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The Housing Unrecovery Is Here: Lumber Enters Bear Market
Despite the incessant belief that this must be too-much-new-supply-driven (as opposed to a lack of demand for new home construction), Lumber futures (after hitting limit down once again today) have now officially entered bear-market territory. Front-month lumber prices are down 23% from their highs in mid-March and given the 2-month lead that correlates so well to the market, it seems things are a little ahead of themselves in 'housing recovery' land.
It seems lumber futures are the best proxy for trading the real economy...
We wonder when the broad equity market will wake up to that?
not like we haven't seen this hysteria before... (can this really go on for another year before reality hits?)
Of course, a plunge in lumber prices will not help all those new mills that are apparently coming back on line now...?
Or is simply that Lumber prices reflect a reality no one is quite comfortable with yet?
Charts: Bloomberg
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But Maria said I should jump back in before I miss the recovery!
She'll keep her job no matter what, so she doesn't need to be right, does she?
I'm sure this is just the builders switching to carbon fiber to build houses.
I saw a building under construction today.
Looked odd, and then I realized it's the only one I know of in town. No one looking at real estate either except "investors". I remember the same thing happened with Ostrich eggs years ago. Everyone is a short term genius.
Can someone reconcile this with Home Depot's better than expected results? I mean, sure, they've cut staffing in half, which accounts for earnings, but .. they also had yoy improvement in sales.
YoY improvement = Dead Cat Bounce.
I'm guessing their sales are still down from the peak.
It's okay, someone just dumped a huge amount of paper shorts in the lumber future market. If you want to buy physical wood at the local shop it is coming at a big premium over spot.
That's for damn sure. A 3/4" sanded PINE 4/8 goes for almost $50???? WTF?
It's not like wood grows on tr-
Oh wait.
Is this a gimme?
Ok ill bite
Past performance is not indicative of future performance.
'
Do it benkeees job, i vow to print so the past is indicative or can i take jamies job
When I worked for THD, we would count our credit rejects and cancelled jobs as gross profit. Added up to tens of millions per year. Total phantom income that added to the bottom line.
"but .. they also had yoy improvement in sales".
Did they really Mr,Mouse?????
I submit they are @ same Volume from after the housing crash in '07.
Any increase in Earnings are attributed to inflation of goods, Worse still is the fact that product moving is not from building contractors (I'm one) but homeowners basic upkeep. Real lumberyards do not sell seasonal products like Christmas ornaments, Easter Lilies,candles, Gas grills, etc.
Big Orange and Big Blue are like a Walmart for homeowners. Their bottom line will only increase if/when the contractors are back @ 7:00 a.m. every day picking up materials.
I gave you a greenie for answering my question.
well they driven interest rates down for housing, theve given rebates for housing, so i guess the next step is make 2x4s free and housing has got to take off, right? right? anyone....
They're hardly free yet. If you look at absolute levels prices have hardly dipped below the pre-Sandy surge level which was close to all time highs already. My question is if there is a difference between a bear market and a breaking bubble? Pop! I'd like to use the proper terminology in a couple months when discussing the DOW.
DeadFred asked:
This particular situation is best visualized with a Venn diagram, with one circle representing a bear market and the other a breaking bubble. The area where the circles overlap represents the current lumber market, colloquially known as "a bear crapping in the woods".
Something that tracks the economy macro...wow.
But now Ben will lift that too and fuck those shorts as well
You may be on to something...
Like he fucks longs in PMs?
Good old Maria Bathroomaroma!!!!!
"But Maria said I should jump back in before I miss the recovery!"
She meant her crack addiction. When she sobers you're out.
Nothing like the 'wood' I had this morning!
Driving a 16d common nail thru it will take care of the problem. If you consider it a problem. I wouldn't.
A syringe works better. Damn that Viagra!
too bad you couldn't have manage a Gold Member
If digital fiat crashes in value and nobody hears it, does it really make any sound?
It does, but only bears can hear it.
does paper gold dream of cardboard vaults?
Does my 96 lb Shepard dream of Maria...or visa versa?
....giving you a 9.8 for that one
it reflects a very small commodity market that is being manipulated down by the fed. just like all the other commodities. if commodities run like they did in 08, the fed loses control of inflation and then the sheet hits the fan.
But what's really odd is that WOOD, the IShares S&P Global Timber and Forestry Index Fund is flying, at a new high. Is this anything like the disconnect between gold futures and physical?
No. Paper settlement is bullish for wood.
took me a second on that one, NotApp, but THAT is wit!
This pretty well nails it.
Comrade,
when will you understand that the price of this and that is what we say it is...money is what we say it is...demand is what we say it is.
That is all for now.
Ahhh, Comrade, after consulting with the great and powerful Ben we have decided the future will be a Sims like virtual world. Lumber, Copper, steel, etc. will no longer be neccessary. "Invest" accordingly in business' long on hope, faith, and trust in the bald headed party leader.
That is really all for now.
It's all paper wood prices. Physical fence posts are going to command a premium.
Coincides with the new housing regulations that allows studs to be 4 feet apart.
lmao
Don't laugh... our wisest building industry safety officials assure us that it leads to 2/3rds less damage and injury from flying lumber when a tornado hits....
Four feet on center? That building official must have caught a flying dos por quatro upside the cabeza shortly before deciding that.
Enables the Chinese drywall to breath better.
Screw it !
same story everywhere
http://www.dryships.com/pages/report.asp
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfupus1&f=a
there is no recovery
Was just about to post http://www.bloomberg.com/quote/BDIY:IND/chart
As you said. Global Trade is going nowhere. Recovery? Best quote so explain it so far: "Who need industrial production when we have monetary production"?
I wonder if the recovery from the Oklahoma and other tornadoes will have any effect upon the lumber market crash? If so it will be temporary and likely non-significant several months out. Not even the dark side of mother nature can save this economy!
SANDY apparently did not, although Congress approved 300B ...
Have you seen pictures of the area 6 months after? 300B didn't go into rebuilding, heck no, it went into stocks.
I hope some of them consider this: http://www.earthshelteredhome.com/
that or a very good storm shelter
Timotheos
Too bad they can't design a website that won't drive you click-crazy trying to look at the pix.
I like cob myself. All natural material (clay, sand and straw). It won't burn down, bugs can't eat it and it lasts nearly forever. Best of all, its pretty do-it-yourself if you have an inclination and the time. http://www.cobcottage.com/node/82
Are you kidding?? With all those broken windows, it's djia 20,000
Zero Hedge on a 'contrarian' roll today ...... in the immortal words of one Georg Soros after his well-placed AUD trades ......"atta boy"!
what is going on in CDS land ..... inquiring minds want to know?
Can this go on for another year? Maybe. Certainly it may continue for another quarter or two.
Intangibles are now a part of the GDP. Enough said.
we no longer need lumber to build homes. it's been replaced with hope and fairy dust.
Lumber prices should fall....all QE is going to buy stawks... Whaddaya asleep ?
LOL this market is going so much higher
I'm going to channel MillionDollarBonus_ here..
Lumber prices softening in the face of a big increase in supply due to new mills is a great sign for the economy. Suppresed lumber prices will make new housing all the more affordable which will further propel the recovery that is well underway. Meanwhile the S&P trend is clear as day and only going higher. Filthy zerohedgers meanwhile watch their life savings disappear as they drink themselves numb on cheap vodka.
Cheap rum is just as cheap, and tastes better. Plus, it's brown.
The Lumber Super Cycle is over. Please welcome the Lumber Super Dooper Cycle.
Generational buying opportunity before the Syrians load up on plywood.
An imaginary recovery is a lot more fun on acid.
How is paper lumber doing against physical lumber?
Max Keiser's show today talked about crashing gold prices in the face of increased demand across the globe for physical. People willing to pay well over market to obtain gold in hand.
Do any of the old price discorvery mechanisms function anymore? I mean the fucking Fed is into manipulation on a vast scale. The market's seem a giant hoax.
Actually you just described the last functional price discovery mechanism.
Personally, I think it's hilarious that eBay is now a more accurate price indicator than Wall St.
It will be even more hilarious when all of the Kitco charts are replaced with these (especially once the silver "premiums" go over 100%):
http://www.24hgold.com/english/buy_sell_silver_coins.aspx?co_id=0
http://www.24hgold.com/english/buy_sell_gold_coins.aspx?co_id=0
Aaargh. 24% premium over spot for junk quarters. Now that's news.
it isn't gold or silver so just lower the margin requirement and problem solved :snark:
I'm sticking with silver. It'll always be needed for ammo to control the undead housing market and the zombie stock market.
https://docs.google.com/file/d/0B16Nxp5pgJBzQWM5N2dSZllRMnc/edit?usp=sha...
China's not in the market. The last few years, when there was a dip in the market, they came in, and lumber prices went back up again. No China buying on this gigantic dip. What does that tell you?
They got wood?
LUMBER COT DECONSTRUCTION COURTESY OF WWW.COMMITMENTSOFTRADERSANALYTICS.COM
https://docs.google.com/file/d/0B16Nxp5pgJBzQWM5N2dSZllRMnc/edit?usp=sharing
can we expect a 3X bearish lumber ETF soon?
With lumber plunging and many sub contractors hiring (under the table) workers at $6.00/hour, house prices will come down substantially. Lots of Headwinds for mortgage holders coming up....
I don't see Home Depot finished lumber plunging by any shake of the stick, but I totally agree that the main and subs are hiring at wages not seen for 20 years. I can personally vouch for that. Gives a whole new meaning to ".A quality built new home"!
I walked into Home Depot and saw what they were charching for wood and said, fuck it, I'll cut down my own tree instead.
Actually I just called up a lumber mill I designed a website for a few years ago and he said I could come pick up whatever I wanted if I update the site again.
THE FUTURE OF THE REAL ECONOMY. One person trading something of real value to another.
You are my hero. I did the same thing with a local micro brewery and they basically laughed at me and said during shit times, beer sales go through the roof.
They've got more money than they know what to do with.
It's Log
....but uncle Warren just bought USG....wallboard and lumber go together....can't have one without the other.
I would like to see this next to a chart for farm land prices. I hear there is a bubble with investors buying any land that could "maybe" become farm land. Perhaps they are clearing the lands they bought and selling the lumber? Sell the timber and have the land ready for the spring growing season. That may have been the plan last summer when crop prices were higher. Now they might just be selling the timber to get back some of their investment or hoping another sucker will pay more for the land now that is is plantable.,....
Lets see if I got this right: when gold and silver futures crash it is due to the Morgue dumping shorts into the market as requested by Ben.
When lumber futures crash it is due to the economy, or lack thereof.
How'd I do?
More seriously, those charts are pretty interesting, though shorting anything in this market has been a suicidal mission.
imaginalis
You are correct . Local lumber yard sales person says the OSB ( organized strand board) has almost doubled in 12 months . Again the huge disconnect with futures and real price . aka Gold and silver anyone? Markets broken . Price discovery verboten
OSB = Oriented Strand Board
I see this as good news because it is the way free markets operate. When supply exceeds demand the prices drop. i have noticed that cement prices are weak as well. They are two major building products that will lower the costs of new construction and make it more affordable, in turn stimulating the real estate market. A major cost in producing cement is the energy used which is often natural gas that has been driven down in price by fracturing production.
Dr. Lumber has spoken!
We supply builders in Michigan and are the busiest we've been since 2006 - go figure.
We, like everyone else in the industry, got stung by the big drop in lumber prices. We are at about a - $120 from the highs on the cash market, which follows the future markets fairly close. What will business be like by the end of summer? Who the hell knows.