A few comments on the Seasonal Pattern for House Prices

A few comments on the Seasonal Pattern for House Prices

by Bill McBride on 8/30/2017 04:05:00 PM

CR Note: This is a repeat of a previous post with updated graphs.

A few key points:
1) There is a clear seasonal pattern for house prices.
2) The surge in distressed sales during the housing bust distorted the seasonal pattern.
3) Even though distressed sales are down significantly, the seasonal factor is based on several years of data – and the factor is now overstating the seasonal change (second graph below).
4) Still the seasonal index is probably a better indicator of actual price movements than the Not Seasonally Adjusted (NSA) index.

For in depth description of these issues, see Trulia chief economist Jed Kolko’s article “Let’s Improve, Not Ignore, Seasonal Adjustment of Housing Data”

Note: I was one of several people to question the change in the seasonal factor (here is a post in 2009) – and this led to S&P Case-Shiller questioning the seasonal factor too (from April 2010).  I still use the seasonal factor (I think it is better than using the NSA data).

House Prices month-to-month change NSA
Click on graph for larger image.

This graph shows the month-to-month change in the NSA Case-Shiller National index since 1987 (through June 2017).   The seasonal pattern was smaller back in the ’90s and early ’00s, and once the bubble burst.

The seasonal swings have declined since the bubble.

Case Shiller Seasonal FactorsThe second graph shows the seasonal factors for the Case-Shiller National index since 1987. The factors started to change near the peak of the bubble, and really increased during the bust.

The swings in the seasonal factors has started to decrease, and I expect that over the next several years – as the percent of distressed sales declines further and recent history is included in the factors – the seasonal factors will move back towards more normal levels.

However, as Kolko noted, there will be a lag with the seasonal factor since it is based on several years of recent data.

Second-Quarter Growth in Selected Industrial Economies

Second-Quarter Growth in Selected Industrial Economies

Second-Quarter Growth in Selected Industrial Economies

August 30, 2017

United States: A 3.3% rise of personal consumption on a seasonally adjusted annualized rate (SAAR) accounted for 76% of the 3.0% SAAR advance of real GDP. Net exports and non-residential business investment increased, too, and made a collective 1.1 percentage point (ppt) contribution to GDP, while government spending slid 0.3% SAAR on quarter and by 0.1% on year. Real GDP has risen for 13 straight quarters. The current economic upswing began in mid-2009, and real GDP advanced in 30 of the 32 ensuing quarters. The eight-year-long upswing saw real GDP on balance grow at a 2.15% per annum rate. The total and core personal consumption price deflators decelerated last quarter to on-year increases of 1.6% and 1.5%, respectively.

Euroland: Real GDP in the euro area expanded 0.6% (2.5% SAAR) in the second quarter. GDP was also 2.2% greater than in the second quarter of 2016. On an SAAR basis, German GDP last quarter also climbed 2.5%. Growth in The Netherlands (6.2% SAAR) and Spain (3.6%) exceeded Euroland’s average, while the GDP growth rates of Greece (1.8%), Italy (1.6%) and Belgium (1.6%) under-performed the Ezone mean. In year-on-year terms, GDP rose 3.3% in The Netherlands, 3.1% in Spain, 2.1% in Germany, 1.8% in France, 1.5% in Italy and Belgium and only 0.8% in Greece.

Great Britain: Depressed in the wake of the Brexit referendum, economic growth in the U.K. was slower last quarter than in either the United States or Euroland. GDP rose just 1.2% SAAR from the first-quarter level and 1.7% from a year earlier. Personal consumption grew only marginally and at its weakest pace since the final quarter of 2014. Business investment stagnated, and the rate of import expansion matched the growth of exports. Government spending lent some positive support to GDP growth.

Japan: Japanese second-quarter GDP growth at 4.0% SAAR topped the leader board of the economies examined in this update. Half of that increase came from personal consumption, which climbed 3.7% SAAR. Among other components of final domestic demand, non-residential business spending advanced 9.9% SAAR, residential construction went up 6.0% SAAR, and public-sector demand advanced 5.1% SAAR. Inventories augmented GDP growth by 0.2 ppts, but net foreign demand exerted a 1.1-ppt drag on GDP growth, as exports fell 1.9% SAAR and imports rose 5.6% SAAR. Japanese real GDP had grown by less than 2.0% SAAR in each of the three previous quarters, so on-year growth in 2Q17 was only 2.0% versus growth of 2.1% in the United States and 2.2% in the euro area. The Japanese GDP price deflator fell 0.4% between mid-2016 and mid-2017. That represents an undesirable drop from increases of 0.4% in the year to 2Q16 and 1.5% in the year to 2Q15.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: and Japan, Euroland, GDP growth in the U.S., U.K.




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Bitcoin Price Stable, Unconfirmed Transactions Subsiding

Bitcoin Price Stable, Unconfirmed Transactions Subsiding

Bitcoin has kept to a stable range in the past few days. Ever since the $3,600 weekly high, the price has been on an upward trajectory. Notwithstanding, the $4,480 all-time was not broken, even though a new $4,449.98 monthly high was reached.

Congestion on the whole network has lessened, unconfirmed transactions have plummeted to a relatively manageable 23,000. The median confirmation time is averaging downwards too, with the mempool size rising once again, in defiance of the seesawing hashrate.

The total crypto currency market cap has ballooned to a $160 billion; with bitcoin retaining $71.8 billion, while the remainder of the $87.8 billion is exclusively dedicated to altcoins. A further breakdown of this figure, has bitcoin cash at $9.861 billion, ripple at $8.882 billion, litecoin at $3.345 billion, and dash at $2.661 billion. All other competing crypto currencies, are presently below $2.5 billion market caps.

Ledger and Trezor have also integrated SegWit into their hardware framework protocols.

Trezor is rolling out explicit SegWit support through their new beta wallet release. Not to be outdone, Ledger has SegWit addresses available for use as well, as demonstrated below on a propitiatory Ledger hardware wallet:

Litecoin, a crypto currency that implemented SegWit almost two months ago, has seen a rather strong rise in price in the past few days. As to whether this is the top of the run-up or not, remains to be seen.

Despite the successful activation, bitcoin fees are still high for smaller transactions. A website providing detailed information and supplementary data, is accessible here. Additonaly, transaction fees are discussed even further in this Mashable article.

Bitcoin mining has seen exponential growth, which is to be expected considering the overwhelming price action we keep witnessing day-to-day. It appears to be a primary income for people trying to get by in Venezuela, at least according to CNBC. On a similar note, Russian power plants have begun selling excess power directly to local miners. Regardless, no direct civilian contracts have been confirmed, as of yet.

It is rather telling as to how much the whole industry has grown; even mainstream media such as CNBC, has begun to acknowledge this obvious fact, with articles comparing the bitcoin marketcap to Netflix.

Bitcoin began trading today at $4,366.43 (GMT 00:01), which has so far sustained as the daily high. This was the start of a minor correction, that ended with a daily low at $4,174.13 (GMT 06:00), after which the price slowly recovered to the current $4,334.84 price level.

If you have any questions and comments on bitcoin today, use the form below to reply.

Forex Gap Trading Plan – Part 1 Sunday Afternoon Gaps

Forex Gap Trading Plan – Part 1 Sunday Afternoon Gaps

The Sunday Forex gap trades have been among my most consistently profitable trading strategies. In this short series, I will explain what the gaps are and show you my strategy, tips, and advice on trading them.

Part 1 will explain what the gaps are, how and why they form, and what you need to take advantage of them.

Part 2 will explain how you the trader can determine where the gap is and whether a trade is possible.

Part 3 will show my rules and suggestions for entering a gap trade.

Part 4 will show how I manage my gap trades.

 

Forex Gap Trading Plan

What is a gap?

Gaps in forex charts are the price area over which price action has jumped. In other words, no trades took place in the price area.  A gap can be caused at any time by fast market action, but for our purposes, I will be referring to the gaps that occur between some brokers’ closing on Friday afternoon and opening on Sunday afternoon.

Statistically, gaps are screaming to get filled.  Since price action is a result of traders’ action and traders generally expect gaps to fill, then they do fill.  The Sunday afternoon gaps don’t always fill on Sunday. Recently a gap of over 160 pips in the EURUSD opened on Sunday afternoon and was not filled until the following Thursday.  But often a partial fill will occur on Sunday afternoon or evening and that is where we hope to take some profit.

How are the gaps formed?

The Forex market closes at 5 pm Friday afternoon (all times mentioned in this series are US Eastern Time.)  Often, finance ministers and central banks will release meeting minutes and other data on Friday after market close and Saturday.  A lot of market-shaking news can be broadcast during this time.

When significant news is released, the market starts moving early on Sunday afternoon and gets more volatile as 5 pm approaches.  Most brokers open trading at 5 pm on Sunday. Some start their data feeds earlier.  The gap is formed between the broker’s close on Friday (some brokers close at 4 pm, others at 5 pm) and that broker’s opening at 5 pm on Sunday (some open earlier, others later.)  The gap is due to other trading taking place on Friday afternoon after the given broker has closed trading and on Sunday afternoon before the given broker has opened for trading.

What do I need to take advantage of the Sunday afternoon gap?

Primarily you will need a broker that opens early enough to take advantage of the closing of the gaps. I have seen the market gap early, start closing around 4 pm and completely close the gap before 5 pm.  If I was trying to trade the forex weekend gap with a broker that opens at 5 pm, I would have totally missed that trade.  That having been said, you can still have successful gap trades if your broker opens at 5 pm.  Any later than that and you may want to open an account with another broker so you can consistently trade the gaps.

My primary Forex broker is FXCM UK, but their trading doesn’t open until 5 pm.  Because of that, I still maintain a small account with Oanda.  Apparently, Oanda doesn’t close at all. You can enter trades on Saturday if you like.  If the gaps start to close early, I will take the trades in my Oanda account. I don’t make as much (the account is quite a bit smaller than my FXCM account), but at least I get to take advantage of an early gap close.  If the gap turns to close after 5 pm, I will take the trade in my FXCM account.

I am not specifically recommending any particular broker, I’m just letting you know how I do this.

In the next part of this series, I will explain how to determine where a Forex gap has opened and how to determine whether it’s tradeable or not.

See you next Asia session,
Tim Black
Secret Asian Man 😉

Tim Black hosts the live trading room for the Asia trading session. His background is in computers and technology. He is addicted to technology, charts, and technical analysis and enjoys teaching and sharing his viewpoints in these areas.

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Winners Edge Trading was founded in 2009 and is working to create the most current and useful Forex information and training available on the internet.

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Texas Roadhouse

Texas Roadhouse

Texas Roadhouse (TXRH) is a best in breed restaurant play, which has rallied by 6% year-to-date and 13% during the last 12 months, sporting a dividend yield of 1.6%. Earnings have struggled, though the May 2, Q1 report showed growth of 11.6% following three consecutive negative reports. 

The stock is higher 12 of the last 17 weeks with zero weeks of distribution and it needs to firmly establish itself above $50 as it has been bobbing above and below that key level. Notice the trade between round numbers with $40 holding on March 13. It is currently holding near a $50.61 weekly cup base trigger taken out the week ending June 9, in a seven-month pattern. Enter TXRH with a buy stop above bullish ascending triangle trigger at $52. A breakout should achieve all-time highs with a target of $57.  

About the Author

Doug Busch has been trading the U.S. equity markets for two decades using traditional technical analysis, as a trend follower, with an emphasis with Japanese candlesticks. @ChartSmarter

Julian Brigden Talks Macro With Chris MacIntosh

Julian Brigden Talks Macro With Chris MacIntosh

If you were rich, successful, and intelligent – which often, not always, go hand in hand together – where would you live?

The last time I was in the Rockies, I remember thinking to myself. You know what, if it weren’t for the fact it’s so damn far from the beach I could actually live here. It’s really quite lovely. Bite-your-hand-to-stop-you-from-crying-out-loud-lovely and if, like me, you’re a sucker for snowboarding, then it’s pretty hard to be disappointed.

After having just spent a few days of pure bliss (uninterrupted sunshine with zero wind) skiing on this baby in New Zealand, I can certainly appreciate living in Vail.

Maybe that’s why Julian Brigden, the co-founder of Macro Intelligence 2 Partners, lives there. I’ve never asked him about it, but I did ask him a bunch of other questions which I share with you today.

The quick and dirty on Julian’s background:

He’s accumulated 25 years of experience in financial markets. From 1999 to 2004, he was with Medley Global Advisors, a macro policy intelligence firm. Then from 2004 through 2011, Julian served as North American Head of Hedge Fund Sales at Crédit Agricole.

He has worked in London, Zurich, New York, and Vail at UBS, Lehman Brothers, HSBC, Drexel, Credit Suisse, and Salomon Brother in foreign exchange and precious metals.

If you’ve not heard of Julian, he’s easily searched with some stubby fingers and Google as he’s been featured on Bloomberg, CNBC, the New York Times, Wall Street Journal, and in Barron’s among other for the firm’s research on emerging markets, liquidity, QE, bubbles, and global FX flows.

As you can see, Julian’s far from some dolt-peddling advice.

In our recent conversation, we chatted about a number of things:

  • The state of the global bond market
  • Julian’s views on the US dollar
  • What happens when central bankers get what they wanted (case study: Europe)
  • Demographics and Japan
  • And a host of other things which came up in conversation

I hope you enjoy it!

– Chris

“When the second wave comes in terms of the stimulus package from Trump and in particular the corporate tax repatriation, the sucking sound from the rest of the world, as the dollars come home, will mark the ‘risk off’ phase and it’s possible that you push the dollar so far that its status ultimately as the reserve currency will end up being challenged.” — Julian Brigden