S&P Case-Shiller Home Price Index – Cause for Concern?

Lately some US economic data seemed to be hinting that the US economy was improving albeit slightly. Here is the “but” with last Friday’s release of GDP and yesterday’s weaker S&P Case-Shiller home price index which is trending back down that is enough ammunition to suggest otherwise on the US economic state of health.

Here is a chart of the S&P Case-Shiller which looks rather scary to think it is heading back to the Mar 2010 lows of 137.64. Yesterday’s print of 138.49 and yoy -3.67% will concern the Government and the Fed a lot.

This is a cause for concern that may trigger more stimulus

 

Back in 2010 the Case-Shiller broke its uptrend in the October print and was heading lower right about the time the Fed pulled the trigger on QE2. The Fed could not have all asset classes being sold off as this is at the very heart of “Main Street” not just “Wall Street”. What will happen this time?

As markets now have been anticipating possible further QE as the Fed stands by easy monetary policy.

Putting this into context of what it means for markets volatility is low meaning equities have rallied. If the economy is really at threat as it appears the Fed has two options. First is to stand by and let markets correct or the second option is to pump more money in to it to try and continue to push equities and all markets higher as US home prices continue to sink.

Yesterdays equity market weakness comes from traders caution on the cross roads that lie ahead as the US economy shows signs of weakness. Equity volatility is still cheap!

Good Trading. CF

Share

Related posts:

  1. ETF Edge-Rise of gold ETFs raises concern of price collapse
  2. Binary Options Analysis – U.S Pending Home Sales Rise
  3. New Argentine price index seen ready in 2013-report
  4. Earnings Report Card: Apple Earnings Beat All Expectations an Equity Index Driver
  5. Index trading strategy