Sliver Lining of Existing Home Sales

The headline news of this morning's NAR reports on US existing home sales did not paint a pretty picture at all for current US real estate markets. The existing home sales tumbled to the lowest level since data was compiled in 1999. The median home price dropped more than 6% from previous year. The report seems providing no indications the ending of housing market slide. However, if there was any silver lining from this report, it was the single family home prices had stabilized and actually on a gradual climb monthly since the 1st quarter. The chart below depicts single family median and average price monthly change since the end of 2007. As the chart showed that home price dipped the most in Jan, then had been increasing month over month since.

News media picked up the headline numbers of y-o-y declining 6.1% for median price and and 16.7% drop in total sales. But it is quite evident that entering the second quarter this year the speeds of declining home price had decelerated significantly. Existing home prices actually increased month over month since March. Certainly this might have something to do with seasonality and weather. If we examined the yearly price changes (which minimize seasonal factor, see chart below), it also showed that the price deterioration was slowing since March. The trend of price increasing should not be overlooked. Are we at the end of worst housing market? Not quite sure, but I guarantee we are closer to the bottom than one quarter or one year ago:)

What history tell us about “Sell in May and Go Away”?

US stock market has experienced one of the best first four-month performance over the last four decades, produced 17.5% price return comparing to 19.1% in 1987. It is the third best price return for S&P 500 index since 1950; the top four-month performance belongs to 27.3% in 1975 as the stock market recovered from a severe bear market in 1973-1974 when the index nosedived more than 42% in two years. With calendar flipped into May and onto summer season of sun, beaches, most likely we would hear a lot of about old Wall Street saying “Say in May and go away” in the media. Moreover, primarily because of the unprecedented nature of speed and magnitude of the current market rally against the backdrop of weakening macroeconomic and corporate earnings backdrops during the period. Sell in May and Go Way has delivered 6 times more return Historically, the six months between Nov-April frequently experienced extraordinary stock market performance than the six months between May to Oct...

Michael Masters - The Commodity Speculator Crusher?

Michael Masters , the hedge fund (Masters Capital Management LLC .) manager, made some headlines in the Hill and markets for his champions that speculators cause skyrocket high prices for commodities from agricultural grains to metal zinc. Media has raised the questions regarding Mr. Masters's motive because of his investments concentration in transportation. I pull out the his q2 13F regulatory filings via Bloomberg (see the chart below from Bloomberg ), it is interesting to note that he increased weights on industries and utilities, two sectors by 6.1% and 5.8% respectively over 1st q this year. Not surprisingly, two of his top 5 holdings, Delta and US Ariways , make up 33% portfolio. During the quarter, US Airways positions were increased from 2 millions to 4 millions shares, and Delta was almost double the positions too (from 1.05 to 2 millions shares.) I guess the pain must be unbearable when the benchmark crude rocked to over $140 from less than $100 during the quarter. Cer...

Dollar and crude oil price

The skidding of dollars against the major foreign currencies, especially Euro were constantly blamed for the seemingly unstoppable skyrocketing crude oil price. The logical explanation for this relationship often quoted was that crude is traded in dollar and the weakening the dollar is the major reason the higher crude oil and hence gasoline price paid at pump. If the arguments for this negative relationship contributing to a high crude price. We would expect a significant correlations between crude price and dollar strength. Are there any significant correlations between oil and dollar? Regressing crude price with dollar index ( DXY ), we did found the strong negative correlations between the two beginning early 2006 up to now. The correlations reached to the highest at -0.96 today. However, this relationship were neither stable nor constant over time. We can see from the attached chart (the green area represents positive correlations and red areas indicated negative relationships...

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