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Neither the colonists nor the Wampanoag Indians knew they were celebrating the "first" Thanksgiving then. And, no one knew the details of that harvest celebration would interest future generations so dearly. Though so much have changed since 1621, the spirit of sharing and giving thanks remains the same. And, I'm thankful for your support of this website. It's been such a pleasure to make your acquaintances. Your inputs and words of encouragement mean a good deal to me. I'm also thankful for most of the trades and investment tactics that have worked out well here. Sometimes it's just better to be lucky than good. Overall, it's been a good, well, lucky year for me. Our economy, though, is a different story. Employment is perhaps the most crucial element of our economy. It's the engine that keeps the economy going. When the employment data is released next week, many economists are forecasting payrolls increase of more than 200,000 for the month of November. Chart 1 is The Conference Board's Help Wanted Advertising Index for the past 2 years. It shows increases of job offerings in major newspapers across America (blue lines) between October and February. Last year, it went almost straight up, from the low of 26 in November 2004 to the high of 41 in January & February 2005. But there was that post-presidential-election euphoria in the air last year. This index stays unchanged, at 38, since August this year. If you'd draw a line connecting the high points and the low points in 2005, you'd form a symmetrical triangle. A breakout or a breakdown of this triangle formation is due to happen soon. And, we'll find out if these economists got it right this time. While we're waiting on that, the First Time Online Help-Wanted Ads, a new research series by The Conference Board, have been in decline since August.
Chart 2 shows the number of new online job ads fell to 2,002,600 in October, 36,000 fewer jobs being offered online than in September. And, the September number was down 4.4% from August. The October data have already accounted for the 19% sharp rise of online job ads in the Texas and Louisiana areas due to the hurricane rebuilding. The October volume nevertheless declined. Since this is a new research that only began in April, there're no prior years' data for comparison. But the back-to-back months of decline can't be good.
Despite all the talk of how interest rates are inversely affecting the housing market, I continue to maintain that the most important factor that affects the housing market is the employment. I've shown how the high interest rates correlated with some of the highest appreciating housing market of the past years already, so I won't get into that again. At any rate, the 3.64% decline in the median sales price of existing homes in the U.S. in September was the biggest one-month decline since I started tracking this data in November 2003. It takes a lot for a large nationwide data set as this to drop this much in just one month. It's a very significant stumble.
But the existing home sales is not the only housing segment that started stumbling. New constructions of privately owned homes also shows signs of fatigue. By the way, I'd be interested to see the statistics of Publicly Owned homes, if there's one exists. Anyway, new constructions that have already completed are the things of the past. They had their permits and authorization months ago. Looking at the housing units that have just been authorized but not yet started gives us better insight into the immediate future. And, the future doesn't look too promising. Chart 4 shows that after the sharp rise from February to April (blue lines), the number of units that have been authorized to build has been going sideways. Although it's debatable that the stock market charting techniques are applicable to this type of statistics, the formation does appear to be a triple top bearish reversal pattern. Applicable or not, the chart looks ready to roll over.
And, then we've had the Mortgage Bankers Association's refinancing loan application volume index (Chart 5) that's been in decline for 5 weeks in a row. Since mid October, the refinancing volume index has dropped a hefty 24.41%.
Anyone looking at the stagnant job offering data, the weakening of the housing and mortgage financing sector would concur that all's not well with our economy. But, for the time being, stock market investors are thankful for that. This is the good news that the market has been thriving on. The bad news for the 30,000 GM workers that are getting laid off, for example, spells relief of the inflationary pressure, which is good news for the financial market. Unfortunately, sometimes what's good for Wall Street may be bad for Main Street. But it's only a matter of time before what's bad for Main Street is also bad for Wall Street.
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