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Regular followers of ITR Economics™ know the importance of leading indicators.  We use a variety of leading indicators from many sources, using different methodologies from varying perspectives.  One of these is the Housing Starts 12/12 rate-of-change (please go to our website if you are not familiar with that term, but essentially it is a year-over-year comparison of the annual data trend).  The Housing Starts 12/12 established a tentative high in October 2012.  We have been telling audiences to expect a near-term

The Merriam-Webster Dictionary describes fair as “marked by impartiality and honesty: free from self-interest, prejudice, or favoritism (a very fair person to do business with)”.  It would be hard to describe the new tax policy on high-income individuals as “fair” given facts derived from the IRS.  

I have mentioned at many of my presentations that the Basel III regulations coming would tighten up the global credit markets, raise interest rates, and raise borrowing costs.  There was good news from the Basel Committee today.  They have lowered the capital and liquidity requirements that would have caused banks to restrict lending.

The President and the Congress managed to encompass all scenarios with the Fiscal Cliff Deal that was reached on Wednesday January 2.  Taxes were raised significantly; slight cuts were agreed upon; and the “can was kicked down the road” for two months on more talks on spending cuts.

There will be one dollar in cuts for every forty-one dollars in tax increase.  That is a terrible idea, but it is one we will have to live with - for now.  Today’s fiscal deal in Washington can be undone to some degree by a future Congress (such as the one being seated now). 

There was good news recently about housing price rise in 20 cities.  The national trend is also very encouraging, especially for people who are underwater on their mortgages.  Housing prices through September across the US are up a steeper-than-normal 15.0% since the January 2012 seasonal low.  In the last dozen years, only 2005 (remember the boom year!) was better at 21.2%. 

Don’t be surprised if you see prices decline over the next few months.  A normal September-to-January seasonal weakness in pricing results in a 3.9% price decline.  15.0% higher fo

Despite our best hopes, the “fiscal cliff” drama remains alive and well. It’s important to remember that the magnitude of these decisions don’t allow for easy answers. Truly meaningful change will need to look out 10-20 years in order to adequately put us on sound fiscal footing.

Concerned over the fiscal cliff? Well, that’s probably a given.

The Federal Reserve Board has made the decision to expand its stimulus program.  I know the $45 billion a month sounds familiar, but under Operation Twist, short-term securities were sold and long-term securities in the amount of $45 billion were bought.  The short-term securities are gone, so now the Fed is just going to buy $45 billion in treasuries each month. 

The obvious hope is that it will stimulate the economy.  I don’t believe it will.  Interest rates will stay low, for sure; but will the financial institutions who receive the cash pump that cash in