Great Day to Buy
This is a great day to buy.
First of all, some pullback is okay. Stocks have been creeping up in a pre-earnings excitement.
Second, earnings are bad for housing related stocks. this should be no surprise. I was banging on the drum all last year that appliances and home building related stocks would be suffering very fast. They tried a lot of accounting tricks to keep earnings high (like stock buybacks) but ultimately the time was going to come when they couldn't hide the reality. Well, it has happened.
Be very clear: new couches, new washing machines, and home improvements are driven mostly by moving. People move and they upgrade. Or they want to flip homes and have to repair/improve them. Well, with housing sales down ~30% in volume terms, this was inevitable.
Does this bleed to other consumer spending? Not yet. How many iPhones were sold in 1 week? Official figures aren't out, but estimates are for ~200,000. That's 200,000 very expensive phones. Consumer spending is still going strong.
However, housing did bankroll other big ticket items like cars. I would be shorting HOG (harley Davidson) right now. Also, boat sales should be down. And RVs (which also suffer from high gas prices)
Bg ticket items are sensitive not just to the slowdown in the house-as-ATM: financing can be a lot tougher.
Overall, global consumer demand should meet any US slowdown, as long as those products are not tied to housing and as long as those products have a global market. HOG is not global. Anything that requires financing is under threat (furniture, appliances, motor vehicles).
Yet again, the market will be focused not on the past but on the future.
It's earnings season, and volatility is here.
First of all, some pullback is okay. Stocks have been creeping up in a pre-earnings excitement.
Second, earnings are bad for housing related stocks. this should be no surprise. I was banging on the drum all last year that appliances and home building related stocks would be suffering very fast. They tried a lot of accounting tricks to keep earnings high (like stock buybacks) but ultimately the time was going to come when they couldn't hide the reality. Well, it has happened.
Be very clear: new couches, new washing machines, and home improvements are driven mostly by moving. People move and they upgrade. Or they want to flip homes and have to repair/improve them. Well, with housing sales down ~30% in volume terms, this was inevitable.
Does this bleed to other consumer spending? Not yet. How many iPhones were sold in 1 week? Official figures aren't out, but estimates are for ~200,000. That's 200,000 very expensive phones. Consumer spending is still going strong.
However, housing did bankroll other big ticket items like cars. I would be shorting HOG (harley Davidson) right now. Also, boat sales should be down. And RVs (which also suffer from high gas prices)
Bg ticket items are sensitive not just to the slowdown in the house-as-ATM: financing can be a lot tougher.
Overall, global consumer demand should meet any US slowdown, as long as those products are not tied to housing and as long as those products have a global market. HOG is not global. Anything that requires financing is under threat (furniture, appliances, motor vehicles).
Yet again, the market will be focused not on the past but on the future.
It's earnings season, and volatility is here.
posted by Andrew at
9:53 AM
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