THE DAILY EDGE (28 November 2017)

Entry Level Buyers Drive Solid New Home Sales Purchases of newly built single-family homes in the U.S. rose 6.2% in October

Purchases of newly built single-family homes, a small portion of all U.S. home sales, increased 6.2% to a seasonally adjusted annual rate of 685,000 in October from the previous month, the Commerce Department said Monday.

The advance supports a longer-term positive trend in the market. In all, new home sales were up 8.9% in the first 10 months of the year from the same period last year and have jumped 18.7% in the past 12 months. (…)

Sales of homes in the $200,000 to $300,000 range increased more than 35% in October from a year earlier. (…) The number of homes that have been sold but haven’t yet started construction jumped by 30% in October from a year earlier. That suggests housing starts should rise strongly in the coming months. (…)

Led by the South (charts from Haver Analytics)

  

The daily Shot has the best graphical analysis:

• While the median price of a new house has leveled off, the average price just hit a new high.

 

• Bespoke Investment offers a longer term perspective:

• This divergence typically indicates an increase in luxury home sales. High-end houses usually raise the average price without impacting the median. Here are the new home transactions valued $750k and higher.

• The more modestly-priced new home sales continue to climb, albeit slowly.

• But here’s the rub for the bullish scenario (David Rosenberg)

OECD Sees Global Economic Growth Reaching Seven-Year High The global economy is on course for its best year since 2010 as both the U.S. and the eurozone grow more rapidly than had been expected, the Organization for Economic Cooperation and Development said.

(…) The OECD raised its growth forecasts for the U.S. and the eurozone this year and next. It now sees the former growing 2.2% this year and the latter 2.4%. If the OECD is right, it would be second straight year in which the eurozone has outpaced the U.S. But 2018 is expected to see the return of a more traditional relationship, with the U.S. growing 2.5% and the eurozone 2.1%. However, the research body’s economists expect U.S. growth to slow in 2019, while remaining faster than that of the eurozone.

The OECD left its growth forecasts for China unchanged from September, and cut its forecasts for Canada. Overall, it now expects the global economy to expand 3.6% this year, up from 3.5% forecast in September, while the 2018 growth projection was unchanged at 3.7%. (…)

(…) In the last of four reports on the global outlook for this year, the research body repeated its warning of a disconnect between the behavior of rapidly rising asset prices and more modest economic progress, and added a new note of concern over high levels of debt.

“If we look at the corporate debt buildup, it looks pretty scary,” said Ms. Mann. “If we look at global house prices, they look pretty scary.” (…)

Ms. Mann added that while the measures of indebtedness that were “flashing red” ahead of the global financial crisis aren’t at their 2007 levels, they are “pretty close.” (…)

Oil Prices Chase $60 After a Year of Surging Demand The price of oil in the U.S. has climbed to levels not seen since 2015, as unexpectedly strong global growth has helped soak up a supply glut that plagued the market for years.

BITCOIN STUFF

With bitcoin approaching the $10,000 mark and Coinbase, the bitcoin exchange, more accounts than brokerage Charles Schwab, some preemptive consolation and advice are in order for people who stand to lose lots of money in a crash. First the consolation: Even if that money goes up in smoke, the investment will have helped make the world a better place. And the advice: There’s a way to profit from that too, by making side bets on other applications of the technology that powers bitcoin.

That’s also the case with other unprofitable projects that are losing the investors a lot of money and may lose more in the future: Tesla, Snap, Uber. Investments in them may never pay off — or may only pay off for those who cash out at the right moment, like lucky investors in a Ponzi scheme. But they pay for humanity’s important advances, and for progress in entire markets. (…)

• Investors Rush Into Crypto

• The bear case for crypto, part II: The Great Bank Run.

• More on bitcoin: It just got real.

SENTIMENT WATCH

Here’s why stock-market bull Laszlo Birinyi just raised his S&P 500 target again Legendary investor sees benchmark at 2,680 to 2,700 by end of first quarter 2018

Legendary. What’s a legend?

Anyway, the WSJ’s Market Watch column gives us the killer argument: “Birinyi has been consistently bullish since calling the start of the more-than-eight-year bull market.”

…Failing to disclose that Birinyi seems to only know bull speak:

• This is via ZeroHedge:

• December 2007:

(StockMarketAdvantage)

• January 26, 2008: Birinyi’s Forbes column:

The bearish arguments for 2008 aren’t any more valid. Many bears expect a recession, which they assume is poison for market performance. Not quite. In the 11 recessions since World War II the market has averaged a 3% gain, despite the inclusion in that data set of the 23% decline in 1974. During 6 of those downturns the S&P went up. If 2008 is a recession year, it is not automatically fated to be bad for stocks.