Canadian resale housing market continues to recover in April
May 19th 2009, 1:14 pm
#61
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May 19th 2009, 2:52 pm
#62
Born again atheist
Joined: Jul 2005
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Re: Canadian resale housing market continues to recover in April
Who was this guy? Tiger Woods? David Beckham? Roger Federer?
May 19th 2009, 3:05 pm
#64
Born again atheist
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Location: Europe (to be specified).
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Re: Canadian resale housing market continues to recover in April
I am probably going to regret this because I suspect Novo knows a lot more about the oil business than I do, but still ...
The wholesale proce of oil has increased by almost 50% in the last few months. This suggests that the markets think global economic activity is on the up rather than down. I am not convinced that the wholesale price of oil has that much influence on the retail price of gas. However, if you do, then an increase in the retail price of gas does reflect a view than the global economy is ready to recover.
My opinion is that the retail price of gas is a consumer pricing issue: it is set at the lower of what the market will bear, or what maximizes the industry's profits. While some of the demand for gas is price inelastic, some is highly elastic. Prices are pushed upwards until the volume of sales decline. The fact that the price has gone up over 25% in the last few months suggests that people still have disposable income and sufficient confidence in the future to spend it. This confidence can spread to the housing market.
Not exactly scientific proof, I agree, but I don't think jerry's comments are complete tosh.
The wholesale proce of oil has increased by almost 50% in the last few months. This suggests that the markets think global economic activity is on the up rather than down. I am not convinced that the wholesale price of oil has that much influence on the retail price of gas. However, if you do, then an increase in the retail price of gas does reflect a view than the global economy is ready to recover.
My opinion is that the retail price of gas is a consumer pricing issue: it is set at the lower of what the market will bear, or what maximizes the industry's profits. While some of the demand for gas is price inelastic, some is highly elastic. Prices are pushed upwards until the volume of sales decline. The fact that the price has gone up over 25% in the last few months suggests that people still have disposable income and sufficient confidence in the future to spend it. This confidence can spread to the housing market.
Not exactly scientific proof, I agree, but I don't think jerry's comments are complete tosh.
I don't doubt that gas prices are fixed by the cartel to maximize profit, but a connection to (future) property values is tenuous to the point of uselessness.
For example: oil is priced in US$, so a significant factor affecting pump prices in Canada is the $/$ exchange rate; this does not affect Canadian house prices much, if at all.
As someone else mentioned upthread the major factor driving up crude prices last year was speculation as money moved out of property and related financial instruments and poured into oil futures. An anti-correlation here.
Moreover, at any time you'll find just as many "expert economists" saying "black" as you will "white". None of them have the first clue what they're saying when pressed. I've mentioned gaussian copula functions on another thread. If I had any lingering doubts about the abilities of financial gurus before, this sad tale of greed and stupidity put them to rest.
May 19th 2009, 3:07 pm
#65
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Re: Canadian resale housing market continues to recover in April
