ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Housing Market Intro and Summary The housing downturn ended almost as quickly as it began. V-shaped recoveries are evident across a spectrum of data, especially in home builder sentiment and new home sales. Home builders continue to describe extremely strong demand that, in many cases, goes beyond the release of buying power pent-up by the … Read more
Housing Market Intro and Summary Something surprising is happening in the middle of the current downturn in the housing market: buyers keep coming and home builders are staying resilient and resolute. A series of earnings reports from publicly traded home builders do not reflect the historic plunge in builder sentiment from April (see below). The … Read more
In a press release titled “‘No Lump Sum Required at the End of Forbearance’ says FHFA’s Calabria” the Federal Housing Finance Agency (FHFA) sought to reassure home owners that they will not risk defaulting on their homes coming out of a mortgage forbearance program. The forbearance program gives home owners relief from paying their mortgage … Read more
Housing Market Intro/Summary The stocks of home builders are starting to fail their moment of truth. A Moment of Truth Looming Ever Larger On October 25th, the iShares Dow Jones Home Construction ETF (ITB) hit a 21-month high that coincided exactly with a major multi-year peak and post-recession high from January, 2018. The sellers showed … Read more
Overall Assessment I am neutral on Pulte Homes (PHM). The company’s Q3 2019 earnings report was good but not spectacular. I am warily eyeing year-over-year net income and earnings per share declines even as the company experiences robust demand and buys back shares. Most importantly, with a 2.0 price/book ratio, PHM is relatively expensive compared … Read more