New home sales in June jumped up by 23.6% ,after 36.7% drop in May. The June pace recovered to an annualized 330,000 from a revised 267,000 for May and revised 422,000 for April, note May's record drop was down notably from the initial estimate of a 33.0% decline. This is not a positive data by any measure as you see in the chart above new home sales did not improve. This month data is down 16.7% on a year-to-year basis. The only positive fact is the new home inventory is as low as it was back in 1968. The low inventory means when we get the real recovery home builders have some catching up to do. The main problem with housing market is not too much supply of new housing. Problem is too little demand and big inventory of existing homes. There is a direct coordination between job market and housing market.Until the job market would not improve it's naive to think housing market is on the road to recovery. It's laughable when talking heads in CNBC or Bloomberg talk about "Jobless Recovery". In real world there is no such a thing exist. Many financial analysts including me, believe price of existing and new homes did not hit the bottom. I think they are going to fall 15-20% in coming years; then housing price should move sideway and eventually it would grind higher.
The Europe's banks stress tests was a free pass to banker as anticipated. From 91 lenders from 20 countries only 7 failed! to me it was a big joke. The Europe's banks stress tests, was not so stressful in the first place. They copied the U.S. approached to the insolvent banks and gave them the free pass. The Europeans want to give average investors the mirage that they are going to be just fine.On the technical aspect, I'm bull as long as S&P500 stays above 1100. We are over extended, but you must pay attention to 1100 & 1113.70 levels in coming days. If S&P500 gets above 1131 it would be very bullish.
Posts
