Contrarian Indicator

The Big (and Little) Picture

The most bullish housing signal I've seen lately is all the attention paid to Nouriel Roubini (The NY Times, The Wall St. Journal, etc.). Roubini, an economics professor at NYU and "perma-bear" known for his dour forecasts, is rapidly emerging as the guru of this cycle (like Abby Joseph Cohen was to the '90's Bull Market, Henry Blodgett was to Internet stocks, etc.).

Nobody paid attention to him a year ago; now, everyone is. Not quite as good as Newsweek putting the bear market on its cover, but a good sign, nonetheless. (As every good contrarian knows, when everyone holds the same opinion . . it's usually wrong.)

When I work with Buyers and Sellers, "macro stuff" is really just background noise: ultimately, the focus narrows from the direction of interest rates, broad market trends, etc., to at most a handful of homes. Specifically, Sellers what to know the comp's for their home and how it stacks up against them; prospective Buyers want help whittling a list of finalists down to "the one."

That said, I think the key to the broader economy is housing, and the key to housing is the fate of Fannie Mae and Freddie Mac.

I'm going to venture a little way out on a strong limb, and make two predictions: 1) the template for any fix is going to be modeled after the Resolution Trust Corp. (the entity charged with cleaning up after the S&L mess almost 20 years ago), just with more zeroes added; and 2) the clean-up task is going to fall squarely in the lap of the new administration.