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Five Things You Need to Know: Fed on Hold and Holding on, The Mania Hypothesis, The Mania Diagnosis, Bury a Saint and Sell Your House, St. Joseph on a Roll


What you need to know (and what it means)!


Minyanville's Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Fed on Hold and Holding on?

According to Bloomberg, there is unanimous agreement among 109 economists polled that the Fed will take no action at today's FOMC meeting.

  • The FOMC meeting begins at 8:30 a.m. EST with an announcement expected at 2:15 p.m.
  • Fed Funds futures are pricing in about a 95% chance of no action at this meeting, which means the next meeting of focus will be the October 24-25 two-day meeting.
  • With that meeting scheduled right before the mid-term elections, however, this is likely a two-for-one decision meeting.
  • While the minutes for the August meeting painted the decision to stand pat as a close call, there could be some slight adjustment to the statement today as housing data continues to crumble.
  • The statement is what the market will be focused on.
  • The August statement referred to a "gradual cooling" of the housing market. Will the Fed really be able to use the phrase "gradual cooling" in reference to the housing market this time?
  • Housing data simply does not support a "gradual cooling."
  • Residential construction has been negative for three consecutive quarters.
  • The NAHB Index hit a 15-year low.
  • Is the Fed on hold? Or is the Fed holding on?

2. The Mania Hypothesis

A bubble here, a bubble there, pretty soon we're talking about real bubbles! But what is a bubble? It's such a nebulous term without any real definition or meaning. We know that bubbles eventually pop, but just try predicting how big they're going to grow first. After all, that's what we're really worried about, the popping. Otherwise, every time we buy a financial instrument we're praying for bubbles. But a mania? Hmmm, now that's different. Now we're talking medical science.

  • According to the National Institute of Mental Health, Mania is part of a serious medical condition called Bipolar Disorder, which was previously known as Manic-Depressive illness.
  • Bipolar disorder causes dramatic mood swings, from excessively high (Mania) to excessively low (Depression), with periods of normal mood in between.
  • About 5.7 million American adults or about 2.6 percent of the population age 18 and older in any given year,1 have bipolar disorder, the NIMH says.
  • Bipolar disorder typically develops in late adolescence or early adulthood. However, some people have their first symptoms during childhood, and some develop them late in life.
  • Hypothesis: if changes in social mood motivate changes in social action (Socionomics) - from economics to financial markets, politics and culture - then it is possible that social mood may periodically suffer from the same mental health illnesses and diseases as individuals within the group.

3. The Mania Diagnosis

Is real estate suffering from an episode of Mania? Let's look at the symptoms of mania from the NIMH.

  • According to the NIMH, signs and symptoms of mania (or a manic episode) include:
    - Increased energy, activity, and restlessness
    - Excessively "high," overly good, euphoric mood
    - Extreme irritability
    - Racing thoughts and talking very fast, jumping from one idea to another
    - Distractibility, can't concentrate well
    - Little sleep needed
    - Unrealistic beliefs in one's abilities and powers
    - Poor judgment
    - Spending sprees
    - A lasting period of behavior that is different from usual
    - Increased sexual drive
    - Abuse of drugs, particularly cocaine, alcohol, and sleeping medications
    - Provocative, intrusive, or aggressive behavior
    - Denial that anything is wrong
  • The NIMH says a Manic episode is diagnosed if elevated mood occurs with three or more of the other symptoms most of the day, nearly every day, for 1 week or longer.
  • Looking at real estate, is it possible we have three or more symptoms of an episode of Mania?
  • 1) Unrealistic beliefs in one's abilities and powers:
  • 2) Extreme Irritability
  • 3) Spending sprees

  • 4) Poor Judgment

  • 5) Denial that anything is wrong

4. Bury a Saint, Sell Your House

In Westchester, NY, desperate real estate sellers turn to St. Joseph, according to the Journal News.

  • Mount Vernon real estate agent Elvira Castillo felt she had to take action when a house listed with her agency wouldn't sell, the newspaper reported.
  • "I went with my son in the middle of the night and we buried St. Joseph," said Castillo, referring to the little figurines she keeps in her desk.
  • "A few weeks later, it sold. It could have been a coincidence, but it worked."
  • I'm sorry, could have been a coincidence?
  • Does this qualify as extreme denial yet?

5. St. Joseph on a Roll!

If you think St. Joseph just operates out of the Westchester, NY office, think again. According to the Chicago Sun-Times, St. Joseph is on a roll!

  • Bernie and Grace Howaniec tell the Sun-Times burying St. Joseph has helped them sell a couple of homes.
  • "We've buried a statue a couple of times," Bernie said. "The first time was in 1993, and we were having trouble selling our home in Waukesha. We put the house on the market in June and expected to sell it within a month or two. October came and we still hadn't sold it. So, we buried a statue and the house sold in November."
  • What if you need to sell a condo and don't have a yard? No worries, according to the article.
  • "Real estate experts say"... Wait, real estate experts?
  • Yes. "Real estate experts say just put some dirt from the development's landscaping in a coffee can and plant the saint. You can put it on a balcony or in front of a window. Or, you can bury a statue in a planter."
  • Ok, NOW this qualifies as extreme denial.

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