“U.S. Housing starts unexpectedly fall to record low”
That is the headline on last week’s release of data. Is the fact that builders have radically adjusted downward the number and size of new homes planned to be constructed good news? I think it is largely because it allows the overhang of excess inventory of unsold homes to be absorbed more quickly.
Yet the press trumpets negativity.
How about this: “Commercial loan defaults could exceed $100 billion”
A big number by itself. A small number compared to the residential challenges of the past few months, and an even smaller number compared to the outstanding commercial loans. I want to say, “so what”.
According to the press, it is all but certain that terrible inflation is just around the corner. Makes for exciting headlines but if you catch a glimpse of the bond interest rate curve, in a split second you reach an opposite conclusion.
“The banks remain in trouble”. Maybe so, and specific banks certainly have significant problems to work through. But a check of the spread between 3 month LIBOR and the Treasury Bond rate tells a different story. That story is that the world financial institutions are getting much more comfortable and confident in the ability of counter parties to meet obligations.
“The dollar is weak”. OK, that means that US producers will find their goods more attractively priced and imports will be dearer. Do we not need international demand to help restart our economy?
Don’t get me wrong, I am not complaining. I am simply pointing out that the press, and the public, will be biased toward negative slants on stories until too many people begin to believe that “it’s safe” again.
