Using Veritas to Construct the "Per…

29-04-2017 Hits:87216 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:81133 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:80975 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:85448 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:81946 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:84134 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:55197 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:83391 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:83132 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:83023 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:89282 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:86996 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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I read through the usual suspects in the mainstream media yesterday after the Case Shiller numbers were released and see headlines such as "Home Prices Flatten in October After 5 Months of Gains" and "Mortgage insurers rally after housing data" and wonder just how many of these reporters and analysts actually bothered to look at the data versus repeating sound bites. This has been a bad three quarters for the fundamental bears, but there is absolutely no macro or fundamental reason to turn bullish. As a matter of fact, the only reason I can see to buy stocks is that the stock prices are going up. That, in and of itself, should give one pause.

Let's take a close look at the "raw" Case Shiller numbers, not the seasonally adjusted ones for which I cannot source the method of adjustment for seasonality. Don't worry, if one looks at the data over a long enough time frame, you can easily recognize the patterns of seasonality, and more importantly notice how dramatic they have become, leaving open to question how effective the seasonal adjustments are, whatever they are.

  Starting with a bird's eye view of key markets over two decades you can see that the housing boom was enormous and the crash was severe, but nearly all major markets ticked up significantly over the last few months, although we are still at roughly 2003 pricing levels, having lost about 7 years appreciation. The question is why. Well, the US government has put more money and resources into re-blowing the residential housing bubble than any other time in its existence.

 Click any graph to expand.

caseshiller_oct_long_term.png

Despite this, significant headwinds persist in inventory, foreclosure and distress pipelines, unemployment, etc. Yeah, I know, you have heard this all before, but let's put it in context this time around.

long_term_monthly_case_shiller.png
 

This chart shows us the month to month changes over the same time period. As you can see, last year was bad, but we again ticked up significantly for several months in a row for an improvement. That improvement has quickly disappeared with several markets dipping back into the negative. and all markets trending sharply downward. This is a negative, not a positive turn of events. Put this in perspective, with hundreds of billions of dollars of government aid, MBS purchases, tax credits and bank support - we are still seeing this sharp month to month downtrend. It is no wonder why the housing tax credit was extended, but to what good?

As we drill down on the trend view, we can see that the upward trend in most markets has stopped, with a few markets actually turning back down again, and right after the spring/summer selling season and the perception of the proximal expiration of the tax credit. This is a negative, not a positive turn of events.

shorter_term_case_shiller_trend.png

The chart below illustrates the seasonal ebbs of month to month price changes.  On a month to month basis, we see hills in the spring and summer and valleys in the fall and winter. During the onset of the bursting of the (first) bubble, this cycle was compressed, but was still there. and lasted throughout the bubble. With the onset of the government stimulus (ex. housing credits and MBS market manipulation), the peaks were significantly exacerbated. Now we are entering into the winter months again, and guess what's happening, as has happened nearly every winter cycle before. The only difference is that this dip is extraordinarily steep! I would also like to add that the month to month price changes coincide exactly with the S&P 500 move downward and upward for 2008 and 2009, to the MONTH! What a coincidence, huh? If this relationship holds,,,, well you see what direction the month to month lines are going and how steep they are, don't you?

csmtmlong.png

As you can see when we drill down into the month to month  numbers, the improvements either weaken significantly or disappear into numbers that show further declines - and this is in the face of government bubble blowing!

csmtmshort.png

Let's chop the data up using bar graphs that give the reader a greater feel for the seasonality of the moves, and you will still find the latest numbers showing what looks like a downtrend, again...

image021.png  

  Remember, the CS index measures matched sales pairs. That means that it attempts to follow the same properties being sold, so the seasonality will mean much less than if one were simply measuring transactions, irrespective of the property. The seasonally adjusted numbers look more positive, but still show a downtrend. Since I could not find the specific methodology on the "de-seasoning", and I am easily able to discern the seasonal trends over time, I am much more comfortable with the raw index data.

So, what does it mean if we get another significant downturn? Well, not only are the 2003 to 2007 vintage mortgages in trouble, but those 2008 and 2009 mortgages are at risk as well. What are the chances of this happening? Fairly significant. For all of those guys who swear we are on the brink of a booming economic recovery, recall that it was housing depreciation that set all of this off to begin with. It was not a dip in GDP, not unemployment, not a dip in corporate profits, definitely not a change in analyst's earnings forecasts and not a crash in the stock market. It was a crash in housing. What happens if we get another housing crash (or more accurately put, the continuing of the current one) after a few hundred billion of stimulus and a 62% run in the S&P to guarantee that the stocks are nice and ripe in their overvaluations? Inquiring minds want to know...