody, the chief economist of Mission Residential, expects values to drop another 10 to 15 percent before bottoming out in the middle of 2010. Although he’s not predicting it, if the ongoing recession evolves into a full-blown depression, home prices could fall an additional 25 to 30 percent on top of that, Moody says. That’s because a sharply higher unemployment rate would pull many would-be buyers out of the market. At the same time, the dysfunctional credit markets associated with a depression scenario could prevent many buyers with sufficient incomes and solid payment histories from obtaining mortgage financing. The result: “more significant drops in sales, prices and construction,” Moody says. If so, more folks will be checking out the government’s new foreclosure prevention plan, especially if your debt-to-income ratio is above 31 percent, and your mortgage is more than your home is worth.

What is someone in their 30s or 40s to do now that their 401(k) is a 201(k)? The good news is that you still have decades of compounding growth ahead of you. The bad news is that a 20 percent or 30 percent blow to your portfolio means postponing nearer-term financial goals like buying a house or taking that around-the-world trip. Assuming you have a stocked emergency fund, keep funneling money into your 401(k). If you can, kick those contributions up a notch to take advantage of the market’s fire-sale prices, says Russell Fox of Apex Wealth Management Group: “Generally someone who’s 40 doesn’t have the largest nest egg they’ll ever have, so they’re not in a situation where preservation is the top priority.”

It’s also soul-searching time. Find out why you set up your portfolio the way you did, taking into account risk and time horizon. Then, with Terminator-like resolve, stick to your guns (allocations). “Nervous investors should at least continue building the bond portion of their portfolio, then tiptoe back into equities,” says Ronald Rogé, CEO of advisory firm R. W. Rogé & Co.

And what if you’re in the retirement “red zone” and don’t have decades to rebuild your portfolio? The idea of working during the traditional retirement years isn’t much fun, but it is practical. One of the best ways to give your retirement accounts a boost is to work another year or two. It will take the typical employee with 20 or more years on the job an extra 1.8 years working to recover recent market losses, according to calculations by Jack VanDerhei, research director of the Employee Benefit Research Institute. Delaying claiming Social Security also produces higher payouts. Benefit checks increase by approximately 7 to 8 percent for each year you delay claiming between age 62 and 70. And because Social Security is calculated based on your 35 highest earning years, each year you work in your 60s (assuming you earn more now than you did in your 20s) will further boost your checks in retirement. If you have already retired, it is more difficult to recoup market losses. But at least seniors over age 70 1/2 will not be required to take distributions from IRAs, 401(k)s, and 403(b)s in 2009, which will allow retirees who don’t need to tap their nest eggs an opportunity to avoid selling low.

OK, I’m going to totally hunker down and save like crazy. Any suggestions? Consider extreme saving. Buying in bulk, making your own coffee, and freezing leftovers are all ways to cut your grocery bill down to under $7 a day. But by taking saving to the next level, only buying sale items, staying away from brand loyalty, and using coupons for most purchases, you can actually save up to $1,500 a month. Ashley Nuzzo, creator of the Frugal Coupon Mom website, uses a three-ring binder to keep track of her coupons, and typically cuts her shopping bill by more than half. In December, for example, she spent $711 and brought home $2,200 worth of food — much of which she ended up donating.

Reading about a depression is depressing. What can I do about that? Hey, don’t worry. Be happy. It’s hard to be grateful for what you have when your 401(k) lost most of its value and you have no savings, but it’s probably the best thing you can do for your mental health. Sonja Lyubomirsky, professor of psychology at the University of California-Riverside and author of The How of Happiness: A Scientific Approach to Getting the Life You Want, suggests cultivating a sense of appreciation through something like a gratitude journal, where you write down three to five things for which you are thankful. If you lost your job, think of other dreams that have come true, such as living in the city you want or marrying the right partner. “It’s not trivializing what’s happening, but trying not to focus on it all the time,” says Lyubomirsky.

 

terlanjur cinTA: krisis eropa timur sekarang… 27 Februari 2009

Filed under: Uncategorized — bumi2009fans @ 8:35 am

Will The Economic Crisis Split East And West In Europe?

Nouriel Roubini02.26.09, 12:01 AM EST

The meltdown puts huge pressure on the E.U.’s free-market rules.

Nouriel Roubini co-wrote this essay with Mary Stokes, Jelena Vukotic and Elisa Parisi-Capone, analysts at Roubini Global Economics.

The Central and Eastern Europe region is the sick man of emerging markets. While the global crisis means few–if any–bright spots worldwide, the situation in the CEE area is particularly bleak. After almost a decade of outpacing worldwide growth, the region looks set to contract in 2009, with almost every country either in or on the verge of recession.

The once high-flying Baltics–Estonia, Latvia, Lithuania–look headed for double-digit contractions, while countries relatively less affected by the crisis–the Czech Republic, Slovakia and Slovenia–will have a hard time posting even positive growth. Meanwhile, Hungary and Latvia’s economies have already deteriorated to the point where International Monetary Fund (IMF) help was needed late last year.

Central and Eastern Europe’s ill health is primarily driven by two factors: collapsing exports and the drying up of capital inflows. Exports were key to the region’s economic success, accounting for 80% to 90% of gross domestic product in the Czech Republic, Hungary and Slovakia. By far the biggest market for CEE goods is the Eurozone, now in recession.

Meanwhile, the global credit crunch has sapped capital inflows to the region. An easy flow of credit fueled Eastern Europe’s boom in recent years, but the good times are gone. According to the Institute of International Finance, net private capital flows to emerging Europe are projected to fall from an estimated $254 billion in 2008 to $30 billion in 2009. Whether this is formally considered a “sudden stop” of capital or not, it will necessitate a very painful adjustment process.

This begs the question: Is this a classic emerging markets crisis in the works?

What is especially worrisome is that the days of easy credit flows were accompanied by rising external imbalances that rival or even exceed the build-up of imbalances in pre-crisis Asia (for example, current account deficits in Southeast Asia from 1995-1997 fell within the 3% to 8.5% of GDP range, while those in Central and Eastern Europe were in the double digits in Romania, Bulgaria and the Baltics in 2008). The vulnerabilities in many CEE countries–high foreign-currency borrowing, hefty levels of external debt, massive current-account deficits–suggest the classic makings of a capital account crisis à la Asia in the late 1990s.

 

I am Investor: putus nyambung: datang, datanglah 2009 yang mendua (2) 27 Desember 2008

Filed under: Uncategorized — bumi2009fans @ 7:02 am

I am Investor: putus nyambung: datang, datanglah 2009 yang mendua (2)

 

Oh Baby: Govt moves after market’s FEAR 2 Desember 2008

Filed under: Uncategorized — bumi2009fans @ 8:50 am

The Six Lessons from Last Week’s ActionBy David Rosenberg, North American Economist,Merrill Lynch

1) Expect the worst recession in the post-WWII era
First, this is going to be the worst recession in the post-World War II era, in our view. The ECRI leading indicator hit a record low for the fifth week in a row – down to – 29.2 as of the November 21st week versus -28.2 the week before. This index, which leads real GDP by two quarters with a 70% historical correlation, is getting further and further away from the prior all-time low of -19.8 that defined the worst recession of the post-WWII era and saw a six-quarter consumer recession coincide with a 45% peak-to-trough decline in the stock market. Perhaps the fact that this bear market is proving to be even more severe is symptomatic of an economic downturn that will also prove to be deeper and more prolonged. After the flurry of data released just before Thanksgiving, we are now tracking close to a 4.5% QoQ annualized fall in real GDP in 4Q. This would be the largest pullback since the 1982 recession, and we see a similar contraction in the first quarter of 2009.
2) Capex is in a steep decline
Second, capex is in a very steep decline right now. Durable goods orders dropped 6.2% in October, the third decline in a row. Over that time frame, orders have plunged at a 39% annual rate, which is unprecedented. The retrenchment has spread to the tech sector, where order books were expanding at a 7% annualized rate over the three months to June. Currently, that same three-month trend has swung to a negative 13% annualized rate.
3) Consumer spending down sharply; savings rate is soaring
Third, consumer spending fell 1% in October, which was a near-record decline. This, in fact, was the fourth straight monthly decline, which is unprecedented. The savings rate is soaring; it leapt to 2.4% from 1.0% in September, in a sign of heightened risk aversion and cash preservation, and is a shift that we believe should be seen as secular, not merely cyclical.
This was a conclusion that came through loud and clear in the Conference Board’s Consumer Confidence Index, principally in the spending intention components of the survey. Auto buying plans dropped for the third month in a row to a record low in October while home-buying plans fell to their lowest level since the 1982 recession. Consumer plans to buy a major appliance fell to a 14-year low as well – down for three months in a row. During this four-month period of unprecedented consumer retrenchment from July to October, spending on discretionary items collapsed at an average annual rate of 18%. Even spending on groceries has declined 6%, toiletries are off by 6% and utilities are down 3%. So, even some of the classic staples are being curtailed.
The only areas that have posted increases in spending over this unprecedented four-month decline in spending have been pharmaceuticals (+7%), telecom services (+3%), medical care services (+5%) and mass transit (+26%) – all other forms of transportation, from rail to bus to air fell at a 19% annual rate.

4) Obama planning a $700 billion fiscal package
Fourth, we learned this week that President-elect Obama’s economics team is planning a fiscal package as big as $700 billion over the next two years. We are going to wait for the details to see how this is going to impact our base case macro forecast. Suffice it to say that the cornerstone of the stimulus this time around will likely be infrastructure, not tax rebates. The key for investors is where these outlays will be concentrated, which, in turn, means identifying the areas of the capital stock that have been the most underinvested in recent years. After sifting through the data, we believe that the prime candidates will be hospitals, waste management services and passenger transit.
5) Housing market is not close to bottoming out
Fifth, we learned that the housing market is nowhere close to bottoming out. New home sales dropped 5.3% in November to a 433k annualized rate – the worst since the 1982 recession. Even though sales are now down 69% from the July 2005 bubble peak of 1.39 million units, we believe builders have not been aggressive enough in curbing production because the most critical variable of all, the unsold inventory backlog, rose to 11.1 months’ supply from 10.9 in September.
Need to see inventory backlog drop to 8 months’ supply
The reality is that even though single-family starts have dropped to 26-year lows of 531,000, they are still running 23% above the prevailing level of new home sales. The worst the inventory-sales ratio ever got in the early 1990s real estate meltdown was 9.4 months’ supply. We are currently 18% above that level and almost 40% higher than the 8 months’ supply we would need to see before calling an end to the housing deflation phase.
Another 15-20% decline in home prices likely from here
As we saw last week, the Case-Shiller index fell 1.85% MoM or at a 20% annual rate. All 20 cities were down both sequentially and YoY. Home prices are now down a remarkable 22% from the 2007 peaks. With the unsold inventory sitting at the third highest level of the past three decades and mortgage approvals for new home purchases falling to their lowest level in nine years, we believe the laws of supply and demand point to a further 15-20% decline from here. So, of all the things that happened last week in the market, retailing stocks up 17%, the bank stocks up 26%, tech up 9%, the one development that probably has the greatest chance of being reversed is the 60% surge we saw in the homebuilding group.
6) Fed has switched December meeting to a two-day affair
Sixth, we learned that the Fed is going to make the December FOMC meeting a two-day affair instead of one (December 15-16). The market is already sniffing out a 50 basis point rate cut. However, now that the Fed has de facto embarked on the process of quantitative easing, perhaps the need for a two day meeting is to iron out a more aggressive plan to revive the credit markets and the economy. The only areas that have posted increases in spending over this unprecedented four-month decline in spending have been pharmaceuticals (+7%), telecom services (+3%), medical care services (+5%) and mass transit (+26%) – all other forms of transportation, from rail to bus to air fell at a 19% annual rate.
As Chairman Bernanke suggested in several speeches he gave back in 2002 and 2003, one of the deflation-fighting strategies would likely involve Fed action to nurture lower rates at the longer end of the yield curve. Perhaps this prospect is behind the rally in the 10-year note yield and long bond to cycle lows. This would fit in very well with our ongoing strategy of focusing on equity sectors that have income-generating characteristics like utilities, health care and telecom services; these sectors also screen very well in a negative nominal GDP growth environment.