Headline Hype Distorts only Perceptions, Not Reality

A feel good headline (below) designed to make Americans feel better while they officially give thanks (and decide if they should spend more on black Friday). Fortunately, reality rather than perception drives capital and the markets. Better than expected this or that, while it can make us feel over the very short term, has absolutely no influence on the direction and speed of the dominant secular trends.

Personal income and spending numbers, as I suggested yesterday, have been tweaked beyond useful historical comparisons. Most of the reported strength in income and spending since August has been manufactured by statistical tweaks.

Contrary to the economic hype, new home sales remain extremely sluggish within a secular down trend. Sure, maybe the numbers beat expectations, but the trend remains down.

New Home Sales And Change YOY, SA:


What’s extremely disturbing, and likely highly influential in the Fed’s decision execute another round of quantitative easing (QE), is the shocking deterioration of both nominal (US dollar) and real (gold priced) median home prices below critical swing support levels. The October reading of $198,082.8 marks a break of the April 2010 swing low and the first reading below $200,000 since 2003.

Median Home Price And YOY Change:


The gold adjusted median home price has fallen below critical 1983 support.

Median Home Price to Gold Ratio (MHPGOLDR) And YOY Change


Let us all be thankful for what we have. Please do not let economic hype distort that understanding.

Headline: Economic data reveal a hint of consumer merriness

Americans are earning and spending more, companies are shedding fewer workers and hopes are rising for the economy as the holiday shopping season starts.

Still, with businesses spending less on manufactured goods and new-home sales near their lowest level in 47 years, consumers alone might not be able to invigorate the economy and drive down unemployment.

Source: finance.yahoo.com