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The Homebuilder Hope Trade Deja Vu
We warned recently that the most highly correlated commodity to economic data was flashing red, but today we note that Lumber and Homebuilders are diverging in a dreadfully deja-vu-ic manner (just as they did in 2005, marking the top). While the relationship is 'loose' it seldom diverges for long...
So what are homebuilders making homes out of now?
As NewEdge's Brad Wishak notes,
Lumber is testing the uptrend line from the '09 lows here...
; and curiously, the HOMEBUILDERS ETF XHB is trying to break to new highs at the same time...
while the relationship is definitely loose but it rarely trends in opposite directions for long.
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Bob "i sold at the top the last time too" Toll sold 11M shares back in June 2014. That dude knows how to shear him some sheep.
Here we are in New South Wales
Shearing sheep as big as whales, with
Leather necks and jaggy tails
And hides as tough as rusty nails.
When shearing comes, lay down your drums
Step to the boards you brand-new chums
With the rattum-rattum-rub-a-dub-dub
We’ll send you back on the lime juice tub.
The brand new chums and cappy sons
Fancy they’re the greatest guns.
Fancy they can shear the wool
But the beggars can only tear and pull...
I have my own indicator.
2006 people were beating my door down to build a home and I was telling my subcontractors to save every penny they make cause it was time to fold.
2015 people are beating my door down to build a home and I am telling my subcontractors to save every penny they make cause it is time to fold.
Inventory turn on long-nails is another big rub.
The only hiccup to this trade is if the long-end goes flat, and stays flat with no hope of a hike, then this will embolden REIT's/HM's to buy lots & started communities inmasse. Given the yeild starved public, and limited up-sell for drop down MLP's the hope trade could be pulled out into 2H15 should guys clue in that dead lots can still be channel stuffed a-la 2005-2007.
Given we all know Pensions are stupidly underfunded I could see more than 5 being more than willing to buy MBS/MBC MB-2's at 0+300 mez.
Timmmmberrrrrrrrr!!!!!!
When you are building the American Dream out of pixie dust, no lumber is required.
How much lumber is in a mobile home?
Some of us prefer the term enhanced luxury pre-made chalet.
They are now building solid homes with bricks of fiat currency.
Killer insulation. Should keep them toasty this winter. If it gets too cold, they can always pull a brick out and toss it in the fire.
My 5 and 7 year old Grandchildren have found a great way to play. Recently they stay quite occupied making houses out of big cardboard washer and dryer boxes.......My worry is when they're grown up this will be the new McMansion.
Your comment flashed a terrifying picture into mind. A post-apocalyptic world with scorched, bare earth, a dust filled, perpetual wind, an orange sun, and children gathering large cardboard washer and dryer boxes.
I don't think it will be bare scorched earth....but the cardboare box thing could become a reality after Goldman and the Fed stuff the rest of their losses up thier unsuspecting asses.
DEATH TO THE MONEYCHANGERS! HANG THE BASTARDS.
Who's going to buy the new homes since the Russians have pulled out of US real estate?
Apparently the Teachers' Retirement Fund Managers.
Zero correlation when prices are collapsing.
Just use steel and pour concrete.
Fifteen grand out to about cover it.
Tile roof, solar panel on the car port. "Become a net energy exporter from day one."
Gypsum board prices should collapse here soon enough.
15 grand won't cover the permit and impact fee's. BIG GOVERNMENT needs their cut first and last.
Good luck on that north of the sun belt. You'd be warmer in a yurt than a concrete freezer in the winter. Yurts are cheaper than concrete bunkers. Not so good at keeping out roving gangs though.
Fuck housing and the whole financial shit show until the lies and theft stop.
My $.02!
RYL was green all day today and yesterday which was really pissing me off. Dow down 500 and RYL didn't go down. They report tomorrow am, or this morning i should say so hopefully it gets flattened.
This is good news.
Collated 16p framing nail prices must also be collapsing
homes are built from brick and mortar, only the roof construction is built from lumber. maybe its different in merica?
Can't believe any numbers put out by anyone, fudged, smoke and mirrors.