Delusion everywhere.

Looks like the bears are back into hibernation for the short term, Europe’s banking fairy tale seems to have gone down well, (let us all ignore Hungary for a while ) and has done the same delusional good work that the US banking fairy tale did.

Lets hope those central banks keep their pedal on the gas a little longer, or it the real truth about the world’s insolvent banking system may actually be revealed.

Equities in the US were up last night on data including housing starts. You can tell that hyperoptimism is running the market at the moment due to the response to the data. There was supposedly a “surge” in sales new homes in the US in June. Although if you read the report from reuters you will realise that this still isn’t good news.

Sales of new US single-family homes rebounded strongly in June from the prior month’s record low, pushing the number of houses on the market to the lowest level in nearly 42 years.

But downward revisions to sales estimates for April and May contained in the report on Monday left in place a picture of a weak housing market and perceptions that economic growth moderated somewhat in the second quarter.

New home sales vaulted 23.6 per cent to a 330,000 unit annual rate, the Commerce Department said. Still, the sales pace last month was the second lowest since records started in 1963.

“We can’t take too much joy in one month’s figure. The roadblocks to a healthy housing market are high, the most important one being the still-high jobless rate,” senior economist at BMO Capital MarketsJennifer Lee said.

You should also note that

new home sales make up just five percent of all sales. And the post-tax credit fall-off in activity has yet to fully show up in existing sales. Total home sales have, therefore, yet to hit rock bottom.

So there was a 23.6% gain from a 36.7% fall in 5% of the market and more bad news on the way. Not exactly positive.

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