Wednesday, September 19, 2012

BOJ Eases; Housing a Little Better; Oil Takes Another Hit

OK, it's getting a little stupid with the incessant chorus of monetization of government (and bank debt).

Today, the Bank of Japan (BOJ) joined in, announcing something along the lines of a couple quadrillion yen to be added to liquidity over the next six to eight months. That may not be correct, but the numbers were large, the editor is too tired from cutting down dead limbs (from actual trees), and the time period is rather irrelevant, since the BOJ has been doing this kind of thing for 20-odd years, with obvious effect: keeping the Japanese economy mired in a semi-permanent state alternating between inflation and depression.

Markets took the news in stride, as usual, bounced around a bit, eventually ending only slightly higher on low volume. That's the story for now, and, while it doesn't change much, some day it will. In the meantime, we're taking our own advice and buying land, seeds (tomatoes, tobacco, broccoli, etc.), silver and maybe some working firearms.

There was what might be called "encouraging" news on the housing front. Housing starts (officially, a shovel in the ground or a stake being placed on a lot by a surveyor) came in at 750K in August, but that was below forecast, though up from the July figure of 733K, which was revised downward from 746K, so, expect the August figures to be revised lower as well, for a net gain of, well, who knows?

Existing home sales for August came in at an annual run-rate of 4.82 million, up from an unrevised 4.47 million in July and well ahead of forecasts. That was the best of the news, because August building permits, viewed as an indicator of current demand, fell from 812K in July to 803K, putting something of a damper on the "animal spirits" which keep calling the bottom in the housing market month after month.

Is this the bottom? Maybe, though that depends on perspective and how far out you wish to project. Give housing another four years of ZIRP, massive MBS buying and monetization of the federal debt and see where we are then.

Even better news came from the oil commodity complex, where the price of crude took another massive hit. There's no telling where the selling is coming from, or why, though it certainly seems fishy given the closeness to the general election - just six short weeks away - and the inherently inflationary effect of Bernanke's QEternity, but, it's welcome relief for drivers in the US, at least.

Dow 13,577.96, +13.32(0.10%)
NASDAQ 3,182.62, +4.82(0.15%)
S&P 5001,461.05, +1.73 (0.12%)
NYSE Composite 8,400.31, +12.87 (0.15%)
NASDAQ Volume 1,826,526,125
NYSE Volume 3,409,506,250
Combined NYSE & NASDAQ Advance - Decline: 2914-2500
Combined NYSE & NASDAQ New highs - New lows: 315-28
WTI crude oil: 91.98, -3.31
Gold: 1,771.70, +0.50
Silver: 34.59, -0.13

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