Weekend Weimer and Beagle

The markets are now closed. Think about anything except the markets or the economy. To that end...

Fed In Congressional Crosshairs

From the WSJ:

For the past 18 months Federal Reserve officials have been fighting off storms in financial markets – now they’ve got a storm brewing in Congress that they’re going to have to direct their attention to fighting.

The Senate on Thursday passed a resolution that put it in the line of fire of lawmakers who want to shake up the Fed’s regional bank system. In a nonbinding resolution that passed 96-2, the Senate called for “an evaluation of the appropriate number and the associated costs of Federal reserve banks.”

A nonbinding resolution is a long way from becoming law. But it’s a clear signal to the Fed that it is headed for increased scrutiny on Capitol Hill. (It was also striking that Nancy Pelosi, speaker of the House, last month held Fed Chairman Ben Bernanke out as partly to blame for the troubles at American International Group Inc.)

And then there is this:

In another warning shot at the Federal Reserve about its disclosure practices, the Senate Thursday called on the central bank to reveal the names of institutions that receive its loans and what they’re doing with the money.

The Senate’s nonbinding resolution, which doesn’t have the force of law, was a sign of mounting mistrust in Washington about the course of government rescue programs and the Fed’s role in them. It passed 59-39, a strong show of support.

Lawmakers are likely to keep pushing the central bank to disclose more about the firms receiving Fed as part of its vast financial rescue efforts. Though a resolution doesn’t have the force of law, it could become attached to legislation at a later date.

Let's take these one at a time.

As the first article notes, the Federal Reserve banking system has not been revised since its inception -- we are still using the same district system established at least 70 years ago. I'm guessing there have been noticeable changes since then which are not reflected in the Fed district maps.

However, the second issue is trickier. When a bank goes to the Fed it's usually because they can't get any help from other banks in the short term loan market. That means the Fed is the lender of last resort. The bank asking for help may want to keep things quiet so they can fix their problem without causing a banking panic. At the same time, the public -- and more importantly individual account holders -- may want to know the bank is in trouble so they can pull their money out. In other words, it's a far trickier proposition.

About The Factory Order's Number

From the Census Bureau:

New orders for manufactured goods in February, up following six consecutive monthly decreases, increased $6.1 billion or 1.8 percent to $352.2 billion, the U.S. Census Bureau reported today. This followed a 3.5 percent January decrease. Excluding transportation, new orders increased 1.6 percent. Shipments, down seven consecutive months, decreased $0.4 billion or 0.1 percent to $365.9 billion. This was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992 and followed a 2.6 percent January decrease. Unfilled orders, down five consecutive months, decreased $10.7 billion or 1.4 percent to $773.2 billion. This was the longest streak of consecutive monthly decreases since September 2002-January 2003. This followed a 2.0 percent January decrease. The unfilled orders-to-shipments ratio was 5.98, down from 6.07 in January. Inventories, down six consecutive months, decreased $6.2 billion or 1.2 percent to $529.7 billion. This also was the longest streak of consecutive monthly decreases since March 2003-January 2004 and followed a 1.1 percent January decrease. The inventories-to-shipments ratio was 1.45, down from 1.46 in January.

Why is everybody thrilled by this number? The primary trend of all these data points is down:

New orders were down the last 6 months before the latest increase

Shipments were down 7 consecutive months

Unfilled orders were down 5 consecutive months

In other words -- the primary trend is lower. The latest data points are counter-trend.

Forex Fridays

The weekly chart tells us the dollar has formed a double top. First, note the obvious price action. However, also note that the second top had a lower RSI than the first, indicating the second top was far less powerful price than the first top. Also note the same is true with the MACD -- which is also declining. Also note that prices tried to rally through the 20 week SMA but could not make it.


On the daily chart:

-- The 10 and 20 week SMA have moved through the 50 week SMA, although the 10 week SMA is moving higher

-- The 20 week SMA is still moving lower

-- The RSI is weakening

-- The MACD is moving lower

Today's Markets

Today's action sure looks like a spinning top to me...,

Consumer Delinquencies Hit High

From CNBC:

More U.S. consumers have fallen behind on loan payments than ever before, and the problem may worsen as millions more find themselves out of a job, a study released Thursday shows.

According to the American Bankers Association, which represents most large U.S. banks and credit card companies, the percentage of consumer loans at least 30 days late rose to a seasonally-adjusted 3.22 percent in the October-to-December period from 2.9 percent in the prior quarter.

The ABA said the fourth-quarter rate was the highest since it began tracking the data in 1974, with delinquencies rising in nearly every category. It said these credit trends are unlikely to improve before 2010. Many consider the deep recession the worst since the Great Depression of the 1930s

"Job losses have really hurt the economy and will continue to inflict pain for several months," James Chessen, the ABA's chief economist, said in an interview. "The greater the losses are, the more severe an impact it has on all credit markets."

The ABA study covers direct auto, indirect auto, closed-end home equity, home improvement, marine, mobile home, personal, and recreational vehicle loans. It excludes bank credit card and education loans.

Consider that information with this data from the FDIC's Quarterly Banking Profile:

A Closer Look At the ISM Data

Here is a link to the report:

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The rapid decline in manufacturing appears to have moderated somewhat, as the PMI remains in the mid-30s for a third consecutive month. While the PMI is slightly higher in March, the New Orders Index offers greater encouragement, as it rose above the 40-percent mark for the first time in seven months. The Production Index showed no benefit as yet from the improvement in new orders, as it continued to decline at a rate similar to March. The rate of decline in the Employment Index slowed slightly, and the same held true for the Prices Index. A special question was asked with regard to the Economic Stimulus Package, and five of the 18 manufacturing industries expect to derive some benefit from the stimulus." (See Special Questions section at the end of this release.)

So -- the bottom line is things might be moderating. The index is in the mid-30s for the third consecutive month. While there is no hard and fast rule about how many data points are required for a trend to exist, three points in the same area is obviously better than 1.

Let's look a bit deeper in the data.

* "We remain challenged to align our capacities with demand." (Nonmetallic Mineral Products)
* "Most of the international markets have been reducing inventory levels and they are forecasting improvements in the next 4 to 6 months." (Chemical Products)
*
* "Many pockets of improvement." (Electrical Equipment, Appliances & Components) "Still very slow. No stimulus package for manufacturing. Down 30 percent." (Fabricated Metal Products)
* "What we are feeling now is that customers aren't making their final payments on equipment that has already been shipped." (Machinery)

Anecdotal information provides a mixed bag of data. Some parts are challenged, but some are seeing "many pockets of improvement." While this is hardly a data series to hang your hat on as it were, there are bits of good news.

And then there is this:

New orders index

Mar 2009 41.2
Feb 2009 33.1
Jan 2009 33.2
Dec 2008 23.1

The index is increasing which is a very positive sign as it indicates buyers are starting to rev up their engines. Again I want to caution, this is only three months of data so we are hardly out of the woods. And the last month was not good as 6 showed increased but 10 showed decreases. But I also think calling this trend encouraging is warranted.

And then there is this:

Overall production index

Mar 2009 36.4
Feb 2009 36.3
Jan 2009 32.1
Dec 2008 26.3

This has also been growing over the last three months. However, the same caveats apply to this number as the new orders number. In the latest report only two industries showed an increase in production while 12 showed a decrease

Overall things are still depressed. But the new orders and production trends over the last 4 months are encouraging.

Can the Bull Market Continue?

From Marketwatch:

To me, the recent rally looks dangerously similar to each of the previous bear-market rallies that have failed over the past year. At the beginning of March, few people believed a rally was possible. It seemed everyone was convinced the S&P 500 was headed for 600 or worse. With stocks 20% higher and economic data that is "less bad," the media seems dominated by those expecting a new bull market driven by a second-half recovery.

Perhaps the market has seen the lows and a cyclical bull market can continue. Yet to endorse this view, investors must make the aggressive assumption that actions by the country's leadership have solved the financial and economic crisis such that this heavily indebted economy can return to growth later this year.

For example, the Treasury's public-private investment plan to buy up to $1 trillion in bad assets leaves critical questions unanswered, including what price will be offered for the assets and whether the banks will be willing to sell at that price.

Most disturbing, the plan relies on more debt to solve a debt-induced problem, akin to solving a drinking problem by ordering another round. Fundamental problems remain, including weak bank balance sheets, too much debt, and too little capital.

The bull case lies in the growing confidence that trillions of monetary and fiscal stimulus dollars will gain traction. The Fed and other central banks around the world are pulling out all the stops, keeping interest rates low and buying mortgage-backed and Treasury securities.

This is an interesting article that gets to the heart of the current rally: can the plans of the government as envisioned and implemented work? Ultimately the plans boil down to standard Keynsian economics; when the economy slows the government can provide the missing demand stimulus through macro-level spending. However, this will probably involved the issuing of more government debt, which seems counter-intuitive in a recession.

I should note that I endorsed the stimulus plan in an article back in January. My logic was straightforward. GDP is comprised of 4 elements: personal consumption expenditures, gross investment, exports and government spending. Three of these numbers -- PCEs, investment and exports are in negative territory. From a practical standpoint that leaves government spending to make-up the slack. It's that simple.

However, there are big problems associated with that idea as well -- namely, the issuance of a mammoth amount of debt to pay for the increased spending. Consider the following debt totals from the Bureau of Public Debt:

09/30/2008	$10,024,724,896,912.49
09/30/2007	$9,007,653,372,262.48
09/30/2006	$8,506,973,899,215.23
09/30/2005	$7,932,709,661,723.50
09/30/2004	$7,379,052,696,330.32
09/30/2003	$6,783,231,062,743.62
09/30/2002	$6,228,235,965,597.16
09/30/2001	$5,807,463,412,200.06
09/30/2000	$5,674,178,209,886.86

The current total is over $11.1 trillion.

All of this debt has to go somewhere -- it can't simply exist in a vacuum. Therefore, asking the question of "where will all this debt go" is the key to the current rally. Assuming there are buyers we're fine. When people stop buying, we've got problems.

Thursday Oil Market Round-Up

Click on all images for a larger image


Notice the following on the weekly chart:

-- The MACD is rising and has given a buy signal

-- The RSI is rising

-- Prices have broken through the top line of a triangle consolidation pattern

-- Prices are above the 10 and 20 week SMAs




The chart above shows a much clearer version of the triangle consolidation that occurred over the last few months along with the price break out. Also not the MACD has been rising for the last 5 months -- although it just gave a sell signal. The RSI has also been rising but has been dropping as well. Prices have fallen to the 20 day SMA which is providing technical support right now.

The fundamental picture for oil became incredibly cloudy with the GM situation. A GM bankruptcy -- even a controlled one -- would be a big problem for the economy as a whole and oil demand in particular. Until that situation is resolved resolved in a satisfactory manner I think the oil market will come under pressure.

Today's Markets

Click for a larger image

After hitting a peak a few days ago the market has been in sell-off mode. Right now it is looking for technical support, which it has found at two locations. The first was 38.2% Fibonacci line. The second was the 50 day SMA which prices used today.



The chart above shows that prices have numerous technical support levels going forward.

ISM At Lowest Reading in 30 Years

From the Chicago Tribune:

A closely followed measure of Chicago-area manufacturing and commercial activity fell in March to its lowest reading in nearly three decades, an industry trade group reported Tuesday.

Economists had expected the index compiled by the Institute for Supply Management-Chicago to inch upward to 34.5 from February's weak 34.2. Instead, the index, often referred to as the Chicago PMI, tumbled to 31.4, its worst reading since July 1980.

Under the format used by the ISM-Chicago, a reading above 50 indicates manufacturing is expanding, while a below-50 reading means it is contracting.

And the hits just keep coming....

Can the Bull Market Continue?

From Marketwatch:

To me, the recent rally looks dangerously similar to each of the previous bear-market rallies that have failed over the past year. At the beginning of March, few people believed a rally was possible. It seemed everyone was convinced the S&P 500 was headed for 600 or worse. With stocks 20% higher and economic data that is "less bad," the media seems dominated by those expecting a new bull market driven by a second-half recovery.

Perhaps the market has seen the lows and a cyclical bull market can continue. Yet to endorse this view, investors must make the aggressive assumption that actions by the country's leadership have solved the financial and economic crisis such that this heavily indebted economy can return to growth later this year.

For example, the Treasury's public-private investment plan to buy up to $1 trillion in bad assets leaves critical questions unanswered, including what price will be offered for the assets and whether the banks will be willing to sell at that price.

Most disturbing, the plan relies on more debt to solve a debt-induced problem, akin to solving a drinking problem by ordering another round. Fundamental problems remain, including weak bank balance sheets, too much debt, and too little capital.

The bull case lies in the growing confidence that trillions of monetary and fiscal stimulus dollars will gain traction. The Fed and other central banks around the world are pulling out all the stops, keeping interest rates low and buying mortgage-backed and Treasury securities.

This is an interesting article that gets to the heart of the current rally: can the plans of the government as envisioned and implemented work? Ultimately the plans boil down to standard Keynsian economics; when the economy slows the government can provide the missing demand stimulus through macro-level spending. However, this will probably involved the issuing of more government debt, which seems counter-intuitive in a recession.

I should note that I endorsed the stimulus plan in an article back in January. My logic was straightforward. GDP is comprised of 4 elements: personal consumption expenditures, gross investment, exports and government spending. Three of these numbers -- PCEs, investment and exports are in negative territory. From a practical standpoint that leaves government spending to make-up the slack. It's that simple.

However, there are big problems associated with that idea as well -- namely, the issuance of a mammoth amount of debt to pay for the increased spending. Consider the following debt totals from the Bureau of Public Debt:

09/30/2008	$10,024,724,896,912.49
09/30/2007	$9,007,653,372,262.48
09/30/2006	$8,506,973,899,215.23
09/30/2005	$7,932,709,661,723.50
09/30/2004	$7,379,052,696,330.32
09/30/2003	$6,783,231,062,743.62
09/30/2002	$6,228,235,965,597.16
09/30/2001	$5,807,463,412,200.06
09/30/2000	$5,674,178,209,886.86

The current total is over $11.1 trillion.

All of this debt has to go somewhere -- it can't simply exist in a vacuum. Therefore, asking the question of "where will all this debt go" is the key to the current rally. Assuming there are buyers we're fine. When people stop buying, we've got problems.

Consumer Sentiment Drops, But a Silver Lining?

From IBD:

The Conference Board's Consumer Confidence Index edged up 0.7 point in March to 26 from February's 25.3, the lowest since records began in 1967. About half of respondents say business and job conditions are poor. Homebuying plans sank to a 26-year-low.

But consider these charts from Pollster.com





Do the above two polls indicate we'll start to see consumer sentiment and confidence start to rebound?

Wednesday Commodities Round-Up

Click on all images for a larger image


Notice the following on the industrial metals charts

-- The MACD is rising and has given a buy signal

-- The RSI is rising

-- Prices have been in a downward sloping consolidation pattern since the end of 2007

-- Prices and the SMAs are in a tight range, indicating indecision



Notice the following on the agricultural price chart:

-- the MACD is rising and has given a buy signal

-- The RSI is rising

-- Prices are in a triangle consolidation pattern that started at the end of last year

-- Prices and the SMAs are in a tight trading range

Bottom line: commodities have clearly broken their price spike from last year and are currently consolidating the sell-off. However, prices have not dropped farther, indicating we are probably developing a price floor. From a fundamental perspective, it's important to remember we're still in the middle of a recession which is depressing overall demand.

Today's Markets

On the two day chart, notice there are two upward sloping trend lines, which prices broke at the end of the day today. Also note that prices moved through the 200 day SMA and the shorter SMAs are moving lower. Finally, look at the heavy volume at the end of the trading day traders were definitely looking to get out.



Pulling the camera back, notice there was a big gap down on Monday at the open, caused by the GM situation. Prices formed a downward sloping channel for the entire trading day yesterday, rebounded a bit today with a gap up but then fell through all the upward sloping support lines mentioned above.



On the daily chart, notice that prices are moving up the 38.2% Fibonacci level.

We're Nowhere Near a Bottom in Housing

From Bloomberg:

Home prices in 20 U.S. cities fell 19 percent in January from a year earlier, the fastest drop on record, as demand plummeted and foreclosures rose.

The S&P/Case-Shiller index’s decrease was more than forecast and compares with an 18.6 percent decrease in December. The gauge has fallen every month since January 2007, and year- over-year records began in 2001.

A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Still, sales of new and previously owned homes rose in February, indicating the housing slump, now in its fourth year, may ease as policy efforts to unclog credit and aid borrowers begin to take hold.

“At this point it doesn’t look great for the near term,” Robert Shiller, chief economist at MacroMarkets LLC and a co- creator of the home price index, said today in a Bloomberg Radio interview. Still, he said, prices “can’t keep declining at this rate forever.”

In order for housing to bottom, we need to see prices drop in the 3%-5% year over year range. That's when we'll know the decline in housing is ending. Until that time, we're nowhere near a bottom in housing.

MZM/M2 Post

Some things just can't be resisted -- such as using Pink Floyd's money to begin a discussion about money supply (note two things about the track. First, the main riff is in 7/4 which is a metrical oddity for pop music, and David Gilmour's always great guitar playing.)

This post will be discussing MZM which is:

A measure of the liquid money supply within an economy. MZM represents all money in M2 less the time deposits, plus all money market funds.

.....

MZM has become one of the preferred measures of money supply because it better represents money readily available within the economy for spending and consumption. This measurement derives its name from its mixture of all the liquid and zero maturity money found within the three "M's."

In essence, what we're looking for is money that we can spend right now if we wanted to. First here's a chart of the absolute liquid amount of money in the system:


Click for a larger image

Note that the Federal Reserve has been pumping money into the system in order to stimulate demand. Notice this did not happen in the recessions of the early 1980s because the Fed was raising interest rates at that time. However, the Fed did pump liquidity into the system in the last recession (2001) as they are now.

Here is a chart of the year over year rate of change:



We are seeing a positive rate of year over year growth between 10% and say 16%. However, note the rate of year over year change that occurred in this recession compared to the last recession and you see a major difference. The last recession saw an increase in the year over year rate of increase in MZM whereas this recession is seeing a more controlled year over year rate of change. Interesting, to say the least.

But the tale becomes more interesting here:


This is a graph of the year over year change in M2, which is:

A category within the money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds.

M1 is

A category of the money supply that includes all physical money such as coins and currency; it also includes demand deposits, which are checking accounts, and Negotiable Order of Withdrawal (NOW) Accounts.

First, notice the year over year increase in M2 -- which is spiking to around 10%. But let's ask ourselves why that is happening. Liquid money as represented by MZM is showing a year over year increase, but not at the same rate as we have seen in previous recessions. That means non-currency money is probably the primary reason for the increase in M2. And when we look at the spike in savings:


We get our probable answer as to what is causing the spike in M2 -- people putting money into demand deposits.

Let's ask ourselves a final question: will people spend this money or will they keep it in their accounts as a financial cushion? The answer is extremely important from an inflationary perspective. If the money is more prone to stay put then it will not add as much inflationary pressure or growth. If people are going to rush out and blow it then we'll have an increase in MZM, which will increase monetary velocity and thereby inflation and overall growth.

Bottom line: we don't know the answer to the preceding question. There has been a tremendous amount of wealth destruction over the last 6 quarters which would indicate people are more inclined to keep the money where it is. However, we've also seen weak personal consumption expenditures over the last two quarters indicating there might be some pent-up demand that will kick in when people feel a bit more confident in spending.

In other words -- we get to wait and see. What fun.

Treasury Tuesdays

The main issue in the Treasury market right now is the Fed's purchase of Treasury debt. That has placed a de facto floor underneath Treasury prices for the foreseeable future. The long bar (you can't miss it on this chart) occurred when the Treasury announced the plan. Since that announcement, prices have sold off to the 10 day SMA but are now using the 10 day SMA as technical support. In addition, the 10 day SMA has crossed over the 50 day SMA and the 20 day SMA has also crossed over the 50 day SMA.

It's important to remember that SMAs are coincidental indicators, meaning they occur at the same time as the event they are describing. If you want a moving average that is more predictive -- or at least more important relative to the current prices, use the exponential moving average:


Notice that on the EMA chart, the 10 and 20 day EMAs have already moved through the 50 day EMAs.

Today's Markets

Click on the image for a larger image.

The market sold-off today on news of GM's president being fired and amid concern that an auto bail-out was not on the way. However, notice there are still plenty of support levels below current levels. In addition, a sell-off was inevitable. What we need to watch for now is what happens when prices hit various support levels.

A Sucker is Born Every Minute

From the WSJ:

Some investors haven't quite given up the ghost of "decoupling," the notion that emerging markets can ignore recessions in developed economies. Yes, growth rates in China, India and Brazil likely will outpace those in the U.S., Europe and Japan this year. And emerging-market banks largely have avoided contagion by the West's toxic assets.

That's right -- countries that extract raw materials don't need to sell those materials to anybody who then develop then into products which are sold in the developed world. That's just a figment of my imagination.....

Mortgage Delinquencies Continue to Rise

From the WSJ:

Defaults on home mortgages insured by the Federal Housing Administration in February increased from a year earlier.

A spokesman for the FHA said 7.5% of FHA loans were "seriously delinquent" at the end of February, up from 6.2% a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy.

Since the collapse of the subprime mortgage market in 2007, most home loans for people who can't afford a sizable down payment are flowing to the FHA. The agency, which is part of the U.S. Department of Housing and Urban Development, insures mortgage lenders against the risk of defaults on home mortgages that meet its standards. FHA-insured loans are available on loans with down payments as small as 3.5% of the home's value.

The FHA's share of the U.S. mortgage market soared to nearly a third of loans originated in last year's fourth quarter from about 2% in 2006 as a whole, according to Inside Mortgage Finance, a trade publication. That is increasing the risk to taxpayers if the FHA's reserves prove inadequate to cover default losses.

Let's coordinate this data with the following charts from the FDIC:

The non-current rate has increased for the last two years. The chart indicates the trend is solidly up.

Credit quality of residential mortgage loans has continually decreased


And the non-current rates on loans on 1-4 residential properties has been increasing as well.

Market Monday's

Click on the above image for a larger image

Let's take the last few year's price action apart in order to place the current rally in perspective.

1.) The market has been in a confirmed downtrend since the beginning of 2008. Since that time it has rallied 4 times -- March - mid-May, early July to the end of August, November to January 2009 and the current rally which started in March of this year. All the rallies formed upward sloping triangles, sometimes referred to as wedges.

2.) The first rally ran into upside resistance at the 200 day SMA while the others ran into resistance at or just beyond the 50 day SMA. Currently, prices are at or near similar areas around the 50 day SMA

3.) The rallies have varied in strength from (roughly) 8.3% t0 25%. The current rally is over 20%, but is still below the bigger gain of the November-January rally


Notice the following on the 6 month chart:

-- Prices have moved though the downward sloping trend line that connected several points

-- Prices have moved through several previous lows

-- The 10 day SMA has moved through the 50 day SMA

-- The 20 day SMA has now turned positive

-- In other words, there are now several important technical areas of support for prices should they fall


Above is a chart that shows more of the support areas in the event of a pullback.

Who Will Borrow?

From IBD:

The Treasury and the Federal Reserve are throwing trillions of dollars at financial firms to prod them to lend more. But even if those programs succeed, debt-strapped families probably won't want to borrow hand over fist.

This is the key question to ask regarding the credit crisis: once banks are back on their feet, who will take out loans.

Let's start with this:

Consumers are saving more to make up for a 20% drop in the median U.S. home price and a nearly 50% decline in stock prices from their peaks.

Since the second quarter of 2007, households have seen their net worth drop from $64.361 trillion to $51.476 in the 4Q08. This is a drop of 20%. Most importantly, the two most important asset classes are -- stocks and houses -- are falling. In other words, there is no place to hide.

In addition there is already a ton of household debt in the system. Total household debt in 4Q08 stood at $13.8 trillion while total GDP stood at $14.2 trillion. In other words, there as nearly as much household debt as there was GDP.

As a result of all the debt and drop in two primary assets, households are saving more:



What will change this behavior from an increase in savings to an increase in spending? I'm not sure. There are some who are arguing that we are moving into a "return to frugality" where consumers can't be counted on to provide 70% of GDP growth, I think this is entirely possible. However, if the following happens this "return to frugality" could be thwarted:

1.) Meaningful job growth returns for an "extended" period of time. My meaningful, I'm thinking at least 125,000 for 4-6 months.,

2.) There is meaningful increase in incomes.

3.) Stocks return to profitability.

4.) Real estate starts to steady.