MacroScope

Economy signs: Housing a painful recovery

September 8, 2010

An occupied house sits next to two of fifteen empty lots on Desoto street that are listed on the auction block during the Wayne County tax foreclosures properties auction of almost 9,000 properties in Detroit, Michigan October 21, 2009. REUTERS/Rebecca Cook A look at the macroeconomic news and its impact on the mood of investors and the direction of the economy. Are we heading for a double-dip recession?

The housing market is more closely related to the price of luxury items than staple goods such as food and clothing, reports David Leonhardt in the NYT. This being the case, don’t treat your home like an investment because the forecast is underwhelming.

But all is not doom and gloom in the housing sector. In is blog Jeff Matthews Is Not Making This Up, Mathhews espouses the “Cover Story Syndrome” method of investing. The seeds of a housing market recovery have been planted by this week’s Time magazine cover story on just how bad things are, according to Matthews.

“When investment themes get so popular they appear on the cover of a major news magazine—a dying breed, but the basic idea is still there—then that investment theme is, by definition, too popular to succeed, and maybe popular enough to start betting against,” says Matthews.

Also in the down but not out category is Mark Hulbert’s article in MarketWatch. He takes a look at how to make money amidst deflationary concerns. Look to the consumer staples and health care sectors as a way of staying in the stock market.

Investors have their head in the sand when it comes to the outlook for the economy, reports Izabella Kaminska in the FT. The blog also contains a great video of Spock’s Vulcan nerve pinch.

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