Friday, April 23, 2010

Well, Bank Failure Friday seems to have morphed into Nation Failure Friday as Greece has decided that this time it really, really needs a bailout.

"Describing his country’s economy as “a sinking ship,” the Greek prime minister formally requested an international bailout on Friday, an unprecedented step that will test the bonds of the European Union."

The German response will be interesting. I expect they'll offer up more verbal support while quietly waiting for Greece to go under so they can buy some Greek Islands on the cheap :)

"Greece’s deficit crisis is pushing its bond yields closer to those of Pakistan, a junk-rated nation that is battling the Taliban.Two-year Greek note yields soared to more than 11 percent after Moody’s Investors Service cut the nation’s credit rating yesterday and the European Union said the country’s budget deficit was worse than previously forecast.

Similar-maturity securities from Pakistan, which turned to the International Monetary Fund for a bailout in 2008, yield 12.2 percent."

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The real estate data this week was pretty much inline and the question remains what the impact of the expiring tax credit will be. I'm hearing of bidding wars in upper middle class areas of MA/NJ again - nice houses in the $550-$750k range and the low end of the market is still pretty strong nationally due to distressed sales, investors paying cash, and the tax credit. The high end of the market ($800k+) and the exburbs still seem to be stuck in the mud.

I caution that even the data providers though are starting to back off their analysis of the housing market.

"Even the exalted S&P/Case-Shiller Home Price Index folks—who had been pushed to report monthly price numbers with seasonal adjustments, even though year over year is far more accurate—put out a note this week saying that even their monthly seasonal adjustments were no good."

All of the seasonal adjustments have been tied to normal housing markets. People buy in April/May/June so their kids can start in a new school in the fall, no one buys around Christmas, etc, etc. The first time homebuyer credit - both version 1 and version 2 - coupled with all of the distressed sales have really skewed the data to make it possibly look stronger that it really is because the published data are seasonally adjusted.

It's also interesting to note that housing inventory is starting to build pretty substantially. This might be something to watch throughout the year.

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Fact of the Day: The number 1 downloaded app from the Apple App Store for the REVOLUTIONARY iPAD???

Scrabble.

A giant $700 scrabble machine. Where do I sign up?

Cheers!

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