Five Things You Need to Know: Existing Home Sales Rise Again!, Data Roundup, Can You Hear Me Dr. Wu?, Bonus Trivia: Dr. Wu, More Dollar Doomsaying?
What you need to know (and what it means)!
Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Existing Home Sales Rise Again!
At least that's the ever-positive spin from the National Association of Realtors.
- Sure enough, total existing home sales rose 0.6% to 6.28 million units in November.
- However, unlike the "positive" New Home Sales spin yesterday, Existing Home Sales are still down 10.7% year-on-year, with pricing down 3.1% year-on-year.
- Sales prices year-on-year are negative for all regions of the U.S., with the Midwest showing the steepest y/y decline at 3.5%.
- Immediately following the report came a parade of analysis pointing out the "positive aspect" of the 1% decline in inventory levels.
- But the reality is that the inventory levels for existing home sales are far easier to adjust than new homes.
- It is easier for new home builders to offer incentives and adjust pricing to meet demand than for existing home owners, whose pricing levels are far stickier.
- A key theme for us in 2007 will be the underperformance of Existing Home Sales versus New Home Sales.
- We expect Existing Homes Sales to continue to fall prey to the the increasingly predatory pricing by new home builders as they seek to move inventory.
2. Data Roundup
Today was the busiest day of the week for economic data with Initial Jobless Claims, Consumer Confidence and the Chicago Purchasing Managers Index accompanying the focus on Existing Home Sales.
- Initial Jobless Claims came in at 317k versus 320k expected.
- Consumer Confidence rose unexpectedly in December, to 109 from a revised 105.3 in November, the Conference Board said.
- Expectations were for a decline to 101.9.
- Finally, the Chicago Purchasing Managers Index improved to 52.4 from 49.9 in November.
3. Can You Hear Me Dr. Wu?
The US Federal Reserve is expected to cut rates in 2007, reinforcing the dollar's downwards bias and the yuan's tendency to rise, a senior Chinese central banker said.
- Wu Xiaoling, a vice-governor of the People's Bank of China, said in a review of 2006 published in the Financial News, a central bank-backed daily, that the Fed is likely to begin cutting interest rates next year, even as other regions remain in a tightening bias. Reuters reported.
- "Changes in economic growth and interest rate differentials will enhance the trend of a weaker dollar and stronger euro and yuan," Wu said in the official Financial News.
- Five Things readers may recognize Wu as the Chinese Vice Premier with whom US Treasury Secretary Henry Paulson met in mid-December.
- "Some American friends are not only having limited knowledge of, but harboring much misunderstanding about, the reality in China,'' Wu said following the initial meeting with Paulson.
- Are you with me Dr. Wu? Apparently not.
4. Special Bonus Trivia: Dr. Wu
In addition to being China's Vice Premier, did you know that Dr. Wu is also track number 5 from Steely Dan's 1975 release, Katy Lied?
- In the song, Dr. Wu is a man, but the lyrics resonate strongly today if one imagines Treasury Secretary Paulson pleading:
"Just when I'd spent the last piaster
I could borrow
All night long
We would sing that stupid song
And every word we sang
I knew was true
Are you with me Doctor Wu
Are you really just a shadow
Of the man that I once knew
Are you crazy are you high
Or just an ordinary guy
Have you done all you can do
Are you with me Doctor?"
- Meanwhile, did you know that the first track on the Katy Lied LP is the appropriately (for today) titled, Black Friday?
"When Black Friday comes
I'll stand down by the door
And catch the grey men when they
Dive from the fourteenth floor
When Black Friday comes
I'll collect everything I'm owed
And before my friends find out
I'll be on the road
When Black Friday falls you know it's got to be
Don't let it fall on me."
5. More Dollar Doomsaying?
The US dollar bill's standing as the world's favorite form of cash is being usurped by the five-year-old euro, according to the Financial Times.
- The value of euro notes in circulation is this month likely to exceed the value of circulating dollar notes, according to calculations by the Financial Times.
- By the end of October the $759 billion-worth of US dollar notes in circulation was only a fraction ahead of the value of euro notes, the FT said.
- In January the European Monetary Union welcomes its 13th member – Slovenia, the former Yugoslav republic.
- Of course, let's keep in mind that just because the value of euro notes in circulation is surpassing the U.S. dollar does not mean the dollar's dominance as the world's reserve currency is about to end anytime soon.
- And, oh yeah, there's the simple fact that the European Union has about 457,000,000 people compared to the U.S. population of about 300,000,000.
- Moreover, as the UK Telegraph reported today, not everything is exactly hunky-dory well with the euro.
- For the first time since the launch of the euro five years ago, 52% of the French public now regard the euro as a "bad thing."
- And in Germany, a recent poll by market researcher Forsa showed that 58% of Germans would like to return to the Deutsche Mark.
- We're still dollar bulls for 2007.
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