A periodic blog dedicated to providing commentary and encouraging debate on topics in Economics and Finance.

About Me

Age: 26 Occupation: Private Equity

Wednesday, April 4, 2007

Mainstream Media Misses the Boat on Yesterday's Data

I'm currently swamped at my real, pay-the bills job (the reason for my lack of posting). I'll have to keep this very brief. The story goes like this:

Yesterday, the Dow was up 128 points. Incredibly, the Associated Press attributed this run-up to a 0.7% (seasonally adjusted) ANNUAL increase in the NAR's pending sales index. (YAWN!) This makes absolutely no sense, especially given that the index is 8.5% below its year-ago level and the Northeast and West, the two most important regions, posted month-over-month declines. Oil's retreat and a potential breakthrough in the Iran hostage crisis (Didn't this happen before somewhere?), drove the rally. The reason: worries of a severe exogenous price shock due to a spike in oil (similar to the 1970's oil spike) combined with tons of liquidity and a slowing economy, a recipe for the U.S. economic train to pull into the stagflation station, abated. In short: looks like the outlook for inflation did not get worse (although it really hasn't improved).

For all you history buffs out there, I can't wait until Tony "Neville Chamberlain" Blair proclaims to his people, after appeasing Iran, that "WE NOW HAVE PEACE IN OUR TIME."

For my next post, I'm going to teach all you non financial types about fundamentals (a lot of talk about them, but no one in the media seems to explain what they are(or have a clue, at all) and how to do a real, honest-to-goodness buy versus rent calculation (for a house), so you can make an informed financial decision in line with your long-term interests. You'll see why I rent in Philadelphia, would perhaps buy in Midwest, and would contemplate suicide in California.

- eternitus


ghu206 said...

Keep'em coming! Always interested in getting some good commentary. Even in smaller bits. I realize you got to pay the bills, but I really need to get the straight stuff.

The media are lazy... They just cut and paste press releases and apply spin to appease homebuilders and investment banks (who pay their paychecks).

Thanks!!! Always a good read.

eternitus said...

But in the spirit of full disclosure, we all have biases... I just have a conscience.

dxm113 said...

I can appreciate your busy schedule. . . .I'm sure that many people can relate.

Keep up the good work! Where else would we be able to get this information? The NAR sure as hell wouldn't tell us this. Neither would most "experts," as they also have their hands in the cookie jar.

Thanks for your time and energy!