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What We Read Today 16 April 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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Millennials put off home buying, despite rising rent (Uptin Saiidi, CNBC)  Rents are rising while interest rates remain low, yet young Americans are still largely choosing to rent instead of buy.  More about the millennial generation in the members only section.


Using NAR Research to Address Prospective Buyer Concerns “Why Not Rent? I Can’t Afford to Buy!” (Jed Smith, National Association of Realtors)  You can put this in the 'Dept. of Useless Information'.  The following graphic is of no value without further information:  age demographics, personal income levels, income to non-mortgage debt ratios, etc., etc., etc.  More about U.S. housing in the members only section.

net.worth.home.owners


Articles about events, conflicts and disease around the world

U.S.

banking.governments.people

UK

China

Taiwan

Australia


Millennial generation is bigger, more diverse than boomers (CNN Money)  There are more than a century of racial demographics in this article. The unfolding of the American melting pot can be quickly reviewed.  Some examples:

  • In 2013 there were 587,200 Americans who were 89 years old; 84% were white; In 2013 there were 3.9 million babies born; 50% were white.
  • For those born before 1976 there were 1% or fewer Americans identified as 'mixed race'; In 2013 5% of the babies born were mixed race.
  • For every birth year since 1913 the native American population (continental Indian - including Inuit - plus Hawaiian) was 1% or less in 2013.

Click for larger interactive graphic at CNN Money.
us.population.diversity.2013.by.year.of.birth.600x400


Challenges Ahead in Housing America’s Very Low-Income Older Adults (Jennifer Molinsky, Housing Perspectives)  From 2010 to 20130 the number in the U.S. age 65-and-older will surge by 33 million (82%) to a total of 73 million.  In the 62-and-older population, 6.5 million will have incomes below $15,000 by 2030, up from 3.5 million in 2007.  For the 65-and-older group, 73% will find housing to be "unaffordable" (requiring more than 30% of income).  There are a lot of numbers in this piece and, unfortunately, many are presented in a rather helter-skelter manner.  There is a graphic which does summarize some useful information:

housing.assist.need.elderly.2000.2030


Majority of States Signal the U.S. is Due for a Minimum Wage Hike (Jordan Yadoo, Bloomberg Business)  With 29 states having minimum wage laws higher than the federal $7.25 an hour, Washington would just be following the states by enacting an increase.  The only time that this many states were higher than the fed number was just before the federal minimum wage increase of 2007.

min.wage.states


Has the Dollar-Gold Correlation Broken Down? (Cris Sheridan, Financial Sense)  There is a lot opinion that when the dollar collapses, gold will go through the roof.  Well, sometimes that might happen.  Using the data in the chart below, Econintersect calculates that 58.2% of the time there is negative correlation between gold and the dollar (-0.5 or more negative).  There is weak or no correlation about 36.2% of the time and positive correlation (0.5 or greater) 3.2% of the time.  So over many years the statement that gold goes up when the dollar goes down is true more than half the time.  But for short periods of time you can lose money betting with the longer term averages.  For example, from 08 December 2014 to 17 February 2015 the correlation was never as low as -0.5%; about half the time the correlation was above 0.0 and half below; and approximately 22% of the time the correlation was 0.5 or higher.  Any time you want to trade based on correlations you better do the correlation tracking on a frequent basis.

Click for large image at Financial Sense.
gold.dollar.1981.2015


Not-So-Great Expectations: Why Real Interest Rates Won’t Soar (Shane Shepherd, Research Affiliates)  Hat tip to Barry Ritholtz, The Big Picture.  Good discussion about why interest rates are low and will remain ow for a long time.  Two good graphs.  The first shows how GDP growth has slowed since the start of the Great Recession.  Looking specifically at the five years 2010-2014, the U.S. GDP growth rate has averaged approximately $380 billion per year.  The extension of the pre-crisis GDP trend would have averaged a U.S. GDP growth of $600 billion per year.  The current GDP growth rate is almost 40% below that from before the Great Recession.

GDP.potential.actual

A second graph from this report emphasizes the assessment that interest rates will remain low for a long time.  The current real interest rate for 1-year Treasuries is about -1.4%.  The CBO (Congressional Budget Office) and the FOMC (Federal Reserve Open Market Committee) both project real interest rates will not rise to zero until 20121.  This author is projecting 20124.  Econintersect would not be surprised if the latter date was the better projection.

real.interest.rates.us.projected


Other Economics and Business Items of Note and Miscellanea

Builders Are More Upbeat About Sales (Realtor Mag)  Builder confidence in newly constructed single-family homes was on the rise in April, showing more optimism in the spring selling season.  Builder confidence rose four points to 56, according to the National Association of Home Builders/Wells Fargo Housing Market Index, which measures builder perceptions on current sales conditions, sales expectations, and buyer traffic in the new-home market. Any number above 50 indicates that more builders view conditions as "good" than "poor."  Econintersect review of the latest data today and reports Residential Building Sector Soft in March 2015. This Sector Remains Weak.  Have things really improved significantly in the first half of April?  See next article.

Home Builder Confidence Hits 2015 High And Why ETFs May Have Plenty More Room To Rise (Trang Ho, Forbes)  Trang Ho has contributed to GEI.  Trang thinks things are improving, although this was posted before today's disappointing residential construction starts data was released.  She points out that builder ETFs have outperformed the broader market year-to-date and suggests any encouraging data will push them higher, following momentum.  However, see next article.

Home builders' stocks fall after disappointing housing data (Market Watch)  Many home builder stocks declined 1-2% today following the release of disappointing residential construction starts data.

Retirement Strategy: Dividends Vs. Capital Gains (Seeking Alpha)  The author says it should not be an either/or question for investors.  He suggests a dividend growth investment strategy could be a good choice for many.

The Lessons Of Awkward Adolescent Eagles (Adirondack Almanack)



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