Is anyone tracking the housing starts data, and is it giving you any concerns?
I maintain a data visualization tool, and I added this data in the wake of the 2008 melt-down. To my surprise, it showed definite degradation beginning in 2006, so I thought it might be a good early warning device.
The yearly pattern stabilized in 2009-2012, steadily rose through 2016. 2017 looks like a repeat of 2016. But 2018 is showing degradation (higher highs, but also lower lows). I am concerned it might be showing storm clouds ahead on the horizon for the nation's economic health.
Are you watching this data or something like it, and is it making you worried?
Comments
I don't watch housing starts. A lot to consider in this area, I do suppose.
1. Are you seeing too many new starts overall?
2. Single family or multi units?
3. Location, location, location, eh? Are there particular areas that seem to be troublesome for a particular reason?
I expect any housing pressures for whatever demand to remain more towards the larger city areas in any given state. But, this doesn't necessarily have a direct impact on new housing starts.
Private equity firms buying single family to rent
Regards,
Catch
It does confirm @randynevin ‘s reporting on housing starts. In addition, auto loan delinquencies have been rising for several months but are not yet at alarming levels according to various sources I’ve seen. https://www.forbes.com/sites/mayrarodriguezvalladares/2019/05/01/as-auto-lending-delinquencies-rise-discrimination-is-even-more-dangerous-to-the-economy/
To each his own, but I find these to be unusually turbulent times in the financial / geo-political areas. So wouldn’t read too much into any one data set. With interest rates worldwide at or near historic lows*, record high equity markets, and political uncertainties / instability increasing (in large measure due to widespread poverty and the immigration issues thus exacerbated), there’s enough other things, in addition to housing starts, to keep one awake at night.
*Re interest rates: Historically low rates may make it harder for central banks to cut rates and thereby stimulate spending during the next downturn. In addition, there’s the possibility certain asset prices have been artificially inflated due to the poor returns available on fixed income investments.
@hank- Would you please send a note to Mr. Trump advising him of that? I'm sure that he would respond positively as he always has the best interests of the US as his most important goal, and I'm guessing that maybe he just hadn't considered that possibility.
Thanks-
OJ
Hopeless.
Today might turn out to be the type of market action I was thinking of. Let’s hope this is just a temporary shock wave. But global markets experienced a significant selloff overnight and the U.S. looks shaky before the opening. Of course, they could reverse by day’s end.
Seems the Prez got out of bed yesterday morning and decided to fire off a tweet a threat intended for the Chinese about how he might just slap a 25% tariff on Chinese imports. Apparently the Chinese got indigestion from this and are now considering cancelling their upcoming state visit to the U.S. and scheduled trade talks. Than there’s that flotilla of naval vessels moving toward Iran - a country which seems to give John Bolton indigestion much of time.
Toying with opening a small speculative position in the miners from my cash stash. Wouldn’t be permanent as I already have a small amount allocated within the static plan. But wouldn’t be bad to capture a 10-20% uptick before exiting the spec position a few months to a year out. Just watching.
I don’t expect the world to fall apart. Just looking to hedge against equities coming unglued. My thinking is along the lines of Bridgewater’s Ray Dalio who’s been buying gold. I posted an article about Dalio last evening but it’s already buried under 25 new posts - including a video about chimpanzees.
Dalio sees another round of central bank easing (he calls it MP3) after the current hot equity markets lose steam and decline sharply. (Major US. equity indexes fell about 50% over roughly 2 years the last time around.) However, unlike the previous round of central bank easing, to halt the slide this time the central hanks will need to employ new tricks, including negative interest rates (folks will be penalized for saving or holding money). That’s because rates now are much lower than in 2007. Dalio thinks MP3 will work to boost risk assets (like stocks) even higher. But the price will be insane devaluation of paper currencies (inflation) and that’s what eventually causes gold to outperform. Must note that before all this can transpire, equities need to fall big-time. And you’re seeing a tug of war right now between the Fed who would like to inch rates higher and the Prez who wants to keep rates very low to keep stocks rising. I do think that when you see gold start to move contrary to the broad equity indexes that it’s a positive sign for pms.
I offer this only to summarize Dalio’s thinking. But it’s one reason I continue to hold a small bit in the metal although it’s underperformed nearly everything else for years now. Here’s the Ray Dalio thread I mentioned. It doesn’t cover everything I covered here, but folks can dig that up with a bit more searching. https://www.mutualfundobserver.com/discuss/discussion/49616/head-of-world-s-largest-hedge-fund-says-adoption-of-unorthodox-monetary-policy-is-inevitable
FWIW - I’m not selling my balanced funds, bond funds, allocation funds or any other investments. Long term they’re a fine investment. I’m just putting a little spare cash to work in a corner of the markets I think is overdue for a bounce. Makes the game more interesting. I like dumpster diving. And have looked and looked for many months. Nothing else looks cheap (not even Latin America).