Homebuilders have bounced %20-%30 since their lows…Indexes are sluggish but what an incredible recovery for these homebuilders…Citigroup seems like a slow bleed still but I knew those homebuilders would squeeze…
Mike tell me you didn’t short them please…
Not yet, but I’m watching them. I don’t for a minute believe we’ve already hit the bottom. I think the Fed is in one heck of a mess. The economy is teetering and inflation is starting to fly. They couldn’t fix this mess even if they wanted to - which I don’t believe they do.
I’ve been doing a lot of studying lately about central banks and fiat money. EVERY time it’s been done there has been a smoking crater. I think that’s about where we are now. The consumer is toast and the dollar is tumbling. I keep hearing that somehow “things are different this time”, but I don’t believe it. NOT FOR A MINUTE!
Mike
Still a ton more ARM readjustments coming down the pike.
Talk about toxicity…homebuilders are still gonna get crushed, (in my opinion).
-Mike
There is little doubt that the fed is running out of bullets…As for the dollar believe it or not we are starting slowly to pair into the long side…Slowly covering long term short positions and reversing…We believe the fed after this next bout of rate cuts will start to aggressively raise after summer…Oil is weighing on things as well…As it is we are looking at $4+ gas for summer driving season…He can’t keep lowering and kill the economy at the same time…Something has to give and we are betting on it for a multi-year trade…The Euro hit 1.50 yesterday…
Homebuilders…As a trading standpoint I wouldn’t touch the short side of homebuilders,short side money has been made and reinvested already…There are much better shorts to be had than deeply oversold cyclical stocks…I guess I’ve been caught in one too many short squeezes and I’m just injecting my opinion…Dont take it personal…
The thing I find amazing about this economy is the thought that a $600 check is going to save us???
They pulled this trick out of the hat in 2001 after 911, they assume the refunds were responsible for that rebound we had.
The flaw in that thinking is in 2001 the median home price in this country was
$150,000!!! At the peak (2005) it was $265,000.
The rebates we received in 2001 had NOTHING to do with the country pulling out of the 2001 911 inflicted recession. Greenspan was pulling the plug on interest rates because of the dot com bust. The DIFFERENCE
then is we HAD NOT experienced a historic run up in real estate prices like we have now.
This time around things are a lot different. The 2001 recession was caused by a single event (911) This recession is caused by RECKLESS overspending by consumers, RECKLESS LENDING by banks, and NOW we will all pay for it.
A few other differences from 2001???
2001 OIL…$17.50 A BARREL :shocked :shocked :shocked
2001 GOLD…$250/oz :shocked
The U.S. Dollar Index in 2001…1.20
The U.S. Dollar Index in 2008… .75
I’m not even going to get into the credit markets because they’re so screwed up NO ONE knows what ANYTHING is worth.
This mess took a LONG time to create, and it’s going to take a LONG time for markets to correct it.
The home builders are not even close to their ultimate lows in my opinion. Until we see some of them go bankrupt this ain’t over.
They may go down more but I would bet they have seen their lows…I’d be more willing to look for new shorts that are overbought,not shorting something that is oversold…What do I know anyway…Markets can drive anyone crazy…
Bernanke this morning on Capital Hill…
“Things are very different today than they were in 2001 during the last recession.”
Ya think?
So does “the last recession” mean they are admitting that we’re in a recession?
If you don’t have a job it is always a recession. If you have a job (even in a recession) then you are not in a recession you are just scared.
You lost me on that one bluemoon - was that directed at anyone, or was that a just a random blurb of nothing?
It is about our concern about recession. My question is what the heck does recession mean to me. Recession is just the economist’s term for where the economy is. The media, needing a car wreck to report about, picks it up and we all get scared. It means absolutely nothing to you and me. If during the boom times of the 1990’s if you didn’t have a job then your family was in a recession. During the depression of the 1930’s if you have a job then you were not in the depression you were just scared looking out from you island of prosperity on the sea of despair.
Oil is surging today…as of right now its up $2.58 per barrel to $102.20…Insane…T Boone Pickens (famed commodities trader with a knack for being right) says $150 per barrel in 2 years…That would make gas $6 per gallon and diesel $7 per gallon…Virtually every material good will also get fuel tax of %50…Good ole Bernanke,keep lowering those rates and strangle every living human on this planet…
Soon the jobs Bluemoon speaks of will feel the recession/depression if this keeps up…Every industry is somehow tied to Oil…Whether its through fuel or goods supplied…
If anyone has time google Jim Rogers…This is a billionaire hedge fund commodities trader who is one of the few screaming for Bernanke to reverse course and raise rates…This situation is only compounding the equity/credit markets…Bernanke will undoubtedly be replaced upon a new administration being elected…
Jim Rogers called the commodity boom 8 years ago and has riden it ever since.
He’s a genius.
Want to read what Jim thinks is going to happen to Real Estate???
Reuters: Top investor warns of U.S. property CRASH
www.reuters.com Use the headline in the search
Sounds to me like Jmmy is predicting a world wide financial disaster.
People LAUGHED at this guy 8 years ago when he predicted $100/barrel oil!!
At the time oil was trading at about $17/barrel :shocked
This guy is NO JOKE, he started the Quantum Fund with George Soros in the 1970’s and made billions for his investors.
In a recent Fortune article he warned investors about jumping on the HOMEBUILDERS stocks. He said that in every past cycle the home builders always have a few big players go bankrupt before the bottom is REALLY in. He also said that these “clean outs” usually take 3 to 4 years. In his eyes U.S. home builders still have a long way to fall.
Oh…one last Jim Rogers thought…according to him, The U.S. IS already in a RECESSION.
He said that in every past cycle the home builders always have a few big players go bankrupt before the bottom is REALLY in.
The real question is whether any large banks will be allowed to go bankrupt. I’m betting NO! Big banks are in the enviable position of not being allowed to fail, because they are literally running the country by controlling the money supply.
Mike
The real question is whether any large banks will be allowed to go bankrupt
The Loan to Own business is the most profitable sector on Wall street that %99 of people have never heard of…Don’t be surprised if these Arab wealth funds are setting up US companies to take a forced default…
Very interesting point Rookie.
These Sovereign Nation funds aren’t pouring money into this country out of the goodness of their hearts.
For those who don’t know…
LOAN to OWN refers to the practice of “Vulture Lending” Companies with financial problems turn to these private firms that are basically investment groups. The struggling company may believe they are getting a LOAN to repair their financial problems. In reality some of these investment groups are actually LOAN TO OWN operations. They loan struggling compnaies money KNOWING that in all likely hood the borrower WILL NOT be able to repay that loan. Guess who ends up OWNING that struggling company. Thus the term “loan to own”
It can be a very lucrative way to BUY IN to a company that otherwise could be worth much more.
This is also know as “Death spiral lending”
What kills me is people like Ron Paul and Jim Rogers get laughed offstage.
Ron Paul should have done a “Ross Perot” yesterday and produced a chart like this for Bernake to swallow:
http://www.shadowstats.com/imgs/sgs-m3.gif
And why M3 reporting was discontinued in 2006.
That chart shows 16% year over year growth in money supply from 07 to 08.
CNNMoney’s home page today has a good video on this…click on the “Greg Hunter” video.
What’s next?
An old fart like McCain? Yeah…like he’s really adept at solving problems like this.
-Mike
fdjake,
Many of the guys I work with have been involved with substantial size real estate defaults because of loan to own set ups…They know exactly what they are doing and it’s %100 legal and to be honest there isn’t a better business to be found…And the current economic over leveraged times make people do very desperate things…Some of these loan to own deals are at %20 interest plus a boatload of contingencies with all types of protective clauses etc…This is legal stealing…
Think about it,whats the down side…You either get paid an incredible return on the debt or you own the company and make %25-%50 ROI isntantly in stock/equity/real estate etc…Strategists will do these deals all day long if they could…
It’s really a very efficient way to take over a country - quietly take over the banking system. Why fire off a bunch of nukes and melt the assets when you can just control the country for pennies on the dollar. And let’s not pretend that the elected officials control the country - the money controls the country.
Now, how is it we make money in a socialist country?
Mike
I agree Rookie…100%
No one’s holding a gun to anyone’s head here. These companies have no alternative. Some of them DO turn around and the laon is repaid. If not, they know what the end game is when they take the money.
I wasn’t implying that I thought there was anything wrong with the practice.
It’s not like these companies taking this money don’t realize whats happening. These deals get closed with a ROOM full of attorneys on each side of the deal.
Your right again… there is no downside on these deals. It’s the same thing we do with real estate on a much bigger scale. I’m part of a group of investors who do the same thing on a much smaller scale with home mortgages. Since sub-prime has dried up, we loan money at high rates to people with low credit scores but decent income for homes we OWN. If the buyers don’t pay, we get the house back that we originally purchased for 50 cents on the dollar.