Mainstream Media Misses the Boat on Yesterday's Data

All,
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