Good News in Housing, the Dollar

The Case-Shiller price index showed that home prices in the 20 metropolitan areas surveyed were down 15.9% -- a touch better than expected, but still down big. The rate of decline has leveled off, and that is good news. A separate survey is the OFHEO report (Office of Federal Housing Enterprise Oversight); it shows house prices to be down less than 5% year over year, and off a relatively mild 1.4% in the second quarter compared to the first quarter.

The difference is that OFHEO is a broader survey than just 20 markets but includes only those sales attached to mortgages that are eligible for purchase by Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take). It doesn't capture subprime or jumbo loans. Tony Crescenzi of Miller Tabak (and RealMoney) sees the truth as somewhere in between the two reports.

New-home sales were a bit light at 515,000 on an annualized basis, but the number of foreclosed homes for sale would make that market a better bargain for a buyer than that for new homes.

The dollar is stronger, and a report from Germany will do nothing to change the better trend the dollar is in. A thing called the German IFO Institute -- which measures business conditions in Germany, the largest economy in the eurozone -- came in below estimates at the lowest level in three years. A French government spokesman, Luc Chatel, also said the impact of the global slowdown will be more harmful to France next year than this year. On a comparative basis, the U.S. economy is further along its economic path, and the dollar is reflecting that the next move in Europe will be to lower rates, thereby making the dollar more attractive.

There is a report out that Goldman Sachs says a government bailout of Fannie and Freddie would be "entirely manageable." I'm sure it's right, but the question is, what gets bailed out? The common shareholder should, in my opinion, be wiped out if taxpayer money is used to rescue the two companies. You could reason that the preferred shareholder should as well. But JPMorgan (JPM - commentary - Cramer's Take) revealed yesterday that it took a $600 million charge against its holdings of such preferred stock as the market price for the paper has plummeted. JPM can afford it (begrudgingly) but there are a lot of banks that hold this type of paper as part of their capital base, and wiping it out will cause problems the extent of which we may not want to know. This will be tricky.

I'm not a political guy, but regardless of your political affiliation it looks to me like the Clintons are trying to hijack the Democratic National Convention. The selection of Sen. Biden as running mate makes a lot of sense. A seasoned, tough politician, his foreign-policy credentials can't be challenged. But the night he gets to speak, the thunder will be stolen by Bill. Running a film about Sen. Clinton's life before she speaks and before her name is placed in nomination strikes me as the beginning of her 2012 campaign. There is usually a post-convention bounce in the polls. We'll see.

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Vincent Farrell Jr. is chief investment officer for Soleil Securities Group and a regular guest on CNBC and other national print and broadcast media.

Prior to joining Soleil in August 2008, Farrell was a principal of Scotsman Capital Management. Before that, he was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships.

Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.

Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.