Rear View Looks Fine, But The Macro Forward Outlook Is Deteriorating
New post by The Pragmatic Capitalist
REAR VIEW LOOKS FINE, BUT THE MACRO FORWARD OUTLOOK IS DETERIORATING
14 July 2010 by TPC
More bad economic news for those investors who prefer to rely on forward looking indicators as opposed to last quarter’s earnings results (and the obvious incapability of analysts to get estimates even remotely right). Mortgage applications continue to foreshadow a rapidly deteriorating housing market while retail sales show that the consumer is coincidentally weakening. Mortgage applications hit a 14 year low as demand for housing has clearly fallen off a cliff following the end of the home buyers tax credit. Econoday details the results:
“In yet another negative indication for the post-stimulus housing market, the Mortgage Bankers Association’s purchase index fell 3.1 percent in the July 9 week signaling yet another decline for mortgage applications. The index is at a 14 year low. Applications for refinancing, which have been very high due to low interest rates, slipped back 2.9 percent. Refinancing made up 79 percent of all applications in the week. Thirty-year mortgages edged higher to 4.69 percent, still near a record low.”
On the retail side sales disappointed to the downside as well. The number is being brushed off by many economists, but the second straight month of negative results and a clearly reversing trend is not a good sign for the US consumer going forward.