Trendocracy

Charleston Market Report - October 2012

noreply@blogger.com (Brad Rundbaken) — Sun, 21 Apr 2013 19:30:00 +0000

Charleston Market Report - October 14, 2012

The long term trends in real estate and the stock market do not occur overnight. It is a surprise to many because most people do not know how or have the time to track this sort of stuff except for geeks like me. The national media then often reports "crashes" in the markets as though they just happened overnight. The wonderful aspect of trend movement is that they will always move towards an in-balance between supply and demand and show a true direction of price movement.

In order to track the real estate market of the historic and beautiful city of Charleston, SC, which is my hometown, I measure four main indicators which are:

1. Existing Home Sales
2. New Home Building Permits
3. Foreclosure Filings = (Defaults + Auctions + REOs)
4. Interest Rates

Three out of four of these indicators are local except for indicator #4, interest rates. The direction of interest rates tend to increase or decrease the momentum of home prices depending on the direction of indicators #1 through #3.

Main Indicators #1 and #2 are the two best leading indicators and interest rates (#4) have been very favorable and have displayed improvement since Q1 2010. The trends point to a very nice rebound in the Charleston real estate market from depressing levels created by the "credit bubble."

Main Indicator Matrix
When you look at the Main Indicator Matrix below the Charleston, SC real estate market began to deteriorate starting in Q1 2006, which I covered years ago when I first started writing the Charleston Market Report. Starting in Q3 2006 we were in full "red alert" risk mode for home price decline here and most people thought I was a lunatic because Charleston had been such a consistent real estate market for so long. Unfortunately for those who did not listen to the warnings and "trust the trends" they soon realized the hard way that they should have made the "trend their friend."

Q1 2010 is where we first began to see the trends confirm some market improvement as distressed real estate was being worked out, interest rates were favorable and sales turned the corner after some help with stimulus programs.

The Main Indicator Matrix below shows all four indicators in green which has not occurred in over seven years. This can be attributed to a number of factors which include a Zero Interest Rate Policy (ZIRP) being pushed by the Federal Reserve, more affordable home prices and a reduction in distressed properties flowing onto the market. Combine these factors with the quality of life in Charleston, positive demographic trends, a strong cluster of aeronautical, defense and technology companies, and favorable state policy to recruit new businesses is a recipe for a rebounding housing market.

Please keep in mind that these charts are just merely a macro view of what is happening in Charleston, SC and is by no means the sole reason to go buy or sell a home. You will need to drill down in your own area and personal finances with a professional before making that decision.

Please feel free to share this info with family, friends and co-workers.

If you would like to stay updated on the local and national economic and real estate trends please click on the link below:

The Home Price Appreciation chart below is not a main indicator but rather a result of what happens when supply and demand creates an in-balance or no in-balance at all. Real estate prices act just like the stock market because sometimes they go up, down or simply move sideways. The key is identifying a major change in trend, such as what began to occur in late 2005 before most people in Charleston or the rest of the country realized a major decline in housing prices was upon us.

Share Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Please see a more detailed disclaimer at the bottom of this page.

U.S. Real Estate Market Report - October 2012

noreply@blogger.com (Brad Rundbaken) — Sun, 21 Apr 2013 19:28:00 +0000

U.S. Housing Market Report - October 14, 2012

From JPMorgan's just released earnings, which beat expectations:

Dimon commented:

“Importantly, we believe the housing market has turned the corner. In our Mortgage Banking business, we were encouraged that credit trends continued to modestly improve, and, as a result, the Firm reduced the related loan loss reserves by $900 million. Despite this improvement, the absolute level of charge-offs remains elevated. We also expect to see high default- related expense for a while longer. We are acting responsibly to help homeowners and prevent foreclosures, offering nearly 1.4 million mortgage modifications and completing 578,000 since 2009. Credit trends in our credit card portfolio continued to improve, and the wholesale credit environment remained stable.”

There is no question the U.S. Housing Market has turned the corner as Mr. Dimon suggests but it has come at a cost to the U.S. taxpayer in the form of multiple Quantitative Easing (QE) programs initiated by the Federal Reserve over the past couple of years. The approximate cost to save bank balance sheets and artificially lower interest rates is around $2.9 trillion since QE started in December 2008 after the Credit Crisis that almost caused the U.S. economy to collapse.

The charts below were taken from a presentation given by one of the brightest economists in the world, David Rosenberg of Glufkin Sheff + Associates Inc. at The Big Picture Conference in New York. When we focus on the short term recovery over the past two years the housing market looks extremely positive. However, we must not fall into the trap of short term memories of where we came from and where this housing market has gone since trillions has been spent on QE.

The Fed's interference into the free market benefits one sector while it hurts others. Sure the real estate industry is important to the overall economy but at what cost. Is it fair to seniors who need yield to artificially keep interest rates low? While the stock and housing market has reacted positively to QE over the past few years what are the ramifications in the future of this stimulus by printing dollars out of thin air.

So yes the U.S. and many local housing markets are doing extremely well right now but up to this point it has been a $2.9 trillion fix. Questions remain if it will last and how will it be paid back.

Timing is everything in all aspects of life especially real estate and investing where money is on the line. I have been using trend analysis for over 10 years to measure the irrefutable law of supply and demand in the stock market and real estate market. It is a real simple concept that is the foundation of rising and falling prices from everything to stocks, houses, gas, tomatoes, etc. etc. With the economy struggling to recover and the experience of one of the worst recessions on record in history it is critical to be able to determine when to buy and when to sell when your hard earned money is on the line.

Just like the weather, real estate and the stock market move through cycles or stages. The measurement of this movement can be determined by measuring data, which is nothing more than looking at the psychology of markets because people are making decisions that effect price movement in various markets.

With regards to real estate and interest rates for the U.S. I use momentum trend charts to determine long term trend changes in the market. The techniques used to create the charts below are used by institutional traders in the stock market in order to make important buy and sell decisions in their portfolios. In most cases what we tend to see is that these trends will move in a sequence with each other as certain aspects of market variables and psychology change.

In order to get the "big picture" of what is going on in the U.S. I look at the following:
1. Home Price Appreciation
2. New Building Permits
3. Distressed Real Estate (Notices of Defaults (NODs), REO Sales and Pre-Foreclosure Sales, which is provided to me by my friends at RealtyTrac.
4. 30 Year Interest Rates.

So for example, if new building permits are decreasing while distressed real estate and interest rates are all increasing then that will put downward pressure on home price appreciation. This is the exact trend that occurred in 2006 that eventually led to a major housing bust.

I will continue to update these charts as the data comes out so that you can make more informed decisions on major purchases, such as real estate. Please keep in mind that these charts are just merely a macro view of what is happening in the U.S. and is by no means the sole reason to go buy or sell a home. You will need to drill down in your own market and personal finances with a professional before making that decision.

If you would like to stay updated on the local and national economic and real estate trends please click on the link below:

Please keep in mind the following:

1. Rates have dropped by 30% YoY allowing the 70% of buyers who use a mortgage to ‘pay’ 15% more for a house on the same monthly payment.

2. Foreclosures as a percentage of total sales dropped 25% YoY lifting the “median” sale price.

3. You comp YoY against a stimulus hangover year.

The result ’prices paid’ will ‘rise’ and ‘comps’ will look great. But the benefits of stimulus and easy comps will soon turn into headwinds and difficult comps, which is exactly what happened in 2011 following the year+ long home buyer tax credit stimulus pump of 2009/10. Once again, people are mistaking stimulus for durable fundamentals, which has been a consistent problem since housing’s first dead cat bounce on QE in 2009.

Source: Mark Hanson

A Dangerous Bubble

noreply@blogger.com (Brad Rundbaken) — Mon, 08 Apr 2013 12:13:00 +0000

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Please see a more detailed disclaimer at the bottom of this page.

The "Steroid" Housing Recovery

noreply@blogger.com (Brad Rundbaken) — Tue, 19 Feb 2013 04:47:00 +0000

Chart of the Day - The Dow is 10.6% off all-time highs

noreply@blogger.com (Brad Rundbaken) — Wed, 13 Feb 2013 11:22:00 +0000

With the non-inflation-adjusted Dow is trading 1% below its all-time record high, today's chart provides some long-term perspective with a chart of the inflation-adjusted Dow since 1900. Of interest is that the inflation-adjusted Dow has traded within the confines of an extremely long-term upward sloping trend channel over the past 113 years. It is also of interest that the secular bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, while the market action from the inflation-adjusted record high of 1999 to the financial crisis lows of 2009 was severe, the magnitude of this decline was much less than what occurred with the bear markets that concluded in the early 1930s and early 1980s. More recently, the Dow has retraced most of the financial crisis bear market though the inflation-adjusted Dow currently trades 10.6% off its 1999 record high. While the inflation-adjusted Dow is not quite as near record highs as is the non-inflation-adjusted Dow, the post-financial crisis rally would have to be considered a rather dramatic turn of events -- inflation-adjusted or not.

Chart of the Day - The Dow is 10.6% off all-time highs

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.Please see a more detailed disclaimer at the bottom of this page.

`Mild' Bond Bubble Possible in 2013?

noreply@blogger.com (Brad Rundbaken) — Thu, 31 Jan 2013 23:07:00 +0000

An interesting interview with Dominic Konstam, the global head of rates research at Deutsche Bank AG, talks about the outlook for the U.S. bond market and Federal Reserve monetary policy. I agree with his analysis.

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Please see a more detailed disclaimer at the bottom of this page.

Chart of the Day - How does the current rally rank?

noreply@blogger.com (Brad Rundbaken) — Wed, 23 Jan 2013 13:31:00 +0000

The Dow just made another post-financial crisis rally high. To provide some further perspective to the current Dow rally, all major market rallies of the last 112 years are plotted on today's chart. Each dot represents a major stock market rally as measured by the Dow with the majority of rallies referred to by a label which states the year in which the rally began. For today's chart, a rally is being defined as an advance that follows a 30% decline (i.e. a major bear market).

As today's chart illustrates, the Dow has begun a major rally 13 times over the past 112 years which equates to an average of one rally every 8.6 years. It is also interesting to note that the duration and magnitude of each rally correlated fairly well with the linear regression line (gray upward sloping line). As it stands right now, the current Dow rally that began in March 2009 (blue dot labeled you are here) would be classified as well below average in both duration and magnitude. However, when compared to the most recent post-major bear market rally (i.e. the rally that began in 2002), the current rally has already surpassed it in magnitude and required less time to do so.

Chart of the Day - How does the current rally rank?

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.Please see a more detailed disclaimer at the bottom of this page.

Charleston Market Report - Q4 2012

noreply@blogger.com (Brad Rundbaken) — Wed, 23 Jan 2013 06:12:00 +0000

Flows: Mutual Funds vs. ETFs

noreply@blogger.com (Brad Rundbaken) — Sun, 06 Jan 2013 17:26:00 +0000

Chart of the Day: Debt to GDP | Debt Divergence

noreply@blogger.com (Brad Rundbaken) — Fri, 04 Jan 2013 14:37:00 +0000

Chart of the Day: Calendar Year Peformance of the Dow

noreply@blogger.com (Brad Rundbaken) — Thu, 03 Jan 2013 12:59:00 +0000

Today's chart provides some perspective on 2012's stock market performance. Today's chart illustrates each calendar year performance (dark blue columns) of the Dow since 1950. These calendar year performances have varied from a maximum of 44% back in 1954 to a minimum of -33.8% in 2008 with the overall average since 1950 (gray horizontal line) coming in at 8.1%. So how does the Dow's performance in 2012 compare? The Dow's performance for 2012 (gray column) is slightly below the 1950 to present average. However, it is worth noting that this year's performance does compare favorably to the 2000 to present calendar year average which comes in at a meager 2.2%.

Chart of the Day

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Please see a more detailed disclaimer at the bottom of this page.

Chart of the Day - Single-family Homes Priced In Gold

noreply@blogger.com (Brad Rundbaken) — Thu, 27 Dec 2012 15:31:00 +0000

For what amounts to a touch of good news in what is otherwise a challenging economic environment, home prices have worked their way generally higher over the past year. For some perspective on the single-family home market, today's chart presents the median single-family home price divided by the price of one ounce of gold. This results in the home / gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes a relatively low 105 ounces of gold to buy the median single-family home. This is dramatically less than the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down over 80% from its 2001 peak. However, the recent uptick has home prices once again testing resistance of a steep seven-year downtrend channel.

Chart of the Day

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.Please see a more detailed disclaimer at the bottom of this page.

Mid-December 2012: PCM Quant Coalescence

noreply@blogger.com (Brad Rundbaken) — Wed, 26 Dec 2012 22:23:00 +0000

By: Melissa Wieder, CFP®
December 15, 2012

Equity fund flows continue to move international, specifically to the emerging markets (think BRIC's). We are starting to see some strength in the US industrial sector as well. Bond flows are to shorter maturities, and an outright short allocation in our quantitative fixed income index. We are also seeing flows into high yield corporate paper, both in US and International. (High yield corporates are closely correlated to equities.) Currency flow continues to the Euro and to the Euro correlated Swiss Franc.

In our last update, we noted that "following the money" resulted in allocations into the Euro and Euro denominated markets. This trend continues with an additional expansion into Australian and Asian equities. The current holding in the Euro continues doing well. The relative weakness in the US dollar and the addition of a short position in US Treasuries in our model indexes appears to be validated by the most recent 10 year treasury auction on 12/12/12.

According to zerohedge.com, "What truly set aside this reopening was that the Directs, continuing on yesterday's surge, took down a massive 42.7% of the auction: only the second highest since the July 45.4%. The flipside of course is that Indirects were left holding 24.2%, or the lowest Indirect takedown since April 2009." This was followed by a report on 12/17/12 that "today's 2 Year auction was remarkable for one more thing: the Indirect Takedown of 17.7% was the smallest such award on record, which in turn confirms that last week's trend of collapsing Indirect interest is persisting."

What does this mean? "Indirect takedown" refers to the treasury auction bids that are submitted by investors including foreign central banks. An indirect takedown above 40% would suggest "the debt support needed to keep funding the deficit is in place and that the buyers will see this as a sign to keep its focus on the long side," according to Kevin Giddis, managing director of fixed income for Morgan Keegan & Co.

Time will tell if this is a signal that foreign countries are becoming cautious about buying US debt.

Of further noteworthiness, as Michael Chapman pointed out at the annual client appreciation luncheons on December 11th and 13th, each time the Federal Reserve announces a new round of Quantitative Easing, the upward move in equities has been less and less. Alas, on December 12th, the equity and bond markets both closed down for the first time on a day that the Federal Reserve announced Quantitative Easing.

About "PCM Quant Coalescence"

Welcome to Provident's bi monthly "Quant Coalescence" communication. We suspect that many of you are no different than us. That is to say that when our quantitative models re-balance every 2 weeks for some indexes or once a month for other indexes, you sometimes find yourselves asking "What is behind a rotation into that ETF?" This communication is our opportunity to "unite for a common end" with our clients and partners; keeping you updated on our thoughts and perspectives.

As you know, our indexes are based on an absolute approach: we strive to make money in up markets or down markets, while trying to greatly minimize loss in any market environment.

Our indexes are also quantitative, reflective of our systematic, unbiased and technical approach. Since our indexes are unbiased, the quantitative models would obviously at times rotate into positions that cause us to scratch our heads. Nevertheless, being so close to the analysis as it unfolds, allows us to quickly begin to validate the fundamental reasons behind the quantitative "following of the money." At other times, the trades are not validated right away; the story unfolds as the days pass.

We have been very excited about many of these "validations" and "ah ha" moments. We had another "ah ha" moment when we decided that these insights would also be interesting to those who have entrusted us with their financial peace of mind. Our goal is to be short and to the point, specific to what is happening in our indexes rather than a lengthy macroeconomic perspective.

We hope this has been helpful and informative!

If you would like more info on this strategy please contact me directly at bradr at pcminvestment.com.

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Please see a more detailed disclaimer at the bottom of this page.

Europe....Time To Buy?

noreply@blogger.com (Brad Rundbaken) — Wed, 26 Dec 2012 00:48:00 +0000

Probably not if it is on the cover of this magazine and you are a contrarian investor. However, VGK, the Vanguard MSCI Europe ETF is up almost 17% YTD. Not a bad return considering all the fiscal problems across the pond with the EU, which must deal with multiple currencies, housing bubbles, recessions and high unemployment in multiple countries.

Thank the lord the EU discovered their own printing press! The U.S. has also loaned many European banks plenty of "Benjamines" as Ben "Helicopter" Bernanke and the boys at the Fed have gone "Buck" WILD. No pun intended.

In my opinion, this Barron's magazine cover is a major red flag for the future economic prospects of the EU with ETFs such as VGK. It would be a good idea to watch this one carefully as the world and especially Europe must deal with multiple sovereign debt issues in countries such as Greece and Spain.

Robert Shiller | Housing Hasn't Necessarily Bottomed Yet

noreply@blogger.com (Brad Rundbaken) — Fri, 21 Dec 2012 22:35:00 +0000

I agree with what Shiller says in this interview which is:
* Home prices may go up a little bit.
* He is not sure home prices have bottomed.
* There is still a mess leftover from the Credit Crisis of 2008.

We can all lay most of the blame of these difficult economic times on the politicians and The Federal Reserve. They have set the economic policies and reckless spending which has created a debt clusterfuck.

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Please see a more detailed disclaimer at the bottom of this page.

Post & Courier: Charleston Market Report Shows Upward Movement

noreply@blogger.com (Brad Rundbaken) — Thu, 20 Dec 2012 16:40:00 +0000

Below is a nice writeup on September 15, 2012 from Jim Parker at the Post & Courier on my first Charleston Market Report since 2010. It is nice to see the real estate market improving but is tough to witness the amount of stimulus it is taking to revive it at the cost of the taxpayer. I wish The Federal Reserve did not manipulate the markets so much so we could actually participate in a free market instead of a nationalized one. The Fed has truly created an environment of boom and bust cycles with its manipulation of the Federal Funds Rate, Stimulus Programs and now ZIRP.

• Rundbaken: Real estate report shows upward movement •

At least based on sales and new permits, the Lowcountry housing field is recovering from its five-year downturn, a local financial guide says.

“Trends point to a very nice rebound in the Charleston real estate market from depressing levels created by the ‘credit bubble,’” says Brad Rundbaken, investment adviser with Charles Town Capital.

The findings are in his recent Charleston Market Report, which he revived recently after a few years’ hiatus.

“Long term trends in real estate and the stock market do not occur overnight,” he says.

According to Rundbaken, “The wonderful aspect of trend movement is that they will always move towards an in-balance between supply and demand and show a true direction of price movement.”

Rundbaken tracks five indicators to follow the real estate market. They are existing home sales, new-home building permits, mortgage loan defaults, distressed sales and interest rates. All figures are local expect for interest rates.

He says the default and distressed indicators come from consultant RealtyTrac and date to 2007 and 2008. He expects more current figures in the near future.

Interest rates, he says, “have been very favorable and have displayed improvement” since the first quarter of 2010.

To give perspective, his Main Indicator Matrix “began to deteriorate starting in first quarter 2006,” Runbaken says.

By third quarter of the year, the local outlook was in full “red alert” risk mode due to home-price declines.

Rundbaken says investors who didn’t heed the warning signs “soon realized the hard way that they should have made the ‘trend their friend.’”

The market movement cycled back upward in first quarter 2010 “as distressed real estate was being worked out, interest rates were favorable and sales turned the corner after some help with stimulus programs.

“Hopefully the overall real estate trend will remain favorable but we must keep our eye on the ball because there are many potential problems down the road,” he says.

According to Rundbaken, the economy remains “fragile,” U.S. debt keeps growing and “no one knows how long the Federal Reserve keeps its zero-interest-rate policy in place.”

At the same time, the Charleston real estate outlook is “very favorable right now due to record low interest rates, lower home prices since 2006 and a mildly improved unemployment rate,” Rundbaken contends.

The adviser cautions that the report’s charts are an overview of everything happening in the Charleston area, and “by no means the sole reason to go buy or sell a home.” He says shoppers should focus on their immediate area or neighborhood as well as go over personal finances with a professional before making a move.

Fiscal Cliff Solution from the Politicos

noreply@blogger.com (Brad Rundbaken) — Wed, 19 Dec 2012 13:53:00 +0000

How To Repair The Global Economy!

noreply@blogger.com (Brad Rundbaken) — Sat, 15 Dec 2012 20:19:00 +0000

What's The Deal Goldbugs???

noreply@blogger.com (Brad Rundbaken) — Thu, 13 Dec 2012 02:12:00 +0000

$45 BILLION per month and QE INFINITY not enough for GOLD??????

The Goldbugs must be out of their minds right now! Patience.

QE IS A SLICE OF __________

noreply@blogger.com (Brad Rundbaken) — Thu, 13 Dec 2012 01:49:00 +0000

Must be nice owning a printing press.

We would really have QE Infinity if The Fed measured inflation and unemployment properly.

Currently the thresholds are holding rates low "at least" until the unemployment rate is below 6 1/2%, and the inflation outlook "between one and two years ahead" is no more than 2 1/2%, as long as inflation expectations remain "well anchored" - this means inflation could increase to 3% or 4% without an increase in rates, as long as expectations remain anchored and the outlook one to two years ahead is at or below 2 1/2%.

We have had ZIRP for 4 years now and counting.

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Please see a more detailed disclaimer at the bottom of this page.

Economic Trends - Week of November 12, 2012

noreply@blogger.com (Brad Rundbaken) — Fri, 16 Nov 2012 21:29:00 +0000

The bars highlighted represent November 2011 vs. November 2012. Unemployment claims and Core retail sales were impacted by hurricane Sandy.

Core Retail Sales - Change in the total value of sales at the retail level, excluding automobiles.

Unemployment Claims - The number of individuals who filed for unemployment insurance for the first time during the past week.

Philly Fed Manufacturing Index - Survey of about 250 manufacturers in the Philadelphia Federal Reserve district which asks respondents to rate the relative level of general business conditions.

The FHA Is Blowing Up: Bad News For The Housing Market | ZeroHedge

noreply@blogger.com (Brad Rundbaken) — Fri, 16 Nov 2012 02:20:00 +0000

Guest Post: The FHA Is Blowing Up: Bad News For The Housing Market | ZeroHedge

I guess money does grow on trees if you are the FHA. We wonder why our taxes are about to increase? One of many reasons our bloated government does not have a "pot to piss in."

The main reason Helicopter Ben Bernanke wants to continue to artificially prop up the housing market is in order to keep the Too Big Too Fail banks out of trouble. Everything the Fed does is meant to keep the banking cartel out of the red. Just follow the money.......I mean bailouts.

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.Please see a more detailed disclaimer at the bottom of this page.

Chart of the Day - S&P 500 PE ratio at a level not often seen since 1990

noreply@blogger.com (Brad Rundbaken) — Fri, 26 Oct 2012 19:44:00 +0000

Today's chart illustrates the price to earnings ratio (PE ratio) from 1900 to present. Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1900 into the mid-1990s, the PE ratio tended to peak in the low to mid-20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s), surged even higher during the dot-com bust (early 2000s), and spiked to extraordinary levels during the financial crisis (late 2000s). Since the early 2000s, the PE ratio has been trending lower with the very significant but relatively brief exception that was the financial crisis. More recently, the PE ratio has moved slightly higher. It is worth noting, however, that even with this recent uptick, the PE ratio still remains at a level not often seen since 1990.

Chart of the Day - S&P 500 PE ratio at a level not often seen since 1990

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.Please see a more detailed disclaimer at the bottom of this page.

Trend Following Investing

noreply@blogger.com (Brad Rundbaken) — Thu, 25 Oct 2012 13:00:00 +0000

Trend Following (specifically, Trend Following using Time-Series Momentum), has worked remarkably well for many decades (109 years, in one study, 35 years in the other), shows no signs of abating, seems to capture native immutable characteristics of markets and not shorter-term anomalies, and undergoes some periods of under-performance (we are in one now).

The first whitepaper is "A Century of Evidence on Trend-Following Investing", by AQR Capital Management.

From the Executive Summary: "We find that trend-following has delivered strong positive returns and realized a low correlation to traditional asset classes each decade for more than a century."

In these times, when risk-managed strategies such as Trend Following in general, and our own in particular are currently facing under-performance challenges, these longer-range studies and assurances are quite useful and remind us that we shouldn't miss the forest for the trees!

Finally, here is a great quote from "What Works on Wall Street (4th Edition)", by James P. O'Shaughnessy:

"The key to outstanding long-term performance is to find strategies that have the highest base rate, or batting average, and then stick with that strategy, even when it's under-performing other strategies and benchmarks. Few people are capable of such action."

Q3 2012 Metro Foreclosure Rates & Rankings

noreply@blogger.com (Brad Rundbaken) — Thu, 25 Oct 2012 12:34:00 +0000

Q3 2012 Metro Foreclosure Rates & Rankings

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Charles Towne Capital, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Charles Towne Capital, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.Please see a more detailed disclaimer at the bottom of this page.