Wednesday, January 16, 2013

U.S. Housing Real Estate Market House Prices Trend Forecast 2013 to 2016

by Nadeem Walayat, The Market Oracle:
Following the peak of the over leveraged US housing market bubble late 2006, the real estate market literally crashed during 2007 triggering the financial crisis that has acted to subsequently feed a multi-year bear market as a consequence of the subprime mortgage debacle that was magnified globally via toxic CDO packages that literally risked the bankruptcy of the whole global financial system starting in June 2007 when Bear Sterns bailed out one of its hedge funds, within a year Bear Sterns would effectively go bust as JPM picked it up for about 5% of its peak value that acted as a prelude to what was yet to come during 2008 for the likes of Lehman’s that prompted tax payer bailouts right across the globe to prevent financial armageddon as the too big to fail banks only slowly revealed the extent to their exposure to the toxic mortgage backed securities in what amounted to the greatest fraud in history as investors had been duped into buying junk that the credit rating agencies typically rated as Triple A for a fee.
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USG Corporation (NYSE:USG)

USG Corporation, through its subsidiaries, engages in the manufacture and distribution of building materials worldwide. The company offers gypsum and related products, including gypsum wallboards, joint compounds used for finishing wallboard joints, cement boards and accessories, glass mat sheathing, gypsum fiber panels, glass mat panels, poured gypsum underlayments, ultra light panels, and various construction plaster products. Its gypsum products are used in various building applications to finish the interior walls, ceilings, and floors in residential, commercial, and institutional constructions, and repair and remodel constructions. The company also produces gypsum-based products for agricultural and industrial customers to use in various applications, including soil conditioning, road repair, fireproofing, and ceramics. In addition, it manufactures ceiling grid and acoustical ceiling tile for electrical and mechanical systems, and air distribution and maintenance applications. The company distributes its gypsum products through building materials dealers, home improvement centers and other retailers, specialty wallboard distributors, contractors, and a network of distributors. Further, it distributes other manufacturers' gypsum wallboards, ceilings products, joint compound and other gypsum products, as well as drywall metal, insulation, roofing, fasteners, and exterior insulation finishing systems.

To review USG's stock, please take a look at the 1-year chart of USG (USG Corporation) below with my added notations:
USG has been in a steady trend higher since June. Along the way, USG has formed a nice trendline of support (blue). Always remember that any (2) points can start a trendline, but it's the 3rd test and beyond that confirm its importance. Obviously USG's trendline is very important to the stock since it has been tested on multiple occasions.

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These Forgotten Stocks are Ready to Take Off..

In the late 1980s, Japan's economy was the envy of the world. The country's meteoric rise to become the world's second-largest economy coupled with the dominance of Japanese brands such as Sony, Toyota and Kubota gave rise to the term "Japanese Economic Miracle."

Managers around the world sought to emulate the nation's manufacturing techniques. Japanese companies and consumers, enriched by their nation's rapid economic growth, bought up prime real estate and other assets in the United States, Europe and elsewhere.

 But Japan's miracle was built in part on a bubble. In 1989, at the height of the property bubble, choice commercial property in Tokyo sold for more than $20,000 per square foot. Average Japanese homes near the nation's six largest cities cost the equivalent of 30 to 50 times the median Japanese income, an unsustainable level. Gains in residential and office properties between 1986 and the top of the property bubble in 1991 were even more dramatic than home price gains in the United States during the mid-2000s.

The economic miracle came to an abrupt end in 1991 as the nation's overheated real estate market collapsed and the benchmark Nikkei 225 stock Index lost nearly a third of its value in U.S. dollar terms in the 1990s, even as stocks in the United States and Europe saw their biggest gains in decades.

The 20-year hangover
Japan continues to suffer under the hangover of its erstwhile boom. The country has continued to suffer from bouts of deflation -- a general decline in price across the economy -- driven in part by declining property prices in parts of the country, even more than 20 years after the bubble burst. Deflation is particularly damaging to the economy as it discourages credit. When consumers and businesses borrow money they typically post collateral in the form of assets such as real estate or equipment. But in a deflationary environment, the value of this collateral is constantly eroding, making it less valuable as a loan guarantee. (more)

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Bundesbank To Commence Repatriating Gold From New York Fed / By Tyler Durden / 

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the “stability” of the entire monetary regime based on rock solid, undisputed “faith and credit” in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a “crazy, lunatic” dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don’t have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.

Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner’s dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.

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Looking in Fort Knox for its Gold / By Alfred Adask / 

Ft. Knox Gold Gone? On Thursday’s radio show (Financial Survival, 4PM to 5PM East Coast time (, I was reading from an article by Mr. Przemyslaw Radomski that explored the possibility that there’s no longer any gold in the U.S. depository at Ft. Knox:

•  ”An audit of the US gold holdings has  been demanded by some for years, but the government will not allow it.   The gold belongs to the American people, so why won’t they let us see  it?  Many think it is because it is no longer there.  If that is indeed  the case, do we not face a ‘financial Armageddon’?
“At first it may sound shocking, but the last audit of gold stored in Fort Knox took place in 1953. No typo here, 1953, just after U.S. President Dwight Eisenhower took office. [However,] No outside experts were allowed [during that audit] and the audit team tested only about 5% of gold hoarded in the fort. So, there hasn’t been a comprehensive audit of Fort Knox in over 60 (!!!) years.”

•  ”Congressman John R. Rarick demanded a Congressional investigation and, on September 23, 1974 six Congressmen, one Senator and the press were allowed to enter Fort Knox to see for themselves if the gold was there or not.  The tour showed that there was gold in Fort Knox but, all the same, it sparked even more controversies.
Only a fraction of the gold reserves were available to see. A photo of one Congressman published by Associated Press suggested that gold bars held in the fort may have been less heavy than would be usually expected.  This resulted in even more doubt about the fineness of gold in Fort Knox. . . . [This is]  important if you consider that counterfeit ‘gold bars’ have been showing up in New York recently and that fake gold bars turned up in LBMA Approved Vaults in Hong Kong.”

•  ”In 2012, the German federal court ordered that the German central bank, Bundesbank, conduct an audit of German gold reserves stored abroad, particularly in the U.S., U.K. and in France. The German authorities have never before conducted a comprehensive audit of their foreign gold reserves and the last time they were [even] able to see their gold stored in the New York Federal Reserve vaults was supposedly in 1979/80. Because of that, 150 tons of gold will be shipped from the U.S. to Germany to assess the fineness of the bars.”

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Chart of the Day - Burger King Worldwide (BKW)

The "Chart of the Day" is Burger King Worldwide (BKW), which showed up on Thursday's "All-Time High" list. Burger King posted an all-time Thursday at $18.04 and closed up +1.69%. TrendSpotter has been long since Dec 13 at $17.12. In recent news on the stock, PepsiCo announced on Thursday that it had formed a partnership with Burger King in China to make Pepsi the exclusive supplier of soft drinks for more than 100 Burger King restaurants in the Asian country, according to China Daily. On Dec 27, Burger King announced that it has entered into a multi-country, Master Franchise Joint Venture Agreement with BEBOCA LTD in Central America. The new joint venture will acquire the master franchise rights for the 178 Burger King restaurants in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama and has committed to manage the aggressive development of the Burger King® brand in these countries. Burger King Worldwide, with a market cap of $6.211 billion, operates fast food hamburger chains throughout the world.

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Gold, Miners and SP500 Trends & Trading Signals

Gold and gold miner stocks have underperformed in 2012 disappointing most traders. That being said it has traded in a large sideways range since September 2011 and remains stuck in this range as of this week. Investments trading sideways are not my preferred investment of choice because some commodities and stocks for that matter can trade sideways for years before making another bull market rally.
That being said in the last six months gold has started to show life that a new bull market may be starting. 2013 is starting to look as though gold, silver and precious metals miners could lead the market higher if they can break out of their basing patterns. Until we get more bullish price action I am not planning to get long.

Take a look at the gold ETF and Gold Miner charts:

These daily charts show the trend (up/down) along with short term extreme overbought/oversold trading days. The key to long term success is to trade with the trend 90% of the time. Only years of experience will you know when it's ok to break the rules and even then the odds are stacked against you.

Gold Weekly Chart:


Gold Daily Chart:


Gold Miners Daily Chart:


SP500 Stock Market Analysis:

The last five years I have been fine tuning my SP500 index trading with the use of cycles, sentiment, volume, momentum and the volatility index. Until just recently some of the data I use for generating these extreme overbought/oversold conditions were only available after the market closed. This made the high volatile trading sessions difficult to truly know if an extreme level was reached during the trading session. The exciting news is that a new data feed and a top notch programmer is allowing me to turning this once manual calculation of 17 data points taking me an average of 25 minutes to figure out into a system that generates signals in real time complete with profit taking signals, tend direction and a protective stop which self-adjusts depending on the market volatility and cycle stages.
Two other benefits are that during extremely high volatility levels and mixed cycles the system does not generate any signals. This allows us to avoid the large daily swings in price that typically shake even the most seasoned traders out of the market for repeated losing trades. Also during potential trend changes when cycles and volatility become choppy trading signals are not generated helping to avoid the volatility that takes place during reversals points when the bulls and bears are pushing each other around.
Below is a very basic version of the trend and signals for the SP500 index as it does not show profit taking, trend reversal stops or protective stops for individual swing trades yet, but it's coming soon.

Crude Oil Weekly Chart:

Crude oil has been making a move higher in the past four weeks but it's now testing resistance and the chart shows a high volume doji candle. This is pointing to a pause or pullback in price should take place.

Natural Gas Weekly Chart:

Natural gas futures have been under pressure the past couple months but it may have put in a bottom last week. The daily and 60 minute charts show strong buyers stepping in here.

Weekend Trading Conclusion:

In short, gold and silver remain in a sideways/down trend on the daily chart. The weekly long term outlook is very bullish and once I start to see real buyers enter the market in terms of volume and price patterns I will start to accumulate a long position.
The stock market overall remains in an uptrend. We are waiting for a pause or pullback before getting long the index. But that being said there are other sectors and commodities starting to look ripe for big moves. They are not there yet but getting closer each day.
Keep in mind that stocks, commodities and trading in general go in waves. There are times when you are busy with trades popping up left right and center and there are times when setups just do not happen. On my free stock charts watch list in November and December I posted 16 stocks and ETF setups and only one stock went south which happened to be a short trade (count trend trade).
Crude oil is giving mixed signals and I am avoiding it until the daily chart gives us a bullish setup.
Natural gas weekly chart looks bullish but the current price is now trading at resistance. It must break this level before a full reversal can be confirmed.

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My Favorite Retail Stock to Own for the Long Term

Everyone knows fashion retailing is a cyclical business. The better the economy is, the more consumers spend. Conversely, when the economy is weak, people tend to stay at home and keep their purse strings tied tight. As a result, when it looks an economic rough patch is on the horizon, investors steer clear of retailers that sell anything but the basic necessities of life. After all, looking good isn't quite as important during tough times.

But there's just one problem with that strategy: Sometimes that mindset doesn't quite work to investors' advantage. Right now, for example, there's one retailer that's managed to grow its top and bottom line for years now, no matter what kind of economic environment.

Better yet, the stock has shrugging off bear markets on its way to becoming one of top-performing stocks for the past 10 years, rising more than 650%. And the next several years don't look like they're going to be any different.

Amazing stats
The Buckle (NYSE: BKE)
is a small-cap retailer made up of more than 400 stores selling competitively-priced casual apparel, footwear and accessories for young men and women. But this description doesn't do the stock justice. A few key statistics and figures paint the true picture.
The company has had 10 straight years of rising revenue, from $401 million in 2003 to $1.06 billion in fiscal 2012. (Even when the recession was hitting other retailers in 2008, The Buckle kept chugging.)
Profits have also been rising for 10 straight years, from $32 million in 2003 to $151.5 million in fiscal 2012. The fact that the company didn't have to slash prices and crimp margins when things got rough during the Great Recession underscores just how in touch The Buckle is with consumer demand, walking that fine line between "needs" and "wants."

Net margin growth in eight of the past 10 years -- from 8% in 2003 to 14.2% in fiscal 2012 -- is just as impressive. This is because, for many retailers, expansion comes at the expense of margins. For The Buckle, however, growth has scaled quite nicely, as it has actually achieved an economy of scale.
These are phenomenal stats, not just for retailing, but for any kind of business. Take a look at the chart below...
What gives?
The growth streak almost seems too good to be true, prodding cautious investors to wonder whether such a track record is truly sustainable. Well, it is sustainable, because The Buckle has managed to do a handful of things consistently, which most other retail companies never even come close to doing. (more)

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