No News In The Housing Market, The Weakness Is Continuing And The Sales On Available Residences Are Down Over 8%

In the end of 1999 there were discussions that this was the new economy where recessions were something for the history books.

Maybe there is some truth to that, time will tell, maybe not. That was not true then and the concept what we see today is a super cycle where US are going into a soft landing and other regions of the global economy are taking the responsibility to withhold the growth. Though a fact is that something is going on, GM is no more the world's biggest car maker, China passed the US as Japans biggest trading partner and the US stock market just keep going to new heights. The Dow Jones a have going trough 13000 which is a psychological important number. The profit growth for the first quarter was 6% which is around 3% higher than expected, though not double digits that been a fact for the last 12 quarters. According to sympathizers of the Dow Theory everything is in place for the market to continue the strong uptrend the market been in for some years now.

The reason to one of the biggest moves on the downside since the end of the 1980: s is the problems with sub prime mortgage lenders that having problems getting there money back and can not refinance cause the housing prices are coming off and giving no space for refinancing. No news in the housing market, the weakness is continuing and the sales on available residences are down over 8% . More and more sub prime borrowers are getting closer to been borrowing more than the house or flat they been borrowing for are worth and can not refinance it with new loans when the prices coming off. The sales for the housing sector have in the end of the first quarter been strengthen up with an increase of 2, 6% but there seems just to be a small correction in an steep downtrend. The situation of the sub prime mortgages in the US housing sector is serious and can kill the theory of a super cycle very quickly if the weakness in the sector is continuing. The second quarter will be important for if it will be a soft landing or a recession in the US economy. Other aspects are the low unemployment rate connected with the strong buying power that the US consumer are withholding and the expression" never underestimate the US consumer" is still appropriate to be used.

The building and investments in the housing sector will be holding back the US growth till at least the second part of 200What we see right now is a overall weakness in the US economy but the market seems to think this will be just a short correction in a strong uptrend which leads to that the financial market foremost looks at the levels of profits and the consistently low global inflation that seems to be intact at this stage. Other aspects not to underestimate are the strength in Europe. Germany have recently having very strong numbers when it comes to consumer confidence and growth, likewise for France Great Britain and Spain, which is a fact that is very important to withhold the valuations in the stock market.