THE ONLY NEWS THAT MATTERED TODAY

There were only two stories worth paying attention to this afternoon.  The first was the increase in inventory in the existing homes sales report.  A positive read on actual sales was largely expected for this month as the home buyers tax credit ended in April, but the continuing rise in inventories is further concern that the shadow inventory will continue to come on the market in the coming months.  We have detailed the outlook for housing and continue to believe the pressures are mounting in real estate.  Today’s surge in inventories is worrisome to say the least.  Home sellers are clearly trying to sell into the brief strength we’ve seen in housing.  The massive supply on the market is not a good sign for what is likely to be lower and lower demand as the year wears on.

The other story of note is the CajaSur Takeover in Spain.  The Spanish central bank initiated the takeover this weekend.  The move rippled thru the credit markets as investors begin to see real signs that the sovereign debt crisis is impacting the banking sector.  The Ted Spread jumped to 36.96 on the news and banking stocks were down 2.85% on the day.

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • RSDallas

    The CajaSur story is the most discounted. It is amazing how there has been little to no coverage of this. Let’s see if this is the last one or if there are more to fall. I think you should have included the events in North/South Korea. These guys in the North are nuts and the South seems to be fed up with them, which I can’t blame them. The world does not need another war.

  • FDO15

    Another war is what’s coming. Just wait until the trade tensions continue to build around the globe. Someone will finally be forced to budge financially.

  • Clay

    Some partial comments by Peter Boockvar on existing home sales today at ritholtz.com:

    “NAR estimates that 1st time buyers bought 49% of homes in April, up from 44% in March”
    “Distressed homes were 33% of total sales vs 35% in March.”

    Therefore, these two categories of sales comprised about 82% of total existing home sales for April.

    During a “normal” real estate market, I wonder what the average % of distressed home sales might be…..3-5%? Anybody know?

  • Pvk22000

    I doubt that those two percentages are additive, there is likely overlap.

  • http://economic-undertow.blogspot.com/ steve from virginia

    The only trade that matters in the industrialized world is dollar/crude. The dollar’s relationship to other commodities or derivatives is irrelevant, even dollar/gold.

    What the trade today is saying is that the inflationary dollar is a lost cause so the carry trade tha has propelled stocks and other securities is finished.

    The trade says the dollar is worth more in crude oil than it was a couple of weeks ago which suggests a hardening – and very deflationary – dollar.

    The declining dollar price says the world is poorer than it was a year ago and is getting poorer, faster. If the world cannot bid up oil in the face of massively increasing demand (that bening the desire to own and drive automobiles) then the business that would create more credit and bid up the price of oil is declining.

    The new hard dollar is a reality that is ignored by most but the astute traders who have already close their dollar- short trades. Unfortunately, the effects of this hard dollar are just starting to be felt. There is also no escape from the hard dollar which will smash the US and other industrialized economies like the hammer of Thor. Think 1931.

    The only way forward is to go ‘off oil’ as the world went ‘off gold’ in the early years of the Depression.