TradeBlog (TM) .net / Personal Finance Blog

Home-Purchase Index in U.S. Plunges to Lowest Level Since 2000

The Mortgage Bankers Association’s index of applications to buy a house dropped 12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000. The group’s refinancing gauge rose 11 percent as interest rates decreased, pushing the overall index up 3.2 percent.

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US Unemployment Rate Rose To 10.2% In October, Highest Rate Since April 1983.

It rose from September's figure of 9.8%. The number of unemployed people rose by 558,000 to 15.7 million.

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Dollar Falls as Manufacturing Grows; Oil, Copper, Gold Rally

The dollar slid against high-yielding currencies, led by the Australian dollar, as China reported a surge in manufacturing and investors bet factory production in the U.S. accelerated. Oil, copper and gold climbed.

The so-called Aussie advanced versus 15 of the 16 most- traded currencies as of 10:12 a.m. in London, and the Swedish krona gained against all 16. Oil added 1 percent in New York while copper rose 0.7 percent in London and gold rallied 0.8 percent. Futures on the Standard & Poor’s 500 Index increased 0.7 percent, indicating the benchmark gauge for U.S. equities may rebound from its steepest weekly drop since May.

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Roubini Fear: Biggest Co-ordinated Asset Bust Ever

Since March there has been a massive rally in all sorts of risky assets – equities, oil, energy and commodity prices – a narrowing of high-yield and high-grade credit spreads, and an even bigger rally in emerging market asset classes (their stocks, bonds and currencies). At the same time, the dollar has weakened sharply , while government bond yields have gently increased but stayed low and stable.

Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.

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