DON'T GET EXCITED ABOUT CPI AND HOUSING DATA

fso ^ | October 20, 2006 | Peter Schiff

[Fan of Fiat]

Company insiders can only continue selling their shares if they convince investors to keep buying. A sharp reduction in starts would confirm just how dire the housing situation really is, and jeopardize many executives exit strategies.

Starts Down = We're Doomed!
Starts Up = "Proof We're Doomed!"

[Fan of Fiat]

[Fan of Fiat]

[JasonC]

The decline in oil prices has completely disproved the whole peak limits of growth etc scaremonger hype. The core CPI is tame at 0.2 per month, and utterly unsurprising after the Fed moves. The housing number is a predictable response to the move down in 10 year rates from 5.2 at their peak in July to 4.5 briefly, now back up to 4.8. The housing boom isn't going to renew itself but neither is there any crash. As for commodities as a whole, they had a huge run from late last year to this spring, but cratered when the Fed finished, and moves in volatile minor markets have nothing like the weight of the big declines in oil and gold.

The Fed wanted overheated housing to cool off and it has. High oil prices did their job damping demand and calling forth supply and no other explanation is needed there. The economy is fine, all the doom stories have utterly failed to pan out.

[SaxxonWoods]

Who's excited?

[Fan of Fiat]

Given that food prices are conveniently absent from the "core" measures of inflation,

Given that energy decreases are conveniently absent from "core" measurements of inflation.

Oh wait, strike that...doesn't fit the agenda.

[SierraWasp]

Web Hubbel!!! Is that you??? (snort!)

[Fan of Fiat]

the stage is finally set for the crash-landing scenario to catch everyone by surprise.

Not like the media hasn't been hammering this "crash" non-story every day.

[Fan of Fiat]

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LOL!
I thought I smelled a goldbug around here!

[Always Right]

I would also not take great comfort in the recently announced up-tick in housing starts. By adding additional inventory to an already over-built market, homebuilders are simply helping to make a bad situation worse.

More likely homebuilders are getting more orders and building houses in response to that. You can bet new homes sales will be going up as these homes close. This is a sign that inventories have peaked in the new home market and will stablize or come down in the months ahead.

[Mase]

The inflation data was largely a function of the sharp decline in gasoline prices. In the first place, this decline will likely prove to be temporary, as it merely reflects a correction in an ongoing bull market

The CPI ex-energy is up just 2.5% over the past 12 months. The cost of food has increased just 2.2% over the past year. The only way this guy can sell his doom is to argue that oil prices are going to skyrocket. I'll bet he's trying to sell gold to someone somewhere.

[1rudeboy]

Given that food prices are conveniently absent from the "core" measures of inflation . . . .

Given that the government conveniently releases inflation figures that conveniently include food prices, I suppose this writer found it inconvenient to look them up.

[Fan of Fiat]

I'll bet he's trying to sell gold to someone somewhere.

Yep! See #10.

[org.whodat]

More likely homebuilders are getting more orders and building houses in response to that. You can bet new homes sales will be going up as these homes close. This is a sign that inventories have peaked in the new home market and will stabilize or come down in the months ahead..

Have not posted here in a while, but, a dumb statement needs to be called a dumb statement.

[Always Right]

Considering this is my business, it is anything but a dumb statement. Lowering interest rates have in fact brought buyers back to the market.

[soloNYer]

A lot of buyers are also back in the market because the perception that the economy is in free fall has ended. Newspapers (especially here in NY) are still trying to convince them that we're going into the next great depression, but gas prices, the DOW and the growth in local commercial construction tells them otherwise.

They don't believe house prices are going to fall anymore, and may even go up slightly during the normal Spring cycle. So, time to buy while we're at the "bottom" and the deals are still good.

[WLR]

Earlier today I had a realtor look at a house I have empty to either rent or sell. She started with that "Healthy Correction" (read frighten sellers into accepting less so relators can move houses faster) mubo jumbo... I started to laugh. She was an older lady and must of felt a sense of guilt for pushing that line she looked well.. sheepish..


W

[hubbubhubbub]

Starts Down = We're Doomed!
Starts Up = "Proof We're Doomed!"

Only if you're deeply in debt or own homebuilder stocks.

[hubbubhubbub]

Only if you're deeply in debt or own homebuilder stocks.