Monday, August 19, 2013

The "Bear" Has Its Claws In The Housing Stocks Now

A wiser fella than myself once said, "sometimes you eat the bear...sometimes the bear, well,  he eat's you."  - The Stranger (Sam Elliot), "The Big Lebowski" - LINK
Last Thursday and Friday the Dow Jones homebuilding stock index had a two-day bounce connected to the National Association of Homebuilders "Market Index" (Thursday) and the Census Bureau's housing starts report (Friday).  The bounce came on the heels of an 8-day 10% plunge in the homebuilder index, so an "oversold" bounce was not unexpected.  Interestingly the Friday spike higher at the open didn't last, as the builder index closed flat on the day - which is very bearish.

Today the homebuilder stock index is down 4%.  I wrote an article on the housing market/housing stocks on Friday for Seeking Alpha which explains why the data released on Thursday/Friday was largely immaterial to the prospects of the housing market and why the housing market is firmly entrenched back in its bear market that really started in mid-2005.

You can read the article here:   The "Bear" Has Its Claws In The Housing Stocks.

Anecdotally, I'm really starting to see a deluge in "for sale" signs pop up all the around the Denver area - from the Highlands neighborhood north of downtown all the way down to the south metro area by Highlands Ranch.  It's especially acute in the central Denver area, where I live.  In addition, I've observed several stale "contract pending" signs on top of "for sale" signs, which indicates that financing is now a lot more difficult.

I fully expect that both the homebuilder stocks and the overall housing market - price/volume - will ultimately go below their lows set in 2008, before Bernanke and Obama dumped a few trillion dollars into all aspects of the housing market to try and generate a recovery.  Guess what?  They failed - badly.


  1. Dave,Off topic. This Zero Hedge article about Obombo calling in the big banks for a meeting. Speculation is another gold push down. Give it a look and see what you think.

  2. Ya I saw it. I tweeted back them that neither Zerohedge or the author of the original tweet truly understood just how strong the physical demand for delivery is. They made a big mistake taking gold down as low as they did. The negativity of the GOFO rates tells you they can't take gold lower.

    Zerohedge's understanding of the gold market is sophomoric, at best. Most of the guest commentary they publish is superficial and quite lame.

    1. I see that Stewart Thompson has been selling bullion well I hope some of his bars are going to the poor long suffering chumps who bought in May and are still waiting for delivery. Perhaps he could send a few over to London not just as specials for the JPM vault. If gold is so over bought and in such great supply how come nobody can get their bars?

    2. LOL. Stewart Thomson is pompous windbag who is so full of shit that I can smell him in Tennessee from here in Denver.

  3. Goldman Was Buying Gold While They Were Saying 'Sell?'

    A reader informs us that:

    "For those with a bloomberg terminal, type up the command: {GLD Equity PHDC1 } ... GS bought $5b USD of GLD last quarter, while they were pitching their "sell gold" call to the world."

    ...and this is goldman's hands in the public's pocket...............

  4. I'm a follower of your work Dave, but isn't calling Zerohedge's understanding of the gold market sophomoric sort of like saying "The Minnesota Twins can't hit a curveball"? Zerohedge isn't one person - and I don't mean the guest commentary, I mean the pseudonym Tyler Durden. It's not one person, its many. I'm sure we could pick nits with some of the contributors, as well as the guest posters, but I don't think a blanket statement covering everyone is fair. I don't always agree with them either, but they certainly aren't dummies.

    1. Eric, I'm well aware who and what Zerohedge is. I've been following them since their inception. "Tyler Durden" is Brad Pitt's character from the movie "Fight Club." It's why I used the word "they" in reference to the guest commentary they post.

      Zerohedge does a great job of cataloging some awesome data. I find their accompanying interpretation and analysis to often be superficial, lacking real depth and full understanding of the subject matter. Again, their understanding of the gold market is sophomoric at best and it's reflected in the guest commentary and their own analysis.

  5. I respect your take Dave (and yes I know where the Durden name comes from - I'm an Ed Norton fan). Thanks for the work.

  6. JFK’s Death Marked the End of the American Republic
    August 20th, 2013

    LS: Why does the death of JFK still matter?

    MB: It’s the most important crime in the second half of the 20th century, it is still unsolved and it marked in a way the end of the American Republic. Since then the financial-military-industrial complex rules and no president after JFK had the balls to challenge that. There is, in the words of Gore Vidal, “a one-party-system with two right-wings”; there are corporate media brainwashing the population 24/7 and propagating wars for global imperial dominance; there are covert operations all over the world to ensure this dominance – and this will go on and on as long the truth about the covert operation, the coup d’ état, against JFKs presidency is kept hidden.

    LS: Thank you very much for taking your time, Mr. Broeckers!

  7. Andrew Ross Sorkin Is Such a Wall Street Bootlicker Sometimes

    Andrew Ross Sorkin, the whiz kid-ish New York Times Dealbook reporter, sometimes gets unfairly characterized as a bootlicking Wall Street suckup who wants only to ingratiate himself with the powerful. Other times—like today—that characterization is completely fair.

    I mean, this shit right here is scarcely believable: "Hiring the Well-Connected Isn’t Always a Scandal," by Andrew Ross Sorkin, Backslapping Apologist For Every Shitty Undemocratic Practice of the Wealthy Plutocracy. This is literally a column in which Andrew Ross Sorkin, the rich son of a powerful corporate lawyer and the best media pal to the Masters of the Universe, dismisses out of hand any concern that weirdo nitpickers might have about the fact that the children of society's most rich and powerful people routinely land the most well-paid and desirable jobs. What sort of hippie freak would care about a thing like that, right?

    The news peg for this column is the fact that JP Morgan Chase is currently being investigated for hiring the children of highly placed Chinese officials. To do so in an attempt to win business would, of course, be against the rules. The normal reaction of a business reporter to such news might be: "Let me look into this story to see if I can find any wrongdoing by the bank." Andrew Ross Sorkin's reaction was: "Let me write a lengthy column larded with chummy anecdotes which justifies this plainly fishy practice!" After all, who would suspect a Wall Street bank of doing something dishonest or duplicitous? Not Andrew Ross Sorkin.

  8. whats wrong with hedge fund boards and who's trying to fix them

    no one talks about this

  9. Credit Suisse Sells Its First Public Tier 1 Contingent Bonds

    Credit Suisse Group AG (CSGN), the second-biggest Swiss bank, sold its first public Tier 1 contingent capital notes, bonds that will be written off if the lender’s capital ratios drop below a preset level.

    The Zurich-based bank issued 250 million Swiss francs ($272 million) of undated notes paying a coupon of 6 percent, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. The Tier 1 bonds, the most junior layer of debt capital, will be written off rather than convert to equity if the bank’s capital ratios fall below 5.125 percent, the person said.

    Switzerland, with 8 million inhabitants, hosts two of the world’s biggest banks. It’s seeking to protect its lenders against future crises by tightening capital requirements after UBS AG had to be rescued in 2008. Credit Suisse’s more-senior Tier 2 contingent bonds due August 2023 it sold earlier this month carried a higher coupon of 6.5 percent, according to data compiled by Bloomberg.

    “The coupon on the latest deal reflects just how much more favorable the Swiss franc market is,” said Simon Adamson, an analyst at CreditSights Inc. in London. “That’s well below what it would have to pay on an international issue.”

    Credit Suisse, which sold the notes to help it achieve a capital ratio of 19 percent by 2019, has the option of repaying the debt after five years, the person said. As a Tier 1 instrument, the borrower can suspend coupon payments without defaulting and the missed coupons don’t have to be made up when payments restart.

    bond or gift?

  10. Gangster State US/UK — Paul Craig Roberts

    It is fashionable in the US and UK governments and among their sycophants to speak of “gangster state Russia.” But we all know who the gangsters are. The worst criminals of our time are the US and UK governments. Both are devoid of all integrity, all honor, all mercy, all humanity. Many members of both governments would have made perfect functionaries in Stalinist Russia or Nazi Germany.

    This is extraordinary. It was the English who originated liberty. True, in 1215 it was the freedom of the barons’ rights from the king’s infringement, not the freedom of the commoner. But once the principle was established it spread into the entire society. By 1680 the legal revolution was complete. The king and the government were subject to law. The king and his government were no longer the law and above the law.

    In the 13 colonies the Englishmen who populated them inherited this English achievement. When King George’s government refused the colonies the Rights of Englishmen, the colonists revolted, and the United States was born.