Quote from OldTrader:
Maybe they taught economics 101 different where you went to school. Where I went to school, lower housing starts and permits means less supply. Less supply means less pressure on prices.
OldTrader
And it also means less revenues, less book value of assets (because there are fewer), negative profit growth, and is a sign of worse times to come. KBH up, BIDU up, etc. This current market has abandoned fundamentals.
The markets won't remain oblivious forever - they will just for a while. So many crap stocks being bid up higher and higher for the only reason that trailing PE looks nice and there's nothing else cheap to chase up.
Dumb market, but it won't remain for long. Housing's only hope is massive wage inflation to pick up the slack after more ARMs start resetting.
The fed's goal should be pro-inflation, devaluation of the dollar, and lowering interest rates. Its the only -temporary- way out of the housing doom without immediate pain. This will keep everyone happy for a few months.
Then they'll see commodity prices even higher than before, since the dollar will be worth so little.
Another odd joke is that Bush will take credit for the bull market of the last 5 years and the incoming next (likely Democratic) president will take the heat on the USD deflationary death spiral we're about to head into.
And it won't be a 12 month death spiral. This will be a 5-10 yr deep one.
