Week 34 US Economic Calendar: Is Housing hit the Bottom already?

Weekly Economic Calendar, from Action Economics, Businessweek

This week focus point is Producer Price index, Housing Starts and Leading indicator

Last week, Consumer sentiment index drop and weak retail sales result serve as a good reminder of weak recovery. People are spending cautiously, as the employment outlook is still bleak. The other reason is the stock market has run too far ahead. If you look into some of the US blue chips now, they are trading at 2 digit of Leading P/E (Trailing P/E is Price divided by previous earnings, Leading P/E is Price divided by forecast earnings). In some cases, I personally think that it is over optimistic already. In the end of day, a business value is weighted by its underlying cash flow (Owner’s Cash flow – after deduct any debt/interest). However, more often, people are always misled by the sentiment and buying into the hope of making quick profit!

Housing sector is stabilizing, as the sentiment has been very bullish lately, due to the quick recovery of stock market. People, who are looking for new home will start to buy, as fears of rebound in home sector may send the price flying up again. This not only happen in US, as people in Singapore and Malaysia (Damansara) are queuing for new house launch. Can anyone imagine this at start of the year when everything is postponed?? Construction activity is at nearing zero level.

House is a place for people to rest and re-charging energy after a hard work day. However, people have started to treat house as a commodity now. Bank no longer doing their traditional business, as greedy executive is using mortgage as collateral, securitized it and sell it at the market. The main reason is their bonus is tight with the profit.