...ein paar zusammengetragene Charts und Tabllelen, sowie Aussagen und Denkanstösse, die vielleicht auch anderen zur Orientierung hilfreich sein könnten.
The December Low Indicator:
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100 Year Dow Jones Industrials Chart
Have a look at this 100 year (actually, 105-Year) chart. I colored each "Market" appropriately -- Green for Bull, and Red for Bear -- to more clearly show what happens.
Bull markets get ahead of themselves. At their ends, they tend towards excesses that take a very long while to recover from.
When a long Bull runs end, it takes quite a while before the next one begins. Some of this is related to the destruction of capital crashes cause; Much of it has to do with the psychological damage suffered by investors. As we have seen more recently, that damage -- plus 46 year low interest rates -- helped push former market investors into real estate. We have yet to see their unbridled love affair with sotcks rekindled. What will be the catalyst to get them back into equities? My best guess is a sustained move upwards.
Regardless of the actual cause, in the past century, every Bull Market has been followed by a significant refractory period. From the looks of the time-lengths of red, it appears almost generational in nature. The damage is repaired when a new crop of investors -- without crash scars -- finally appears.
Is it possible that an 18 year Bull market (1982-2000) could be followed by a 2 1/2 year Bear (March 2000 peak to October 2002 low), and then launch into another multi-decade (2003-2018) Bull? Sure, anything is possible. But as the chart above plainly shows, it would be historically unprecedented.
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Tops from around the World
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Top Ticking Real Estate is Different Than Stocks
Nice pair of charts from Northern Trust that show even as sales slow down:
Prices still remain relatively robust:
That may seem counter intuitive to equity traders; when you top tick a stock, its all down hill from there. But the money flow, finacing and resistance levels are different.
Except for first home buyers, top ticking on a buy also implies top ticking the sell, too. A buyer into a over priced/high priced market is also a seller into that same pricey market.
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The Real Estate Soufflé
We have a decidely nuanced view of Real Estate: While not neccessarily a bubble, it has been the prime driver of the economy since rates were slashed to half century lows 3 years ago.
Our expectation for the slow motion slow down rests on Real Estate cooling (which its been doing since August), home construction and sales slipping, and prices slowly sliding. That may stop the Fed from tightening appreciably further (2 and through?). Mortgage rates staying below 6.5% allows Real Estate to maintain a moderate level of activity -- but one that is obviously way off its prior white hot pace.
I suspect this could happen more slowly than those who think Real Estate is a full blown bubble ready to pop. Indeed, one of the comments in "Top Ticking Real Estate is Different Than Stocks" notes that:
"Last weekend I first heard the term "real estate soufflé" proposed on the radio to replace the term "real estate bubble." Even when the soufflé falls as it comes out of the oven, it doesn't pop like a bubble."
That seems to make a lot of sense to me. Its consistent with last month's final Home Sales slipping to to a minus 0.3%, from a prior 3 month average gain of 4.6%. While down on a month to month basis, the absolute levels still remain historically high. Mortgage Rates have been bouncing between 6 and 6.25% -- still historically cheap.
Barron's Alan Abelson is even more Bearish than I on the prospects for Housing & Real Estate:
"On that score, our conviction has been mightily strengthened by clear signs that the great housing boom is rolling over. Exhibit A is last month's steep drop in the sales of existing houses -- 5.7%, to be precise. Yes, we're well aware that the Commerce Department reported that sales of new single-family homes rose 2.9% in December. But the figures don't jibe with the rather downbeat findings of the housing industry. And as to which we find more credible -- Uncle Sam's or the builders themselves -- it's no contest."
Merrill Lynch's David Rosenberg has become a regular in his column. His views on the end of the housing boom, and its impact on the macro economy are also pretty bearish:
"To that astute economic observer David Rosenberg of Merrill Lynch, the startling collapse of sales of existing single-family homes in the October-December span -- they fell at a 36% annual rate -- is persuasive proof that the bull market in housing has metamorphosed into a bear market.
What marked the extended and powerful cycle, he reminds us, is that it was built on cheap credit and incredibly relaxed loan standards. Some 43% of first-time buyers, David recounts, put zero money down on their home purchases last year; by contrast, two years earlier, 28% bought a house with no down payment. Well over a quarter of the mortgages in '05 were of the dicey "buy now, pay later" variety. Not exactly sturdy underpinnings for a boom, especially with credit likely to get increasingly less cheap and the regulators fretting over lending standards.
The backlog of unsold inventories in the resale housing market last month shot up 26% above the December '04 level to a 5.1 months' supply; that compares with the low of 3.8 months in January of last year. Inventory of new homes stands at its highest level in nine years. The overhang of unsold units in the condo market constitutes a formidable 6.2 months' supply. And pricing is beginning to reflect the inventory bulge: December's median price of $211,000 for an existing home was virtually unchanged from last spring and down 4% from the August peak."
There's little there I disagree with; If anything, we only differ on how long this will take. I have no clue, but I suspect it will be a more gradual process than many expect.
"For the economy, David asserts, the end of the housing boom could be a serious drag on economic growth. Considerably more serious, we might interject, than most of the sunshine gang, whether in Wall Street or D.C., care to admit. In the past three years, the surge in housing prices, he calculates, accounted for nearly 40% of the expansion in household spending via home equity cash-outs. Merely stagnant home prices, by his reckonings, would shave a full percentage point off consumer spending growth in the coming year. An outright decline obviously would have that much more of an impact.
Just the direct effects of the raging bull market in housing, he figures, chipped in 25% of the overall growth in GDP since 2003. The real-estate boom, he goes on, was responsible for a cool 20% of the rise in total retail sales, while enlarging the nation's payrolls by around a million jobs.
As David wonders, "So who picks up the baton now that the housing parade is over?" Who, indeed?""
The sunshine crowd will tell you that Business is ready to pick up the baton; they certainly sang that from on high after Q3 GDP showed a big uptick in Corporate Capex. Of course, they have been saying that for years now. And as Q4 GDP has revealed, Q3 capex is looking more and more like an outlier . . .
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It's (Still) a Small (Cap) World
"Small caps, stocks with market capitalizations of less than $1.5 billion, offer investors a chance to outperform the broad market, but are prone to price swings."
Source: WSJ
In the Long Term Small-cap stocks vs. large-cap stocks in good market times and bad. One size usually dominates at any given time.
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Once Fed Hikes Stop, Markets Fall
As we digest the Fed statement, let's put yet another Bullish Myth to rest: Markets do not have an upward bias after a rate tightening cycle ends.
Instead, we see the end of a hiking cycle occuring towards the end of a business cycle. That implies if not an outright recession, than at least a significant economic slow down occuring quite often.
What actually has happened at the end of a rate tightening cycle? USA Today commissioned a study from Ned David Research on just that question. NDR's conclusion?
"Going back to 1929, the Standard & Poor's 500 was actually lower six months after the last rate increase 71% of the time and down 64% of the time 12 months later, according to data that NDR compiled for USA TODAY...
[W]hat the bulls see as an all-clear signal is far from a sure thing. "There's quite a bit of talk about the market doing better once the Fed (stops)," says Ed Clissold, senior global analyst at Ned Davis Research (NDR). "However, more often than not the market has struggled after the last rate hike."
That's not even remotely close to the case promulgated by the Bulls:
Wall Street is betting big on stock prices heading higher once the Federal Reserve stops raising interest rates. But there's no guarantee it will be a winning bet, history shows.For months, market strategists have been trumpeting the fact that stocks usually rise when the Fed ends its rate-increasing campaigns. Many pundits cite the expected end to the current "tightening cycle," perhaps as early as March, as the key catalyst that will boost stocks.
End of Fed's rate increases may not be good for stocks
Sources: Ned Davis Research, USA TODAY research
