I saw quite a bit of interesting news bits on my reader today. Here’s an attempt at organization:
I started to write a post on the popping of the Australian and Canadian housing bubbles this weekend. I haven’t seen a lot of discussion about Australia’s bubble, except for some noise made when Australia’s central bank didn’t continue to hike interest rates. The key for Australia is China. China seems to be backing off of the stimulus pedal just a bit. Since China dominates Australia’s raw materials exports, this is critical. As I said, I haven’t seen enough discussion to point to anything worthwhile, but be aware that it’s now something to be looking for. Also, this is not a popular opinion.
Canada, on the other hand, generated some discussion today. This was largely due to the WSJ article, Housing Rebound in Canada Spurs Talk of a New Bubble. Ottwa says the housing bubble is not a concern. In all seriousness, I believe home prices in Vancouver will be lower in 6 months than today. This is partially due to a few thousand units coming on to the market during the post-Olympics hangover. Whether this is cause for greater concern is not really my bag. Canada seems more dependent upon the US consumer than on the Canadian consumer. Canada’s banking system is able to tolerate a greater capital hit than US banks. Falling housing prices will certainly produce different problems in Canada than in the US.
US Residential Real Estate came into the spotlight again. Fitch Says Prime Jumbo RMBS Near 10% Delinquent. Since California makes up 44% of the Jumbo Prime mortgage market, it should then be no surprise that California $1M-Plus Home Sales Drop 24%. That doesn’t mean the subprime worries are over, with the Scariest Chart EVER showing (a poorly labeled) average loss severity of 70% on subprime mortgages.
There’s some interesting discussion about the quality of the recovery in the US. Looking first to jobs, we have No Job Growth for Small Business Spurs Recovery Doubt. There’s also a demographic shift in employment. Clusterstock asks in their chart of the day Remember When Men Used To Have Jobs?. The NYT claims Women Now a Majority in American Workplaces. This is an interesting statistic, as it only looks at the seasonally unadjusted establishment survey (seasonally adjusted establishment survey puts women at 49.9%). Both the unadjusted and adjusted household survey give the majority to men. The article is also careful to point out:
As in previous recessions, male workers have borne the brunt of the job losses in the last two years. Since the recession began in December 2007, men have lost 7.4 million jobs on net, whereas women have lost 3.9 million jobs.
In other words, both sexes are worse off than they were before the downturn, but men have suffered more.
The article also implies that a recovery will benefit men more than women.
More bad news for the recovery: Bankruptcies Up 7%, And Not Getting Better.
The European troubles will continue to make headlines, but the most intriguing headline of the day for me was Investors Place The Biggest Short Bet In The History Of The Euro. Looks like a possibility for a rebound after all. Who will unwind first? Dollar or Euro shorts?
