It is reasonable to think that smaller new homes could temporarily fill a market glut while US housing pricing correct. Higher interest rates mean higher monthly payments; downward trending pricing should create psychological resistance of consumers to purchase more than they can afford. As this gap narrows the appeal of microhomes from a financial standpoint may drop.

Read more & see a video at ABC News.

“‘This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices,” Roubini said. The decline in investment in the housing sector will exceed the drop in investment when the Nasdaq collapsed in 2000 and 2001, he said. And the impact of the bursting of the bubble will affect every household in America, not just the few people who owned significant shares in technology companies during the dot-com boom, he said. Prices are falling even in the Midwest, which never experienced a bubble, ‘a scary signal’ of how much pain the drop in household wealth could cause.”

Via MarketWatch

“Real estate goes up in spurts, like over the last five years, when the average annual increase was almost 21 percent, according to data from the National Association of Real Estate Investment Trusts and FTSE, a British index publishing company. And so far this year, real estate mutual funds have returned 16.57 percent to investors, reports Morningstar, putting them at the top of the fund research firm’s list. But even when real estate stocks and funds aren’t racing up in price, they tend to pay you in solid dividends that are really rent payments collected by the companies you invested in. Even after the last rip-roaring five years, REITs are paying about 4 percent in dividends, according to their trade association.”

Via Washington Post/Reuters

“Talking on state-run radio on Saturday, Idriss Derby, the president of Chad, asked both the companies to leave the country for refusing to pay taxes: ‘Chad has decided that as of tomorrow (Sunday) Chevron and Petronas must leave Chad because they have refused to pay their taxes.’”

Via AlJazeera

“The company said it would take a charge of $61.3 million, or 19 cents a share, to reflect an increase in the number of its subprime mortgage customers falling behind on their loan payments. H&R Block’s woes will likely extend to other subprime lenders, analysts said, as borrowers with less-than-stellar credit histories struggle to keep up their payments as rates rise.”

Via MSNBC

From Live Options Trader:
“…for a contrarian trader this “stuff” is essential for spotting reversal points. The above are simply sentiment reads and, while admittedly very broad, are very indicative of imminent reversals. I don’t want to beat a dead (actually, not so dead at all!) horse, but look at the Housing sector as an example. Mid-July was the perfect buying opportunity amidst trumpteted horrors of collapsing real estate and falling earnings”

From Notable Calls
“According to the WSJ’s “Ahead of the Tape” column, the housing mkt is deteriorating, but many private-equity firms and hedge funds still see real estate as a game worth playing. For some proprietary-trading desks at investment banks and hedge funds, one of the better guides to that game is a report from Citigroup’s Citigroup Global Markets that came out within the past few weeks highlighting stocks that have substantial real-estate value relative to the total value of their enterprise.”

From Dismally:
“Inflation in Japan is heading a bit higher. But, it wasn’t enough to get the inflation bugs moving into yen (or out of dollars, as may be the case). Instead, traders sold off the currency even though the rate of growth in inflation is pointing higher, as this chart shows…”

From 10Q Detective:
“Although concerns do exist on whether or not AOL can execute on its recently announced ‘free’ web-portal strategy, the double-play of (1) continued growth in advertising revenue [growth exceeded 30% across all advertising product categories in the 2Q:06] and (2) cost-cutting measures [such as marketing scalebacks] are expected to more than offset subscription revenue losses (and the Company has targeted a goal of $1.0 billion in cash flow savings by the FY end of 2007).”

From SeekingAlpha ETF:
“Australia is a commodity-based economy. Because of that there is the expectation that it would have a different economic cycle than in the US. It stands to reason that the stock market cycle would then be different as well. That is why I own the country.”

From Long or Short Capital:
“..the ‘if we make our crappy bankrupt company worse, maybe we won’t lose our overpaid jobs’ tactic never seems to be that effective as part of a ’stay employed’ strategy. They would be much better off if they didn’t strike and just switched their outfits to ones like this. Short Unions.”

From InvestorGeeks:
“It seems that investors and executives involved with Xethanol had as much of a criminal resume as they did business resumes. Many of the people close to the company had been investigated by the SEC in the past. Some had even done jail time. Their business resumes weren’t actually that accurate anyway, as Carey writes that two of Christopher d’Arnaud-Taylor’s (Xenthanol’s chairman and CEO) previous employers “could find no information confirming his employment, in any capacity”.”

From Jeff Matthews Is Not Making This Up
“Who knows what other hidden assets—along with the many well-enumerated hidden liabilities—exist within Ford? After watching Clayton Dubilier (insert euphemism for “steal” here) one of those hidden assets, Hertz, from Bill Ford last December with a mere $2.3 billion equity investment, how many other private equity firms are now lining up behind the scenes to see what else they can (insert euphemism for “steal” here) from the desperate scion of a once-proud family that owns all of 5% of the common shares yet acts as if Ford is their own private employer-of-last-resort?”

From Alchemy of Trading LLC:
“First of all, he gave a tip of the derby to the guy interviewed in Barron’s this week because David Richards is on to this consumer slowdown theme that The Prof has been talking about. So that means retailers, restaurants, and by extension homebuilders are potential meat on the hoof……the only question is where to safely re-load, and since he’s been out of the market for ten days he’ll be looking for bounces/bear flags.”

From Between the Hedges:
“Ben Bernanke’s silence on monetary policy this morning implies the market has it right, in my opinion. I continue to believe there is virtually zero chance of a rate hike at the Sept. meeting and little chance of another hike this year.”

Via MarketWatch

“Investors in Ecuador’s debt are scared by opinion polls showing increasing public support for leftist Rafael Correa, a close friend of Venezuelan President Hugo Chavez. Correa is still in third place in the Ecuadorean presidential race, tied with banana billionaire Alvaro Noboa, who has been gaining as support for the two leading candidates decreases.”

Via Reuters

The question remains how closely commodities prices corolate with real demand verse investment speculation. However, an inflationary monetary environment will surely push prices higher for decades to come.

From IndustryWeek