With the explosion in the number of homes for sale locally, it’s a wonder the Bulletin hasn’t run out of ink sooner.
LIV

With the explosion in the number of homes for sale locally, it’s a wonder the Bulletin hasn’t run out of ink sooner.
LIV

One of the most interesting charts I’m looking at these days is the chart of the yield on the Ten Year Treasury Note. (For the uninitiated, the Ten Year Treasury is THE bond to follow – see “Rates of Interest”).

Last month, it staged a breakout attempt above last summer’s highs but was soundly rejected:

With the recent drop in rates, the yield has returned to its long-term downtrend channel:

The obvious question is, “was the recent runup in rates merely a whipsaw or will they finally break their multi-decade downtrend?”

In my mind, this is the key question. The only reason rates would go much lower is if we saw a significant economic slowdown (aka, recession again bordering on deflation), a prospect most people abhor.

On the other hand, if rates were to convincingly breakout the most likely cause would be that foreign central banks became sated with our debt and significantly slowed their buying (the speculated cause of the recent bond selloff).

However, a renewed rise in rates would surely exacerbate the decline in the already foundering mortgage and real estate markets. It would also make every alternative asset class inherently less attractive (can you say, “synchronous bear markets?”) not to mention the cost to the country of calling the the world’s reserve currency (our beloved greenback) into question.

This is why I continue to believe most of us should be rooting for a recession.
LIV

One of the most interesting charts I’m looking at these days is the chart of the yield on the Ten Year Treasury Note. (For the uninitiated, the Ten Year Treasury is THE bond to follow – see “Rates of Interest”).

Last month, it staged a breakout attempt above last summer’s highs but was soundly rejected:

With the recent drop in rates, the yield has returned to its long-term downtrend channel:

The obvious question is, “was the recent runup in rates merely a whipsaw or will they finally break their multi-decade downtrend?”

In my mind, this is the key question. The only reason rates would go much lower is if we saw a significant economic slowdown (aka, recession again bordering on deflation), a prospect most people abhor.

On the other hand, if rates were to convincingly breakout the most likely cause would be that foreign central banks became sated with our debt and significantly slowed their buying (the speculated cause of the recent bond selloff).

However, a renewed rise in rates would surely exacerbate the decline in the already foundering mortgage and real estate markets. It would also make every alternative asset class inherently less attractive (can you say, “synchronous bear markets?”) not to mention the cost to the country of calling the the world’s reserve currency (our beloved greenback) into question.

This is why I continue to believe most of us should be rooting for a recession.
LIV

I just put together the chart above on stockcharts.com (click the chart for a better view). It shows each time over the past decade the MACD on the S&P 500 weekly chart has reached the current level. Now running back up to its 2000 (mania) highs the Index is looking a little overbought.

At the same time, the Advance-Decline Line (AD) that I track has failed to confirm the Index’s recent push to new highs.

The two together suggest that further gains from here are improbable, at best.

The MAC D(AD) will make you… What? What?

LIV

I just put together the chart above on stockcharts.com (click the chart for a better view). It shows each time over the past decade the MACD on the S&P 500 weekly chart has reached the current level. Now running back up to its 2000 (mania) highs the Index is looking a little overbought.

At the same time, the Advance-Decline Line (AD) that I track has failed to confirm the Index’s recent push to new highs.

The two together suggest that further gains from here are improbable, at best.

The MAC D(AD) will make you… What? What?

LIV

The following letter was submitted to the Editor of the Bend Bulletin today:

Last month the Bulletin ran an article with the prominent headline, “Regional Economy is Diversifying.” The article suggested the local economy has matured and thus grown healthier over the past six years due to a broadening of the jobs market.

A closer look at the jobs statistics, however, suggests otherwise. The article reveals that, “the largest industry gains over the [past] six-year period have been in construction, professional and business services, and education and health services.” In fact, the construction industry, which some would consider merely a component of the larger real estate industry, has nearly doubled as a percent of total jobs since 2001.

It is highly likely that the growth in “professional and business services” is closely tied to the real estate industry as well. The local real estate boom that coincided with the study period (2001-2007) surely created many “professional” jobs for real estate agents, mortgage brokers, appraisers, home inspectors and title officers along with the obvious surge in construction jobs.

For this reason, rather than a diversification of the local job market, I would suggest there has been a concentration of jobs into the real estate industry. And rather than, “securing Central Oregon’s economic health,” this narrowing of the jobs market has increased the risk to the local economy.

With the recent slowdown in the real estate market I guess we will soon find out how much the local economy has “matured” over the past six years.
LIV

The following letter was submitted to the Editor of the Bend Bulletin today:

Last month the Bulletin ran an article with the prominent headline, “Regional Economy is Diversifying.” The article suggested the local economy has matured and thus grown healthier over the past six years due to a broadening of the jobs market.

A closer look at the jobs statistics, however, suggests otherwise. The article reveals that, “the largest industry gains over the [past] six-year period have been in construction, professional and business services, and education and health services.” In fact, the construction industry, which some would consider merely a component of the larger real estate industry, has nearly doubled as a percent of total jobs since 2001.

It is highly likely that the growth in “professional and business services” is closely tied to the real estate industry as well. The local real estate boom that coincided with the study period (2001-2007) surely created many “professional” jobs for real estate agents, mortgage brokers, appraisers, home inspectors and title officers along with the obvious surge in construction jobs.

For this reason, rather than a diversification of the local job market, I would suggest there has been a concentration of jobs into the real estate industry. And rather than, “securing Central Oregon’s economic health,” this narrowing of the jobs market has increased the risk to the local economy.

With the recent slowdown in the real estate market I guess we will soon find out how much the local economy has “matured” over the past six years.
LIV

First Motown loses its mojo.

Next Kermit loses his crown.

As a capitalist, I must ask, “is this the beginning of the end?”
LIV

First Motown loses its mojo.

Next Kermit loses his crown.

As a capitalist, I must ask, “is this the beginning of the end?”
LIV