Tuesday, July 27, 2010

And The Spin On New Home Sales Sends Stocks To The Moon

As expected the markets rallied.

A rise in new home sales?

Wiki Wiki!

The US Census report: http://www.census.gov/const/newressales.pdf

  • Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
    This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000.

So it's a 23.6% improvement...and here is CNBC market wrap notes: Stock Gains Top 1%; FedEx, Builders Lead (ps: 'revised' )

  • Stocks posted an impressive late-day rally boosted by positive sentiment over improvement in new home sales and strong earnings reports.
    Though the summer trend of anemic market volume continued, Wall Street churned out yet another impressive day that sent the Dow positive for the year and the Standard & Poor's 500 to a critical close above its 200-day moving average.

LOL! Anemic volume :P Glee! Well if Americans are taking money out of equities, surely we won't see any improvement on the non-existing volume in the equity markets.

  • So short-covering or not, traders were more than happy to accept another strong trading day that has the market on the path for its best month in a year.
    "Volume is still horrible, but I think we've got to get used to this. This is what you call the 'new normal,'" said Dave Rovelli, managing director of US equity trading at Canaccord Adams. "So now it would be nice to see some fund inflows, from bond funds to stock funds."


  • The other major piece of news for the day saw new housing sales rise 23.6 percent in June and inventory hit a 42-year low.
    Analysts had worried that the stockpiling of houses on the market would keep prices depressed and hold down the market.

Ahem... see how nicely they have forgotten to stress on the word 'revised'?

Now if we click on CNBC link: new housing sales rise 23.6 percent

  • Sales of new U.S. single-family homes rebounded strongly in June from the prior month's record low, driving the number of houses on the market to its lowest level in nearly 42 years.

Rebounded strongly????? LOL!

  • The Commerce Department said on Monday sales jumped 23.6 percent to a 330,000 unit annual rate from a downwardly revised 267,000 units in May. The sales pace last month was still the second lowest since records started in 1963. The percentage increase was the largest increase since May 1980, and partially unwound the prior month's historic 36.7 percent decline.

May home sales were revised DOWN just to 267,000. LOL! No wonder this 330,000 looks so impressive. (ps: The sales pace last month was still the second lowest since records started in 1963. )

And of course folks like TD easily spotted it and had no kind words for the headline spinning!

  • So June new home sales come in at 330,000 on expectations of 310,000: a decent beat by 20k or so, and a "record" increase from the May revised 267k. However, this "beat", and massive 23.6% MoM surge only occurred due to prior downward (of course) revision which took away 57k from the past two months! The May number was revised down from 300k, or by 33k, to the lowest sales number on record of 267k. And April, not to be undone, two months after the initial release, has received its second downward adjustment, this time down by 24k from 446k to 422k. So let's get this straight: this was the worst June on record, following the worst month on record in new home sales ever, the beat was completely drowned out by 57k worth of prior revisions, the average new home price slid another 1.4% to $213,400, yet just because the new home supply is down to "just" 7.6 month from 9.6 in May it is enough to push stocks to the moon (of course this completely ignores that existing homes sales are back to 9 months, and shadow inventory is more than double that. Who cares - machine language does not add, it only multiples). Another day, another insane day in stocks, which are now programmed to ignore reality, and just focus on the propaganda headline spin. ( Atrocious New Homes Sales Data Sufficient To Force Another Algo Mediated Short Covering Frenzy )

LOL! Yessir me and the cow did jumped over the moon. :P

On Calculated Risk: New Home Sales: Worst June on Record

  • Ignore all the month to previous month comparisons. May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.

Here's the chart of the New Home Sales (source: New Home Sales Bounce Off Their Revised May Low )

And so the US markets is rallying because of the new home sales???



Yup... it all doesn't matter... doesn't it.

Like the old man told Paul ..


Gamelion said...

Dont forget all the too big to fail
banks earning super-profit r with
the help of the revised & suspension of accounting rules of mark to market of their toxic asset valuation. This gimmick r so successful that they take the credit
4 implementing it.