Recent research
by Robert Shiller indicates sounding the all-clear for a housing
recovery is premature since the home-price rebound, if that's what it
is, doesn't yet have momentum - which is the most powerful driver of
home prices. As he notes in today's WSJ, momentum is a modestly weak force in the stock market but the most important driver of the 'feedback loop' in home-price increases (followed by unemployment).
"It could be a bottom, I just don't know", he adds pointing to the
large overhang of homes that are either in foreclosure of near it -
which would push prices down further if they were ever released to the
market (wanting to see momentum carry into the Spring to be convinced).
Critically, he sees bubbles once again forming in some areas, commenting
that investors have been "primed to think speculatively" adding that "There was a change in our mindset. Now we start thinking about the housing market as like the stock market."
Our question is, if the increasingly speculative housing market is part
of the CPI basket, why then is the stock market not also part of what
is now an inflationary basket chock full of QE-sensitive assets.
http://www.zerohedge.com/news/robert-shiller-has-chiller-housing-recovery-hopes
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