Brahmason's Blog

House prices according to Shiller have shown 3 % increase in September as regards prices in September last year , with sales reactivating slightly after long continuous decrease .

Even so it should be recalled that price reduction since 2007 have dropped an accumulated 30 % and that the mortgage cost ( fixed for 30 years mortgage ) is at its lowest in 3.31 % and average american house is currently priced a bit over 160.000 $ .

The Richmond Manufacturing Index has strongly mounted to 9 from a previous negative reading widely beating the experts consensus and this is a consistent data because it is based on facts and figures concerning orders , shipments etc…

The consumer sentiment has also shown some improvement on previous figures mostly on the trust that Obama’s plan to fight unemployment will be successful .

I do not believe that housing is initiating a real lasting recovery . The doubts and problems of economy as a whole have moved some investors and high segment americans to spend some money in housing as one of the simpler ways of using part of their savings with no many alternatives at sight and a stock exchange that begins to show terribly dangerous .

The big problems remain and we will only see what can be expected well advanced the first 2013 quarter .

Of course fiscal cliff remains as a real source of volatility , but the real expert knows that this can only have a negative effect if not duly solved at the House of Representatives with no bearing in the solution of historic problems of economy .

Real problems of american economy are the huge debt at private and corporate level plus the lack of competitiveness to balance budget and external deficits and that is something that will require a very long time to show substantial improvement and will demand strong sacrifices by investors with real pains to the stock exchange , wich by the way is not the real economy as many pretend . Stock exchange is only an ingredient of real economy and has to behave as such .

When markets indexes are lifted on expectations we are creating bubbles . Gains in markets should come after consolidated improvement of real economy and believe me this is one of the aspects that future economy will impose .

Finally we should not disregard the impact of volatility caused by the weakness of european and japanese economies whose problems are also nearly out of control because growth every where is based in continuous credit ( debt increase and inflation ) instead of being the result of real added value processes with a vigorous middle class sharing the resulting increase of reachness .

Brahmason

Brahmason@gmail.com