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The Most Important Commodity For Housing Is Screaming "Recession"
While Crude Oil and Dr. Copper are often cited as economic indicators, as we noted previously, in fact Lumber prices are the most correlated with ISM and GDP of all industrial commodities (h/t @Not_Jim_Cramer). That is a problem. Lumber prices are tumbling - breaking to 18-month lows today. We have seen this picture before, and it did not end well...
Deja vu...
But it's different this time... becausae fundamentals mean absolutely sweet F.A. ... until of course they do.
* * *
Awkwardly, earnings are also flashing a big red "recession" warning...
Chart: Bloomberg
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Looks like lumber needs a 50% rally to correct this. And it has to be this, because the market cannot go down.
also interesting how much gov debt the large TBTF banks continue to hoard..
http://hedgeaccordingly.com/2015/02/u-s-banks-hoard-2-trillion-of-ultra-...
who needs lumber nowadays? everything is now built with good intentions.
Neo-Modern Mid-Century Particle Board and Elmer's
With lino floors and shag rug throws
good intentions - and nailguns
a drop in lumber prices, yet nail guns are virually flying off the shelves, correlations.
You didn't build that!,.... with lumber.
My read: Housing peaks in late Fall 2015, then dumps like a truck.
How about a new acronym for charts and graphs that should be meaningful, but aren't because of the Fed's manipulation?
NO ONE GIVES A SHIT...or NOGAS.
"That's some NOGAS info right there, Tylers."
I find Shit Info, or Shinfo, works a lot better.
"That's some shinfo right there, Tylers."
NO ONE GIVES A SHIT...or NOGAS.
I like it. LOL
Good day for lumper liquidators.
Ticker LL
http://stockcharts.com/h-sc/ui?s=LL&p=D&b=5&g=0&id=p14627368376
Liquidated.
26% down "on no news."
I wouldnt call their earnings report (big miss) and subsiquent conference call "no news"
That and this:
(Bloomberg) -- Lumber Liquidators Holdings Inc.’s stock plunged after Chief Executive Officer Robert Lynch said “60 Minutes” will feature the retailer in an unfavorable light.
http://www.bloomberg.com/news/articles/2015-02-25/lumber-liquidators-plu...
But of course you get some ANALyst view.
http://blogs.barrons.com/stockstowatchtoday/2015/02/25/after-20-plunge-t...
Of course they are oversold. Stocks don't go down EVER. They can't stay over sold for more than a minute, but can stay overbought for YEARS.
"No News" ,, reminds me of HD when they crashed about 15 years ago ,,, LL has been running firesale adverts on TV and radio trying to move product for a long while now... their inventory is losing value daily and it's not going out the door...
Hey, the Fed can just tell the TBTF banks to bid it up and everything will look peachy.
Something tells me that a shitload more lumber contracts stand for delivery than they do in PMs, so that has to be changed.
I like doom porn as much as the next guy.....& I think it's warranted but........
weekly chart for lumber:
http://finviz.com/futures_charts.ashx?t=LB&p=w1
Besides page clicks we want to act sane until the insanity really begins
It's the divergence and its place as a leading indicator rather than the absolute levels that matter here, hence Tyler overlaid the indexes on top.
Just one more piece of evidence that stawks are going to have a Wyle E. Coyote moment in the future.
Don't forget...Walmart raised its wages to $10/hr. All that net income should cook the economy going forward.
(sarc)
Timberrrrrrrrrr! Nice get!
Pretty ironic...Smartest guy ive EVER met (205 I.Q., not kidding) Stanford, Harvard etc. CIA, state dept, in finance....once told me...
"as goes the price of lumber so goes the economy"-
Uh oh
The above statements are true
So let me get this straight:
205 IQ
& this massive, kinetic, intellectual potential, spiraled him down, with increasing velocity, the path from:
Stanford~Harvard~CIA~StateDept~Finance???
WTF was he smoking? [or did a floating decimal point fail to get inserted]?
The gov. grabbed him at 16....started college at that age. 5'5" Brain (too funny)...They put him out to pasture at age 48.."they wanted new technologically sophisticated youngsters. He would travel overseas and go into specific countries as "The banker" and put "bugs" in their banking systems circa 19 early 80's.
A real greek tragedy. I discovered via his life, Intellect is NOT always a good thing. Above the crowd..I could literally write a novel on this guy.
I did learn from him how many U.S. Corporations are just fronts for...well, with a C ends in A, three letters....
Kaiser permanente comes to mind. Oh and something about Noriega....nuff said
Sad... Just think... He coulda just said:
"Fuck it, while I'm at it why not just shoot my buddy, take his job, give it to his sworn enemy, hike up gas prices, bomb a village, club a baby seal, hit the hash pipe and join the National Guard?"
He coulda been elected President!
Thirst uh, you seem to be overcompensating a wee bit. The guy is real. His uncle was shot down WWII ,,landed his plane with shot up legs. His father was dean of.....wont say
,He is/was a man that loves/loved his Country. Old School. Was a nervous nelly because of his stature, but smart enough and a big enough con to USE the lesser then.
Born a silver spoon, money wasnt an issue for him. Brought two Russian scientists over to U.S. due to their technological saavy...to sebastapol? no, not
Ukraine but CA. Im tempted to tell you to go EFF yourself, but you amuse me. So I wont.
Overcompensating?
Ok, riddle me this [as I retreat back to my original thesis]...
205 IQ???
Sure, as you say, I guess he got railroaded at a young age. But, in the process of all this, if there was not:
- An interenet
- Places like ZH
anyone with 2 brain cells, by now, should be able to figure all this out. [Which basically, at this stage of the game, makes him an IDIOT, if, in his massive undertakings, he happens to still be alive & has not yet decided to 'suicide himself' by the usual emptying an entire 9mm clip to the back of his head].
Go be an apologist for someone else who truly needs it.
You had me at "interenet"
Peace
"Stanford~Harvard~CIA~StateDept~Finance???"
That is the path of INCREASING potential and success.
Stanford/Harvard just to get in the room, on to CIA to meet the people you need to know to ever even get considered for a place at The State Dept, which is where you finally get to make the contacts/relationships and gather the dirt and secrets you need to ever be truly succesful in....FINANCE.
He did it perfectly as few were able. Probebly because he was a genius...
Copper, Lumber, and the BDI tell you all you need to know.
Here's copper... and here's the BDI... to join the chart above.
Yup, nothing to see here. Everything this fine! <eye twitches uncontrollably>
SO, youre saying life leaves clues? I get it...
Both BDI and copper well below their GFC lows.
Lumber getting close, and the FedRes out of bullets whatever they might think.
Crispin was right, this bust will be remembered for a hundred years.
An epic deflationary collapse this way comes.
I think longer than a hundred years. History will be made as nation states implode. I see no rosey scenario out of this.
However I don't think we are there yet.
The collapse will not be advertised. When you see it coming, it's already too late. Your gut is lying to you.
30% off gold, 50% off oil.
Think it snuck up on us while we were mesmerized by stawks.
How else can this be explained. I believe deflation is the culprit and the market refuses to accept this as an explanation for six years of ZIRP and no expansion because of little growth caused by increasing debtor.
It's recognized fairly widely to be a solid leading indicator. Though supply inconsitency can add noise. This is why housing starts is more closely followed--cleaner read on the same sector.
Do you mean paper lumber or physical lumber?
Most lumber these days oughta be paper. Lasts about as long. Finger-jointed trim and fast growth forests yield some really crappy building materials. Laminated wood chips and all that. Aaargh.
RR
It's called " engineered" lumber
This is very good news!! It means we can build many more new houses much more cheaply, and pass along those savings!
Then all of the fertile illeagle aliens can buy them up with no down payment and boost our spirits here in the USSA!
AWE-SOME!
we don't need no steenking lumber
that's what she said
yeah def a head and shoulders on that lumber chart. funny thing is that the price is nearly the same when it crashed last time!
Mourning wood.
In the morning, would.
"I once had a girl, or should I say, she once had me
She showed me her room, isn't it good, norwegian wood?
She asked me to stay and she told me to sit anywhere
So I looked around and I noticed there wasn't a chair
I sat on the rug, biding my time, drinking her wine
We talked until two and then she said, "It's time for bed"
She told me she worked in the morning and started to laugh
I told her I didn't and crawled off to sleep in the bath
And when I awoke I was alone, this bird had flown
So I lit a fire, isn't it good, norwegian wood?"
https://m.youtube.com/watch?v=T70-HTlKRXo
uuuuuummmmm, morning wood
It keeps getting more interesting with every chart...Only a matter of time until the central banks/politicians are unable to hold this mess up and KABOOOOOOM!
They'll just pass a law that mandates ALL graphs be published inverted.
Isn't that the Axis of Evil?
I put this in another thread but I have written a book that I think goes a long way in describing much of what we see happening today...you are welcome to take a look.
http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-1-advanced.html
Can we get some of that cheap lumber in Australia? We've apparently got a major housing shortage, which must mean that there's a ton of people living on the streets, so if you send it to us, we'll build some small boxes and flog them off for $500K a pop.
So there is a school of thought that says deflation precedes hyperinflation.
Stack like you never stacked before.
That's because the US is the only country experiencing a revival in residential construction and I would imagine there is far less speculation within the commodity.
Revival - yes, in multi-family rental properties or $600k+ houses, otherwise not so much.
Are you serious Clark
Over supply?! Polar vortex?! :-/
Evidently a central bank has created an infinite supply of lumber contracts.
I'm a lumber buyer. It's winter time, lumber production has increased in the last year, so increased supply and lower winter demand = lower prices,no surprises. Right now it's touching on 2014 lows. If it goes another $20 lower, then let's talk about it indicating something.
If you have spent any time in construction, you know that it is all run with interim money, that is borrowed money. Builders will rob Peter to pay Paul just to keep building long after they have ceased selling anything. If lumber is cheaper they will see that as a sign that they should be building more. Nevermind that the average Joe hasn't seen a raise in seven years and still can't afford to buy unless the banks remove all creditworthiness testing which they probably will do. I remember the housing glut in Texas in the eighties. They just kept building and building until the bottom fell out. It was a dry run for 2007-8. That is what will happen again.
Same is happening here in south florida.Everywhere there is land up for sale and its not moving
at all.Lots of developers stuck with their land banks, build and pray.
So there's still a little bit more time to squeeze it out? LOL.
The Central Bank does not buy lumber, it only buys the SnP.
CBs buy paper, not wood.
Actually it is different this time. When you're using make believe housing #'s starts, it goes without saying you're using make believe lumber! duh.
They want deflation......if they didn't, they would buy the entire commodity complex.
They are trying to create distress for owners of real assets and real options. Why buy the commodity? They want their phantom claims to take over the flow... And we can stop them. Liquidate nearly infinite duration financial assets to raise cash and gold, to eventually redeploy into domestic producers and owners of real goods and commodities.
This time is different.
Fer shurrre. In Bizzaro world every time is different which makes it exactly the same.
Running to standstill.
nailgun suicides
a chicken in every pot
and the nsa in every i-phone
laughing to keep from crying
this time its different
im sorry but falling lumber prices, along with falling oil prices = more money in my pocket this summer. this is good news for some of us
Here are some of the bubbles.
http://michaelekelley.com/2014/12/20/leveraged-loans-predict-crash/
http://michaelekelley.com/2015/01/28/remember-cdos-theyre-baaaack/
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Good luck.
Looks like the last time it took 2 years to peak before crashing. This time we are only 1 year into the peak.
But I am betting the second quarter earnings reports for both oil and biotech will be bad due to the overexposure of debt.
http://michaelekelley.com/2014/12/20/leveraged-loans-predict-crash/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Thanks
http://finviz.com/futures_charts.ashx?t=LB&p=w1
Meh
Who the fuck uses lumber to build a house? You mean a third-world tippi, aren't you? Only the very fucked up live in houses made out if wood...
"Who the fuck uses lumber to build a house? You mean a third-world tippi, aren't you? Only the very fucked up live in houses made out if wood..."
Wow......that is the most totally clueless comment I have read in a very long time. Now we all know how ignorant you are.