The Fed's "Mission Accomplished"

  • A Fed milestone: Existing home prices reach a new all-time high
  • Instant income from the 2015 homebuying boom
  • Apple’s numbers are either great or terrible
  • ISIS as a functioning nation-state — you read it here first
  • A new and long-lasting source of demand for copper… the $10 silver bar saga, continued… reader accuses The 5 of his nearly losing bladder control… and more!

Give the Federal Reserve its due: It’s managed to reinflate the housing bubble. Sort of.
Sales of existing homes have returned to levels last seen in February 2007, says the National Association of Realtors (NAR) this morning.

Heh — we’ll pause to note February 2007 was the first time a big bank booked a loss on subprime mortgage securities and the start of the housing meltdown became apparent to anyone with a pulse.
In any event, existing home sales rose 3.2% in June, on top of a 4.5% jump in May. The year-over-year gain is 9.6%. So, not bad.
A caveat: The National Association of Realtors has a history of fudging this number.

We exposed the scandal in real-time during 2011. The NAR did not use MLS listings as its reference point. Nor did it rely on county courthouse filings. Instead of tangible figures like those, it relied on a statistical model keyed to the 2000 Census, making various assumptions about population growth after 2000.
A few days before Christmas 2011 — a time when presumably no one would notice — the NAR revised its figures going back to 2007. Existing home sales in every year from 2007-2011 turned out to be at least 11% lower than we were first told.
God only knows what they’re doing to generate the numbers now.
But here’s a number that’s harder to fudge (we think). The NAR says the average price of an existing home has reached a new all-time high — $236,400. That surpasses the previous record set in July 2006.
“Part of the rise in prices,” says a Bloomberg summary, “is tied to a lack of distressed sales, at only 8% of June’s total, which is a record low.” Wow, not a lot of foreclosures or short sales there.
“Tight supply is another factor driving up prices, at 5.0 months at the current sales rate versus 5.1 and 5.2 months in May and April and against 5.5 months last June. There were 2.30 million existing homes for sale on the market in June.”
“We’re starting to see first-time home buyers re-entering the market,” says our income specialist Zach Scheidt — eyeing an instant-income opportunity for his premium subscribers recently.
Before the housing market went to hell in 2007-09, first-time buyers usually made up about 40% of the market. By spring of last year, the NAR says that number had sunk to only 27%.
But for the last four months, the number has been at or above 30%. At least a few millennials are doing well enough to keep up with their student loans and move out of Mom’s basement, it seems.
That could be huge, says Zach: “As new families are started, demand for housing leads to construction jobs, along with plenty of ancillary businesses in mortgage servicing, home repair, landscaping, furniture sales and so on.
“The pickup in first-time home purchasers is great news for home construction stocks,” says Zach — “especially those that build homes that are affordable enough for first-time homebuyers.”
A month ago, Zach showed his readers how to take advantage of what he calls the “ultimate retirement loophole” to pocket an easy $225 in five minutes — seizing on the boom in home construction.
He lays out trades like this all the time. So far this month, his premium subscribers have had a chance to collect $1,380 in extra income the same way. He shoots for a minimum $1,000 a month, or $12,000 a year.
Think of what you could do with an extra $12,000 a year in income. Then follow this link to learn how you can collect it.
As Apple goes, so goes the broad stock market. As we write this morning, all the major indexes are in the red except the small-cap Russell 2000.
The Nasdaq Composite is down the most, nearly three-quarters of a percent… because Apple accounts for 12.5% of the index’s value. Apple issued its quarterly numbers after the closing bell yesterday. At first, the media were unsure what to make of them. Here, verbatim, are the alerts that crossed your editor’s iPad…

  • CNBC: “Apple profits, sales just beat analyst expectations”
  • Wall Street Journal: “Apple’s quarterly profit surges 38%, boosted by strong demand for iPhones and robust growth in China”
  • Bloomberg: “Apple iPhone Shipments, Revenue Forecast Miss Estimates.”

The Bloomberg interpretation is the one that most traders went with. AAPL is down 5% as we write.
Gold is losing its tenuous grip on $1,100. At last check, the bid was down to $1,092.
The bulk of that move is outright selling, not so much a function of dollar strength. The dollar index is up only slightly at 97.6.
Green energy will drive new demand for copper in the years ahead, says Byron King of our natural resource team.

As we’ve mentioned before, a typical hybrid or electric car uses two and sometimes three times more copper than a car with an internal-combustion engine. What’s more, each megawatt of wind power requires an average 3.6 metric tons of copper. And a typical electric trolley, bus or subway car needs 2,300 pounds of copper.
“This is huge change from just a few years ago,” says Byron, “and it’s come at a critical time. According to the International Energy Agency, 1.3 billion people, or 18% of the world’s population, still don’t have electrical power in their homes. That’s slowly changing, so by recent standards, we’d expect roughly 18% growth in copper demand in the years ahead.
“Now the growth curve is accelerating. Instead of growing by 18% as the world electrifies, we expect to see copper growth out of proportion to new electric demand, thanks to the hyperintense copper demand of the new ‘green’ technologies that will help close the global electricity gap.”
[Ed. note: Byron is among an all-star lineup speaking next week at the Sprott-Stansberry Natural Resources Symposium. Eric Sprott, Doug Casey and Adrian Day will be there too. Our own Jim Rickards is a late add to the lineup, which also includes Chris Mayer. And Agora Inc. founder Bill Bonner will no doubt deliver a lively talk.
Maybe you can’t make it to Vancouver to see the event in person starting next Tuesday… but you can still see every session in real-time. That’s right, live streaming is available. It’s your exclusive pass to this event — as it happens. Click here for access.]
We couldn’t help but chuckle, if grimly, at this New York Times headline: “ISIS Transforming Into Functioning State That Uses Terror as Tool.”
You learned as much in The 5 more than a year ago. On June 13, 2014 — days after ISIS first burst into the headlines — we cited the work of reporters who’ve actually taken the trouble to go to Iraq since U.S. troops withdrew at the end of 2011: “ISIS is in the process of forming the world’s newest nation-state,” we wrote — “erasing the bogus border between Iraq and Syria drawn by the British and French nearly a century ago.”
The Times story yesterday — datelined Istanbul, Turkey — adds a bit of color: Unlike the kleptocrats in Baghdad and Damascus, ISIS is resistant to bribes: “You can travel from Raqqa to Mosul,” a resident of Raqqa, Syria, tells the paper, “and no one will dare to stop you even if you carry $1 million. No one would dare to take even one dollar.”
This is remarkable, if you think about it: You can travel with large sums of cash in eastern Syria and western Iraq and stand less chance of being shaken down by highwaymen in uniform than you do on a typical U.S. Interstate.
“I can’t let this 10-ounce silver bar thing just go away,” a reader writes — proving once again we never know in advance when a topic gets “legs” in our virtual mailbag.
“Mark Dice recently tried to give one away. In this YouTube video, he offers folks on the street either a cold Hershey bar or a 10-ounce silver bar, no charge for either one. No one takes the silver. In this case, the only loss one might experience from choosing the silver (if it were not real) would be the cost of a Hershey bar. One lady questions whether the bar is real — the Hershey bar, that is!”
“The reader in yesterday’s 5 makes a good point about not being able to tell a good silver ingot from a bad one,” reads another email.
“I don’t know if it will work with a silver ingot or not — I think that it should — but the quick-and-dirty way that I can tell if a silver coin is good or not is to drop it on a hard surface and listen to it. If it rings like a bell, then I can feel reasonably sure that the coin is genuine, but if all I hear is a thud sound, then it’s not real silver.”
“I disagree with your reader’s assessment of why no one was buying,” says a third. “I’m very aware of its value, but I would not have stopped.
“I, like most Americans, am skeptical of anyone selling stuff on the street, sales people on the phone, emails for ‘great deals,’ ‘donation’ requests over phone or email, etc. Con artists are bombarding us from every direction, every day. I would assume his silver bars were fake and avoid him/them!”
“The guy hawking the silver bar was standing right in front of a coin store,” says a fourth. “It would take maybe a heartbeat, a heartbeat and a half, to evaluate the bar.
“I started in with this bullion game when the joke was, ‘Sixty-four Kennedy halves are worth 32 bucks!’ Doug Casey was still in short pants. :-)”
“I almost peed my pants — well, actually, shorts, because it’s very warm here in Toronto,” writes our final correspondent.
“It was when you stated the ATM withdrawals in Greece were no longer limited to 60 euros a day. Now they can take out 60 euros a day for seven days.
“Either way you look at it, it’s still the same. Well, I know you already knew that and were just testing us readers. Keep up the good work! Love reading this every day.”
The 5: This is surely a 5 first — a reader attributing borderline incontinence to our daily missives.
It’s a weighty responsibility we shoulder here…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Just in: Zach Scheidt has issued another trade alert for his premium subscribers — showing them how to pull in another $280 in income today.
So his total for the month of July is $1,660 — well above the $1,000-a-month target he sets for his readers. And we still have seven trading days left in July.
You can collect these payouts — hundreds of dollars at a time — in less than two minutes. It’s that easy. See for yourself, right here.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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