Economics Update

Remember yesterday, when I said that consumer confidence fell? Well, that was the Conference Board. According to Nielsen, U.S. consumer confidence is up for the first time since 2007, as well as most of the rest of the world.

I think that both organizations conduct reputable surveys, but they got different answers because they asked different questions. This is something that one should consider for any survey.

In the world of slightly more objective metrics, we have durable goods orders rising for the 4^th time in 6 months, which is good news, but New home sales unexpectedly fell.

I'm not sure why new home sales falling was "unexpected". They are recorded when the contract is made, and not when they close, whereas existing home sales are recorded at closing, which means that people who had not bought new homes by the end of August, were really pushing it to qualify for the first time buyer tax credit, which require that the deal be closed by the end of November.

The end of the tax credit is why mortgage applications fell, even though rates fell.

In fact the divergence between new and existing home sales (more later) is a real indicator of how much that tax credit is goosing things.

In the world of central banks, the Norwegian central bank raised its benchmark rate, but the New Zealand bank kept its rate steady.

Of course, there is some apples and oranges here, because Norway raised its rate to 1.5%, and the Kiwis kept their rate steady at 2.5%.

In either case, the markets are not being optimistic, with oil falling below $78/bbl, and the dollar and yen strengthening on a flight to safety.