Mercury Rising 鳯女

Politics, life, and other things that matter

And where she stops, nobody knows

Posted by Charles II on May 21, 2012

Odds look like a short term bounce for the market, with the market wildly “oversold” (translation: it usually doesn’t fall this quickly, but of course it would if people were scared) Asia green in most places at this hour (Asia often seems to lead movements in the US markets). Technicals (which are, of course, nonsense) suggest support in the 1280/1300 region. If a reversal occurs here, this would represent just a bare correction. Stronger support at 1140. VIX is at 25, up from 15 a month ago. It hit 43 last summer.

In the real news, the main concerns are for China having a hard landing. They are deferring or simply breaking contracts for coal and copper. Calculated Risk thinks (as of February, reiterated recently) that the news on US housing is likely to be good and Bondad’s co-blogger NDD says US indicators are generally cheery. The reality of how messy a Greek exit would be is sinking in, with elections a month off. Maybe even Merkel will get a clue one of these days, though the Chinese are giving her a run for the money in general cluelessness.

If you are asking me where things are going, I haven’t a clue. Somewhere between zero and a million, for sure.


2 Responses to “And where she stops, nobody knows”

  1. jo6pac said

    As much as I love CR I think Mike has the correct answer. I’m under the impression that the banks will hold back until spring 2013 and No I have no idea why I think that.

    • Charles II said

      The average time people have mortgages is about 5 years (this 2006 report says that 70% of mortgages were originated post-2000). This is because jobs change, because people have children and need more space, because they retire or become disabled, and so on. Therefore, of the mortgages issued through 2007, which includes most of the worst mortgages, half would have already been expected to be renegotiated anyway. Foreclosures probably are included mostly in those figures.

      If the economy gets worse, then purchases will go down. But if it stays the same or gets better, the number of foreclosures should decline, and sales should improve. This is more because the crisis has become exhausted rather than because of an improving situation.

      The real problem is American incomes. Since those have been stagnant or declining, it’s very hard to see a robust real estate market. But I lean toward CR’s estimation that we are at a bottom in house prices most places, with the caveat that renewed recession–almost guaranteed under Republican rule– would cause further decline.

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