The Fed doesn't have a choice
The housing market got too hot. 2% increases maybe in a year is good. Where I live prices are up 25% of LY and nationwide a conservative percent is 12 to 15%. This was manipulated by the banks not putting out foreclosures and the fed forcing down interest rates. Where I live there are 19,000 homes in some type of foreclosure, so this isn't over. What you will find soon is there will be too many homes and no buyers due to higher interest rates and the U6 unemployment not getting better than 14%. Business aren't hiring full timers because they can hire cheap part timers. Big concern is of course Obama Care and all the hidden costs to business and then you have unemployment costs for 2 years if you hire a full timer. Unemployment using the government figures may come to be under 7% soon, since they are counting the huge amount of part time jobs. Problem with this is Part timers can't buy houses. In the mean time, Obama deal with the big Wall Street Firms like Blackstone, where they are able to purchase homes from the banks, with the banks financing them, took away a means that the middle class could have profited by buying foreclosures and permanent homes at fair value. Instead Obama and the Dems paid off Wall Street for the big election contributions. Funny how BO said he was against this, but as you have seen, it's always the reverse. So you will have a class of part timers in the country and without businesses improving earning top line revenue, this trend will continue. The amount of money that businesses are spending is contracting nationwide in order to keep earning up. So there you have it. Contraction in business spending, contraction in full time help, lack of qualified buyers to buy homes, Wall Street firms who have bought Billions of dollars of homes that they will rent out. Rents are up 10% Year over year and renters discretionary spending is down by 4%. So you are saying things are great. Internals stink. ITB and IYR both Real Estate ETF's had a Death Cross where the 50 crossed the 200 DMA on Thursday. That isn't bullish. The hedge funds are betting the 10 year Bond reverses here with net short position of 66,000 contracts, verses 23,000 the week before. The 10 year climbed over major resistance Friday, which is now support on the weekly chart. Philly Fed Manufacturing in at 9.3 vs 19.8 expectations. The Fed only runs computer models and there are no great minds behind throwing POMO at the banks. Well, not until the stock market and housing market bubble up. We are there. Part timers can build a village, as Hillary Clinton said, but we have a bunch of village idiots running the village.
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