RCM Editorial: Should Ben Bernanke Be Reappointed? And Other Questions on Bloomberg TV's, 'No Visibility Ahead'

RCM Comment: Today on Bloomberg TV a promotion is running urging viewers to watch the 7:00 pm show, No Visibility Ahead: Predicting What's Next, during which a moderator will question a panel about the current economic situation and the credit crisis. This panel will include the likes of Jack Welch and Meredith Whitney. I imagine this will be an interesting forum, however, in the promo the group dances around a key question and since they are unwilling to give a straight answer I will jump into the breach. Admittedly, it is easier for me to voice my opinion in this post than on national TV, but I hope I would have the integrity and moxie to answer this question on any medium.

The question: Should Ben Bernanke be reappointed to Fed chairman when his term is up?

While others dance I will stand like a Rodin and say emphatically, NO. Those of you who have been reading this blog for the last few years and/or have spoken with me know that since Ben took over as chairman we have been concerned. We contended that an academic who was known as "Helicopter Ben" was a perilous appointment. We voiced our concern when Ben decided, in March of 2006, to stop the government's reporting of M3. We took this as a clear sign of Ben's willingness to devalue the US$ and we launched our Fortune's Favor Precious Metals fund in August of 2006 to benefit from this direction. During a time of rampant free credit Bush appointed a free credit junky. Many metaphors come to mind to describe the situation, but I think the arsonist and the fire will suffice.

If the desire is to further destroy the value of the US$, send treasury bond prices plummeting / rates soaring and lead us headlong into massive hyperinflation then by all means reappoint Ben Bernanke. As investors we welcome the continued policies of Ben as we have a clear road map to success through our commitment to Gold, Silver, energy and other commodities. But as patriots of this country and believers in the fundamentals established by Alexander Hamilton and our forefathers we urge the administration to appoint someone who will attempt to right the ship.

The following are a few stories that may shed some light on the effect of the current administration's policies as well as Ben's actions:

GMT:

The rising cost of insuring debt is impacting treasuries too. The cost to hedge against losses on $10 million of Treasuries is now about $100,000 annually for 10 years, up from $1,000 in the first half of 2007. These rising insurance costs have helped push up treasury yields in the last few months. Worse still, the rising costs of insuring against government defaults will undermine faith in dollar. After all, the CDS market is telling us that 10-year treasury notes have become 100 times riskier in the last two years.

Jim Sinclair:

Remember hyperinflation is NOT an economic event, it is a currency event.
If you study market history you will see the glaring truth that the Weimar experience would not have happened if German debt markets were not used as a vehicle to heavily short the Weimar Mark.

It was the Weimar mark short sellers that created the Weimar hyperinflation just as the OTC derivative shorts will cream the US dollar with the unavoidable effect being hyperinflation.
I know of what I speak. About the above there is no doubt. There is no real argument to the contrary and you can count the number of those outside of our community on one hand who understand how hyperinflation is created."

Dave from Denver on the real deal…
More fantasy housing numbers and prior revisions

New home sales were reported to be up .3% in April, HOWEVER, March numbers were revised from +.6% to -3%. That's a huge revision. MOREOVER, new home sales plunged 34% compared with a year ago.

More disturbing yet, Americans fell behind on their mortgages and foreclosures hit a record pace in the 4th quarter. Mortgage delinquencies hit 7.9% of all loans, the highest level since 1972. Prime delinquencies are now higher than subprime delinquencies. This statistic should completely terrify everyone, as the prime mortgage market is 10x the size of the subprime/alt-a market.

News that Moves: Dangerous Divergence, Bond Auction Spin

RCM Comment: I posted a challenge yesterday and as yet only one taker. I received an email from Gary Rosenthal (a/k/a, Dad) labeling the stories correctly. So, is the contest over? Should I send him the prize? I think the answer has to be, no, on account of the proverbial apple and its proximity to the tree perhaps disqualifying Dad. So, Tim, Greg, Bunny, Philippe and everyone else: I know you are out there. Give it a shot; the prize awaits.

Global Money Trends Magazine:

At the same time that TLT (ETF of US Treasuries) and the US$ Index having been trending lower, indicating that foreign investors are dumping US-assets, global commodity and stock markets, were moving in the opposite direction, trending higher, amid what’s been dubbed a “green-shoots" rally.

When the two asset classes move in opposite directions for long periods of time, characterized by tumbling bond prices, and rising stock markets, this phenomenon is dubbed a “dangerous divergence.”

RCM Comment: Well said by GMT. Trade the rally? Yes, but don't stay too long and recognise the cracks in the wall. Today's action could be one of those signs:

BONDX Nice Going (-03/32 3.560%)
The $35B 5-yrs went at 2.310% with a 2.32 bid-to-cover and indirect take of 44.2%, the outing was solid. The results were against an average 2.13 cover over the past 16 auction since the start of 2008, and a 29.2% indirect bidder take. The market had been looking for a solid showing, and while this was less impressive than the 2-yrs, that was to be expected. The market had been looking for a draw of 2.33% plus and liked the lower yield. The 2-to-5-yrs were able to pull out new highs on comparatively decent volume for the 5-yrs. (Please see Bond page for charts and more)

This is the story that ran at 1:12pm today. The spin as you can see is positive, but the bond market price action after the news is deadly. Bonds are selling off hard and equity prices are suffering. This is a key relationship that must be respected.

News that Moves: Consumer Confidence, Foreclosure Face-Lift, Dallas Fed President...Can You Label These Stories Correctly?

RCM Comment: For today's read I have put together a selection of stories for your amusement. One story is a fantasy, one a horror and one a Greek tragedy. Let's make this Audience Participation Day. The first person to send me a comment labeling the stories correctly will receive a genuine Rosenthal Capital Management polo shirt. Good luck...


ECONX Consumer Confidence Picking Up
The Conference Board's Consumer Confidence Index for May increased sharply to 54.9 from 40.8 in April. The May number is the highest since last September, but still trails the 58.1 reading seen a year ago. The index for May showed that consumers are feeling much better about the outlook... The Expectations Index, which drove the overall reading for May, surged to 72.3 from 51.0 in April and is well ahead of the 47.3 reading from a year ago. The Present Situations Index, meanwhile, moved up to 28.9 from 25.5 and is still well below the year-ago reading of 74.2. Looking six months out, a larger number of respondents than in April feel business conditions will be better (23.1 vs. 15.7) (Of course, these same people had no idea the economy would collapse when this reading was taken a year ago), that more jobs will be available (20.0 vs. 14.2) and that income will increase (10.2 vs. 8.3). Strikingly, fewer respondents have plans to buy a home (2.3 vs. 2.6). Also, it is believed the inflation average 12 months hence will be 5.6% versus 5.9% in April...


Face-lift for foreclosure prevention - Washington Post
Washington Post reports the Obama administration is attempting to revive a stalled government foreclosure prevention program that could restore equity to hundreds of thousands of borrowers whose home values have plummeted. After eight months, the program, known as Hope for Homeowners, has helped just one borrower secure a more affordable loan. President Obama signed legislation last week simplifying and lowering the cost of the program for lenders and borrowers. Lenders that participate also are eligible for incentive payments from government bailout funds. Most striking is that Hope for Homeowners has attracted unexpected backers: Investors who had refused to consider the program's requirement that they forgive some of a borrower's mortgage balance if the home is worth less than is owed, known as being underwater, are now trumpeting that provision. "Institutional investors that own securities backed by mortgages are extremely keen to write down principal in exchange for the borrower refinancing into a Hope for Homeowners loan," said Tom Deutsch, deputy executive director of the industry group American Securitization Forum.


Dallas Fed President says don't monetize the debt - WSJ
WSJ reports Dallas Federal Reserve Bank Richard Fisher says he is always on the lookout for rising prices. But that's not what's worrying the bank's president right now. His bigger concern these days would seem to be what he calls "the perception of risk" that has been created by the Fed's purchases of Treasury bonds, mortgage-backed securities and Fannie Mae paper. Mr. Fisher acknowledges that events in the financial markets last year required some unusual Fed action in the commercial lending market. But he says the longer-term debt, particularly the Treasurys, is making investors nervous. The looming challenge, he says, is to reassure markets that the Fed is not going to be "the handmaiden" to fiscal profligacy. "I think the trick here is to assist the functioning of the private markets without signaling in any way, shape or form that the Federal Reserve will be party to monetizing fiscal largess, deficits or the stimulus program." The very fact that a Fed regional bank president has to raise this issue is not very comforting. It conjures up images of Argentina. And as Mr. Fisher explains, he's not the only one worrying about it. He has just returned from a trip to China, where "senior officials of the Chinese government grill[ed] me about whether or not we are going to monetize the actions of our legislature." He adds, "I must have been asked about that a hundred times in China."

RCM Editorial: The Ramifications of Increasing US$ Weakness

RCM Comment: The US$ is breaking down again today and has taken out key support. I continue to write about this weakness because the ramifications of the continued demise of the US$ are far reaching. Allow me to list a few thoughts to keep in mind while we watch the US$ developments:

Weakness in the US$ goes hand in hand with an eventual rise in rates/fall in prices of US treasury bonds. A rise in rates is contrary to what the Fed wants and detrimental to the recovery process.

The Fed has pledged to buy $300 billion of US treasury debt. Since this announcement the US$ has weakened substantially as we predicted. The purpose of this buying spree is to keep rates down. However, printing the fresh $300 billion weakens the US$ in turn pushing up rates. I fear the Fed is caught in a vicious cycle.

This cycle has accelerated the desire of our key trading partners to diversify out of the US$ as discussed in the Brazil/China story below. This diversification is like a body of warm water that fuels a hurricane. Stories of diversification take the vicious cycle and turn it into a named storm.

In a strange twist, often weakening currency leads to rallying equity prices for a time as the investing public realizes that holding cash is counter productive. This equity rally does not mean "green shoots" are forming and is not sustainable long term. Trade the rally? Yes. Buy and hold it? No.

This behavior also leads to a rally in commodity prices, which results in a blowout of inflation. This is the sector to establish longer term holdings for a more significant move. Pay no attention to the talking heads who blather on about impending deflation. They are simply missing the big picture and are stuck in a quagmire of minutia. Inflation is a currency event not an economic event. Example: For weeks now these self-proclaimed "pundits" pound the table screaming that the world is awash with oil. They point to "huge" inventory numbers each week and argue that oil should be trading in the low $40s. However, much to their chagrin, oil continues to roll ahead and trades today over $61. Are they wrong about the inventory numbers? No, but it is oil's relationship with the US$ that is driving prices and this fact they either can't see or choose to ignore.

We need to watch for signs that this named storm, let's call it Ben, is picking up speed and act accordingly to protect our assets. The Privateer reports: "As of May 7, US Treasury 30-year bonds had lost investors 20.9 percent in 2009 according to Merrill Lynch & Co indexes, as the Treasury increases security sales to help fund a swelling budget deficit. The world is now paying more on US Treasury credit default swaps than McDonald’s does on its borrowings." This fact raises the level from tropical storm strength to category 1. The best weapon to protect our assets - the storm shutter to the window of our portfolio - is gold. Please hold on to the bar.

Brazil and China eye plan to axe dollar - Financial Times
Financial Times reports Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil's central bank and aides to Luiz Inacio Lula da Silva, Brazil's president. The move follows recent Chinese challenges to the status of the dollar as the world's leading international currency. An official at Brazil's central bank stressed that talks were at an early stage. He also said that what was under discussion was not a currency swap of the kind China recently agreed with Argentina and which the US had agreed with several countries, including Brazil. "Currency swaps are not necessarily trade related," the official said. "The funds can be drawn down for any use. What we are talking about now is Brazil paying for Chinese goods with reals and China paying for Brazilian goods with renminbi." Henrique Meirelles and Zhou Xiaochuan, governors of the two countries' central banks, were expected to meet soon to discuss the matter, the official said.

Fleckenstein on China / Brazil development:

For Silva and Hu, an FX "I Do"
The dollar declined about 0.75% -- though even more trouble is brewing for our green paper. For those who don't know, Presidents Luiz Inacio Lula da Silva of Brazil and Hu Jintao of China are meeting this week in Beijing. According to several news accounts, unnamed sources stated that the talks are not about currency swaps (as we've seen between China and other central banks). Supposedly, China and Brazil are in the early stages of considering an arrangement whereby China would be able to buy Brazilian goods with renminbi (yuan) and Brazil would be able to buy Chinese goods with the real.

If that comes about, it would be the first move towards a floating renminbi -- and thus, a very big "small" step indeed. Because if China is ready to float the renminbi in any way, shape or form, that will further confirm that the Chinese are in the process of turning their back on the dollar, despite their official protestations to the contrary. But in fact, China needs to have it both ways -- i.e., jawbone us to not do anything foolish (which everyone knows we're doing and will continue to do), while attempting to figure a way out for themselves. So, this is a development worth keeping our eye on.

News that Moves: US Treasury to Backstop Munis?!?!

FT - The US Treasury would provide a backstop to stricken states like California, which are struggling to raise debt, under legislation due to be introduced to Congress.
Proposals published on Thursday would see the Treasury acting as a reinsurer in the market and the Federal Reserve setting up bond purchase agreements, which were commonly provided by banks until the credit crisis. The changes present an even greater use of federal money and oversight into new areas of the market, with billions of dollars from the $700bn troubled assets relief programme – which has been used to buy stakes in banks and car companies.

Rating agencies would also come under pressure to improve state and local governments’ credit ratings, with the Securities and Exchange Commission tasked with checking that they are not assigning too high a risk of default compared with corporate bonds. Barney Frank, the Democratic chairman of the House Financial Services Committee, who supports legislation, said that he would hold hearings into the changes on May 21.
More…

RCM Comment: This is a very serious development. The value of the US$ is in jeopardy. Even before this story broke the US$ value could be described as standing at a precipice looking into an abyss. Now, this story brings to mind the metaphor "the straw that broke the camel's back". We obviously don't know what that straw will be that pushes the US$ over the edge, but the above story could certainly be the catalyst.

News that Moves: Kudos to IBD, Technical Trader's Take: Gold / US$ / US Treasuries

RCM Comment: I love a good reality check. The majority of media outlets are clamoring to report on bank bailouts and market rallies. However, the story below gives a good view of the real world and the obstacles in the way of a sustained recovery. Credit must be given to the Investors Business Daily for its shrewd and even-handed reporting.

Amid Push To Save Giant Banks, Small Ones Fail At A Rising Clip
By MARILYN ALVA, INVESTOR'S BUSINESS DAILY

The federal government has put hundreds of billions of dollars into financial giants such as Bank of America (BAC) to keep them afloat, claiming they are too big too fail. But what about the 8,300 other banks and thrifts that account for a third of the nation's deposits and at least that much of business loans? Fail they may, as have 58 since the recession began in late 2007 — 33 since the start of this year.... Read more.

Technical Trader's Take: Gold has quietly crossed above the $920 line of resistance and sits at $933 as I write this note. Meanwhile, the US$ is poised to break down or has already done so against a number of other currencies. Treasury yields are breaking out as prices break down.

A technical analyst's job is similar to that of a big game tracker: We scan the path for footprints and try to determine the animal and direction. The footprint I described above suggests perhaps that an Asian elephant has become weary of feeding on US assets and is instead moving on to more golden pastures. The herd is sure to follow, stay alert....

News that Moves: Retail Sales Reality Check, Financial Sector Supply Concerns, America's AAA Rating Risk, Foreclosure Fiasco Picks Up Pace

RCM Comment: I have explained why the housing numbers are suspect and Q1 EPS numbers being "better than expected" is a farce. Unfortunately for the Government, placing a positive spin on the Retail Sales numbers is a lot harder to do....

ECONX Disappointing Retail Sales Numbers Undermine Rebound Argument
Those glimmers of hope are fading. April retail sales fell 0.4%. This followed a decline of 1.3% in March. It is starting to look like the consumer spending gains in January and February were just rebounds off a very weak fourth quarter, supported by strong seasonal factors... It can certainly be argued that there is some stabilization occurring in consumer spending. The April decline in retail sales is not particularly large and suggests that the comprehensive personal consumption expenditures for the month will be near flat. Nevertheless, the markets have been looking to a rebound in consumer spending as a signal of overall economic recovery later this year. The two months in a row of declines in consumer spending don't support that argument quite yet. With unemployment continuing to rise and wage gains stagnating, the outlook for consumer spending remains poor.

RCM Comment: Meredith's thoughts go along with our stated belief that even the "good" banks will be raising capital. I'll say it again because it is reality and bears repeating: The 2 month rally in equity prices was manufactured by a slew of dubious "good" announcements leading to "green shoot" spin all for the purpose of helping the financial sector to raise much needed capital. My question: Who are the suckers buying these secondaries? The glut alone of new supply coming on the market should make it difficult for this sector to advance from current prices.

Meredith Whitney comments on CNBC; says 2010, 2011 earnings are going to be "so far below consensus" for the banks...Says she doesn't think this is the last time these banks raise money.

RCM Comment: Weakening US treasury bond prices, recent US$ decrepitude vs other world currencies and firming gold prices add some weight to the following story...

Former comptroller general of the US David Walker says America’s triple A rating is at risk - FT, David Walker writes "Long before the current financial crisis a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us...

The facts show we're in even worse shape now, and there are signs that confidence in America's ability to control its finances is eroding... Prices have risen on credit default insurance on US government bonds...

Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People's Bank of China have expressed concern about America's longer-term credit worthiness and the value of the dollar...

In my view, either one of two developments could be enough to cause us to lose our top rating. First, while comprehensive healthcare reform is needed, it must not further harm our nation's financial condition... Second, failure by the federal government to create a process that would enable tough spending, tax and budget control choices to be made after we turn the corner on the economy would send a signal that our political system is not up to the task of addressing the large, known and growing structural imbalances confronting us."

Foreclosure activity remains at record levels in April According to RealtyTrac U.S. Foreclosure Market report
RealtyTrac released its April 2009 U.S. Foreclosure Market Report, which shows foreclosure filings were reported on 342,038 U.S. properties during the month, an increase of less than 1% from the previous month and an increase of 32% from April 2008. The report also shows that one in every 374 U.S. housing units received a foreclosure filing in April, the highest monthly foreclosure rate ever posted since RealtyTrac began issuing its report in January 2005.

"Total foreclosure activity in April ended up slightly above the previous month, once again hitting a record-high level," said James Saccacio, chief executive officer of RealtyTrac. "Much of this activity is at the initial stages of foreclosure - the default and auction stages - while bank repossessions, or REOs, were down on a monthly and annual basis to their lowest level since March 2008. This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria (This is something we at RCM have highlighted repeatedly). It's likely that we'll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months."

News that Moves: Massive Drop in Consumer Credit, Truth Behind the Employment Figures, Geithner's NY Times Op-Ed

Zero Hedge:

The latest G.19 filing shows a massive drop in both revolving and non-revolving consumer credit, which has fallen to a one year low at $2.551 trillion, an $11 billion reduction sequentially in credit, split about even between revolving and non-revolving. RCM Comment: The government is trying desperately to spend its way out of this recession, but it cannot do it alone. Uncle Sam needs you, the individual credit junky, to fall off the wagon, tap that vein and shoot up by taking on more debt. What the story above shows is that the credit junky is not cooperating. Instead, he is still sequestered at the Betty Ford Clinic continuing to detox. Maybe the story below will help us understand why...

RCM Comment: The equity markets rallied on the employment figures last week as the media outlets and various government officials applauded the numbers. However, a closer inspection, with the help of Market Ticker, will reveal the true essence of the numbers and perhaps give us a hint at the future direction of the equity markets.

Market Ticker:
The advance seasonally adjusted insured unemployment rate was 4.7 percent for the week ending April 18, an increase of 0.1 percentage point from the prior week's unrevised rate of 4.6 percent.

Half of the unemployed are in fact not insured (they've run out of benefits) but the insured percentage as a percentage of the total ticked up this last week.

The important number isn't initial claims; it is continuing claims, as that defines the number of people who got laid off and can't find a replacement job. How's that doing?
The advance number for seasonally adjusted insured unemployment during the week ending April 18 was 6,271,000, an increase of 133,000 from the preceding week's revised level of 6,138,000.

Ah. So the number the market "liked" was down 10,750, but the truth is that 133,000 more people lost their job than found one last week. That's very bad news; those are real people who can't pay their bills and are unable to find a new job to replace the one they lost.

Good luck with that "green shoot" folks.

Most financial markets are still on some form of government life support and the evidence so far is they can't yet function normally on their own - WSJ
WSJ reports for all of the excitement about improving financial markets, most are still on some form of govt life support and the evidence so far is they can't yet function normally on their own. Last fall, markets froze and interest rates soared as investors dumped stocks and corporate bonds and banks cut back on lending to their customers and to each other. In response, the Federal Reserve sharply cut interest rates and established a Scrabble game's worth of acronymic lending and insurance programs to reassure investors and jump-start markets. Those programs have helped return markets to near normal. Lending has resumed, and many key rates are back to where they were before the peak of the crisis. But in cases where the government has pulled back its support, markets have trembled. Given that history, officials will likely err on the side of intervening too much and for too long. (Gold Bullish) "When the recovery is self-reinforcing and cash flow is picking up for companies and banks, then financial assets will grow on their own without any need for government involvement," says Tony Crescenzi, chief bond strategist at Miller Tabak. "We are nowhere near that self-reinforcing state." In one sign of lingering credit-market anxiety, interest rates not under direct Fed control -- corporate bonds, for example -- haven't fallen as sharply as overnight lending rates, over which the Fed has the greatest power.

RCM Comment: Entertaining liar or credulous fool? You be the judge...
NY Times runs op-ed piece from Treasury Secretary Geithner
Geithner writes "This afternoon, Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve will announce the results of an unprecedented review of the capital position of the nation's largest banks. This will be an important step forward in President Obama's program to help repair the financial system, restore the flow of credit and put our nation on the path to economic recovery...

The effect of this capital assessment will be to help replace uncertainty with transparency. It will provide greater clarity about the resources major banks have to absorb future losses. It will also bring more private capital into the financial system, increasing the capacity for future lending; allow investors to differentiate more clearly among banks; and ultimately make it easier for banks to raise enough private capital to repay the money they have already received from the government. The test results will indicate that some banks need to raise additional capital to provide a stronger foundation of resources over and above their current capital ratios. These banks have a range of options to raise capital over six months, including new common equity offerings and the conversion of other forms of capital into common equity...

Some banks will be able to begin returning capital to the government, provided they demonstrate that they can finance themselves without F.D.I.C. guarantees. In fact, we expect banks to repay more than the $25 billion initially estimated..."

RCM Comment: Allow me to cut through the confusion, the hysteria and state a simple fact: The equity markets rally of the last 2+ months has been engineered by the government to facilitate banks' raising of capital. A plethora of smoke and mirrors have been employed. The government can pretend employment is better or Q1 EPS are "better than expected" or foreclosures are down, but they would be painting a surreal picture that would make Dali proud. Beware, a significant wave of supply is about to hit the equity markets and when supply out weighs demand, well....

RCM Editorial: It Takes A Lot of Manure To Get These "Green Shoots"

The equity markets continue to work their way higher as the government-sponsored and controlled bank stress test pageantry is in full swing. In my business we commonly refer to this type of charade as "putting lipstick on a pig". However, the herd is content at the moment to try and make that silk purse, so we must respect the trend and trade from the long side. My advice: remain alert, we are witnessing the greater fool theory in full force. Keep one foot out the door or the market will cut off your legs when it turns.

I have heard a lot of talk about Ben Bernanke's "green shoots" comment in regards to the economy. He points to different economic numbers that have been released over the last 6 weeks as reasons to be optimistic. I was asked about this "green shoots" theory during the interview I gave on The Financial Lifeline Radio show Monday. My question in return:

What does it take to get these "green shoots"?

Answer: A lot of manure.

Enough said about "green shoots" let's make a reality check:

Creditors object to Chrysler deal, setting up fight
NEW YORK (AFP) - - A group of Chrysler creditors objected Monday to the struggling automaker’s bid for a quick restructuring, calling it an illegal bid by the government that violates constitutional property rights. More…

RCM Comment: The government conjures up green shoots by stepping all over the Constitution. Maybe Bernanke was right, yes something is growing, but it's green mushrooms and they are poisonous.

Mike Morgan:

The moratorium on foreclosures lasted five months. That’s over now. And real estate brokers have been warned to expect a tsunami of properties to be listed and sold.

Foreclosures are increasing in the luxury space. Prime borrowers are now losing their houses and these repossessed homes are recorded as sales in the national figures. So, now you have a "green shoot" reported by the press as "increasing home sales". Then (to add a little more manure onto the "green shoot") the press reports the increase in median home sales prices as a positive. Of course, the increase comes from the repossessed luxury homes that are valued at higher prices, but no one in the press bothers to mention that little annoying detail.