Housing starts drop, a crackdown on oil price manipulation
Future homeowner Tora Barnes works with NASCAR driver Marcos Ambrose and Habitat For Humanity volunteers to build her new home on April 11, 2012 in Fort Worth, Texas. Housing starts were unexpectedly lower this month.
Jeremy Hobson: There was an unexpected drop last month in housing starts. That’s econ-speak for groundbreaking on new homes. But permits for home construction reached their highest level in three and a half years.
And that’s where we’ll start now with Juli Neimann, she’s an analyst for Smith, Moore & Company. She’s with us live, as always, from St. Louis. Good morning, Juli.
Juli Neimann: Good morning, Jeremy.
Hobson: So is this a bad sign for the housing market, that there was a dip in March or a good sign?
Neimann: No, really, it’s consistent with a very slow recovery but a recovery nonetheless. The economy really doesn’t move in a straight line, there are going to be fits and starts but the evidence is that we’re slowly heating and that’s housing permits going up. We’re at half the pace we need to be healthy but at least it’s the right direction.
Hobson: At least it’s the right direction. And let’s talk about something else that’s happening this morning. President Obama is going to announce some new plans to crack down on oil market manipulation, try to bring down prices. He wants to boost funding for some federal regulators and increase penalties on market manipulators. Tell us, in layman’s terms, what that means and whether it would do anything to bring down prices.
Neimann: Well there has to be a big difference between speculation, which is a good thing -- they provide orderly markets in commodities -- and manipulation. And there is some, there’s using financial instruments with little or no collateral, no disclosure, no regulations, no reporting, and it distorts pricing instead of just supply and demand but the big reason prices are up is that the value of the dollar has plunged over the last ten years.
Ten years ago, oil was at $26 a barrel, now it’s $105. If our currency was stronger, the price would be much lower in dollar terms, but the manipulators, yes they’re out there. And the gurus say, that’s to the tune of about $20 per barrel.
Hobson: Julie Neimann. Analyst with Smith, Moore & Company. Thanks as always.
Neimann: You bet.