I used to rant about this constantly but I’ve let it go in recent years. Nobody cares that the most widely followed measure of US house prices uses horseshit methodology that renders it useless as an indicator of current conditions. Meanwhile, had you been following the NAR’s near real time home price data that comes from MLS sold prices from last month, you would already have been well aware that house prices were collapsing.
https://cdn.nar.realtor/sites/default/files/documents/ehs-02-2023-overview-2023-03-21.pdf
Case Shiller uses a 3 month average of recorded closed sales. That represents contracts reached on average 5-6 months prior to the report date. It’s like reporting stock prices from last November.
Now the NAR isn’t perfect. It uses BS terms like “existing” home sales, when the data actually shows closed sales. The NAR’s Pending Home Sales are the actual contracts. That’s real time from the month before the release. 90-95% of contracts close. “Existing” is just the rubber stamp of the actual meeting of the minds when the price was set, a couple of months before.
Then the NAR conflates the price data from the more recent month with the old sales volume. It’s stupid. But the fact is that the price data is good, comprehensive, and no BS, meetings of the minds between buyers and sellers through the Realterror middleman. So if you want to know where the market is as close to now as possible, use the Relators pendings for current sales volume, and existing for current sales prices.
Redfin also uses current MLS national data, and they draw pretty charts.
Another even realer real time measure of house prices is the weekly average mortgage balance of newly granted more-gouges. That comes from the kind folks at the Mortgage Bonkers Ass. That’s down 3.3% year over year as of March 17. That’s as real time as it gets.
source: tradingeconomics.com
Prices are seasonal, with a peak in June and trough in January, but the size of the decline is unprecedented with the exception of 2007-2011. That’s still to come.
Market rents are also collapsing. That’s for another post.
None of this is reflected in CPI of course, because CPI uses made-up bullshit for housing prices. I have called attention to this scam repeatedly through the years. The smart alecks at the BLS (Bureau of Liar Statistics) outsmarted themselves. Because of the lag they built in to their construction of what’s called Owner’s Equivalent Rent, the substitute for actual market prices of houses and actual market rents, the CPI housing component is about 6-12 months behind the reality of the marketplace. So while the method suppressed CPI on the way up, putting Jerry and the Ratemakers to sleep, it is now inflating the inflation. General price trends are not as high as the CPI says.
CPI’s purpose was never to measure general inflation anyway. Its purpose was to promote the indexing of labor contracts and government bennies at a lower rate than actual inflation. Originally house prices were included in CPI. In the seventies, during another great housing inflation, that became problematic. So the Reagan Administration removed house prices from CPI in 1982. The BLS
On the other hand, the PPI for final demand for finished consumer goods doesn’t include housing at all, and that’s been sticky. So we have asset deflation and consumption goods sticky inflation. Great.
The thing is, see, the inflation rate follows the size of the Fed’s balance sheet. Uncle Miltie Friedman was right.
So now the question is what happens with the new BTFD emergency lending programs. Will the effect be an instant surge CPI (phonetically – sippy), or the PPI (poopie) or the Fed’s favorite, PCE (pissy) follow?
I doubt it. Here’s why. Because emergency lending is diffent dan QE! I splain: Fed’s Reaction to the Big Mahoff Panic Ain’t Your Daddy’s QE.
Now, on to our usual look at the intraday slop.
First, here’s the 2 hour bar perspective on the ES S&P 500 24 hour fuguetures. Ohmygawd! This would be so bullish if they clear 4015. The last ditch resistance line for the bears would then be 4040. And after that, da moon.
Here’s our usual 1 hour bar perspective. The 2-3 day cycle projection is 4020.
Furthermore, absolutely nothing doing for the bears unless they get it back under 3965. Which looks really unlikely from here. Watch Out For This If the Market Comes Unstuck
But if they stay under 4014, does that mean there’s a chance?
For moron the markets, see:
- Watch Out For This If the Market Comes Unstuck March 27, 2023
- Gold Set For High Base Breakout March 22, 2023
- Swing Trade Screen Picks – Show Me the Money, Jerry! March 21, 2023
- Massive Fed Monetary Injection Changed the Technical Picture March 20, 2023
- How to Play When Fed Changes the Game, Not Just the Rules March 19, 2023
- Systemic Meltdown Under Way As Dead Bodies Finally Start Surfacing March 12, 2023
- February Withholding Taxes Say – Fade the Jobs Report! March 2, 2023
- Here’s Why There Will Never Be Bull Markets Until This One Thing Happens February 26, 2023
- You Can Now Follow the Diabolical Usual Suspects February 16, 2023
If you’re serious about the underlying forces of supply and demand that drive the markets, join me!
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