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HereWeGo
ParticipantI cannot believe there is no bear fund that focuses entirely on housing and housing related industries. That’s simply wasted opportunity.
ParticipantChris-
Are you suspending the “Sell in May and go away” seasonal rule this year?
Simple rule here, folks:
International exposure, exports – GOOD
Housing exposure, few exports – BAD
ParticipantCan rising incomes offset the effect of housing tumbles on the greater economy? Maybe, maybe not.
Can rising incomes buoy housing markets in the rabidly frothy coastal areas? Doubtful.
ParticipantLA-
Had the Q1 earnings come in at or below expectations, then I would tend to agree with the recession forecast. But given that Q1 earnings were so strongly buttressed by international sales/revenue, it’s tough to stick with that forecast at this point.
That said, if someone wants to play the bear game, I think there are opportunities for shorts and puts, but I would focus on sectors and companies that have little international exposure and strong housing exposure. Off the top of my head, furniture companies, maybe discretionary spending (certainly discretionary spending focused in bubble RE markets,) maybe lenders, but be wary of potential buyouts.
ParticipantThe export number is key, as exports add directly to GDP. Many companies with surging earnings are reporting that exports are central to those earnings. Moreover, if imports do in fact become a little pricier, and American buy a few less imports, that would also add to GDP.
I suspect that, based on all current earnings reports, the GDP number will rise significantly upon revision.
Oh, to make jg’s “pattern recognition” a little trickier, note the 1.8% GDP number from Q3 ’06, and keep in mind not only that the 1.3% number is an intial estimate, but that the Q4 number went from an initial estimate of 3.5, to a revised estimate of 2.2, to a final value of 2.6.
There’s no doubt housing and debt burden are major drags on the US economy. Nonetheless, the world economy continues to grow at 4-5%. Two very powerful phenomena pulling in different directions, but which will ultimately prove stronger? I once believed housing would pull the US into a recession (and worse,) but that’s a terribly US-centric view. I’m no longer convinced a recession is inevitable (although housing is likely in for a very difficult run.)
ParticipantIt will be interesting to see how Q1 GDP is revised in the coming months. This number seems incoherent with the surging earnings reports.
ParticipantWhy would you compare housing or the DOW to jewelry?
ParticipantMoreover, there are plenty of investment banks with a bucket full of money and a box of M&A fever. Now the next quarterly report might involve a bit more excitement, assuming CFC hasn’t been gobbled up by that time.
ParticipantYou might be right, paranoid. The globalization investment may finally be paying off, and none too soon.
ParticipantThe scary part about shorting CFC is the possibility that an investment bank, many of which are flush with cash, might try to buy it.
When GS offered its opinion on CFC earlier this week, that was my first thought, that Sachs is trying to jawbone the stock down to make the acquisition more affordable.
ParticipantEarnings are crushing estimates, especially for US companies with significant international exposure. That’s likely to power the S&P upward. If you’re all hot and bothered to buy some puts or take out a short position, I’d make sure the company shorted is entirely a US domestic operation, preferably one tied to housing in some way.
ParticipantI’m not a big fan of the everythings-falling-apart bears; it just doesn’t seem to correlate with reality. That said, I’m very bearish on certain sectors, especially housing, Alt-A lending, and housing related spending.
Now globally positioned US companies capable of taking advantage of the 4-5% world GDP growth? That’s an entirely different story, as current earnings reports indicate.
ParticipantAs Sperling suggested, rising incomes could offset falling MEW. Now that’s not going to help over-bubbled housing markets, but it might very well keep the economy afloat.
Exports seem to be picking up steam. The world economy is growing between 4 and 5 percent … could it be that the globalization and free trade efforts of the 90’s and this decade are finally paying off for the US?
ParticipantIf there is a record short interest on the market, isn’t the only logical conclusion that equity prices are currently depressed by that short interest, rather than inflated?
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