Wednesday, February 19, 2014

The Pause That Depresses

The following chart shows the average of new private housing units authorized by building permits and new privately owned housing units started.

Click to enlarge.

If cold weather is responsible for the exponential trend failure then, as seen in the chart, it sure has been cold over the past year.

Source Data:
St. Louis Fed: Custom Chart


shtove said...

OT: "What's interesting however is that China's treasury position "adjustments" throughout last year seem to follow treasury prices (inverse of yields). This is akin to a retail investor buying high and selling low - chasing the market with everyone else. While analysts often assign some degree of sophistication to China's investment strategy, the positioning in the chart below resembles a fairly incompetent trading behavior, an unsuccessful attempt to "time" the market."

Stagflationary Mark said...


Interesting chart. I tend to agree with the analysis. If China wants to reduce treasury holdings then China should consider selling a fixed amount each month rather than buying and selling random amounts, because what they're doing looks a lot like unsuccessful gambling.

I might suggest that an even better plan would simply be just holding to maturity and not buying more if the plan is to reduce holdings. No need to trade at all. For what it's worth, that's sort of my plan. I do intend to buy more as bonds mature, just won't be using all the proceeds. Much of the proceeds wil be used to meet my living expenses. It's an eventually die broke strategy.

Put another way, I shall slowly be reducing my holdings from here on out. In theory, I will be buying more than I'm selling though (since I intend to never sell, but simply hold to maturity). Go figure.