Morning Coffee: What's Next for Housing?
(Stocks in article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: MER, NYSE: LCC, Nasdaq: DPTR, Nasdaq: BIDU, NYSE: M, NYSE: TOL)
On this last trading day of 2007, existing home sales came in better than expected. Hold your horses though, we'll take you through the numbers and show you why the real message is that we have not hit bottom in real estate. That does not necessarily mean we have not bottomed in related stocks, and I've already gone on record looking for a January lift in some of these shares. November's new home sales sank 9%, so this rise in existing home sales to a 5.0 million annual pace from 4.97 million seems contradictory. Also, considering the existing market is much larger than the new market, today's news would seem more important.
However, lost in the numbers is the fact that new home sales data is taken upon the signing of sales contract, while existing data is taken on the closing of the sale, which usually lags by 1 or 2 months. So, if new home sales is the leading indicator, then we should see this existing sales data deteriorate for at least one or two months more. The spring is the most important selling season for housing, so a lot is weighing on what happens after February. Inventory declined, which is a very positive piece of news, but the level remains inflated. Inventory continues too high to support prices and to inspire home builders to look to expansion. We think it will be another 6-12 months before prices stabilize, and much depends on the very volatile geopolitical outlook (I'm talking about Iran).
Consolidation Begins in Retail
Did you notice? It may have already started. Macy's (NYSE: M) is closing nine locations and laying off some 900 employees, though they will have opportunity in nearby stores as they avail themselves. Wall Street Greek is telling you that this will be the them that drives 2008, besides continued geopolitical stresses. Keep your eye on retail, and notice the empty buildings where your favorite stores once offered goods.
Market-Moving News
On this last trading day of 2007, existing home sales came in better than expected. Hold your horses though, we'll take you through the numbers and show you why the real message is that we have not hit bottom in real estate. That does not necessarily mean we have not bottomed in related stocks, and I've already gone on record looking for a January lift in some of these shares. November's new home sales sank 9%, so this rise in existing home sales to a 5.0 million annual pace from 4.97 million seems contradictory. Also, considering the existing market is much larger than the new market, today's news would seem more important.
However, lost in the numbers is the fact that new home sales data is taken upon the signing of sales contract, while existing data is taken on the closing of the sale, which usually lags by 1 or 2 months. So, if new home sales is the leading indicator, then we should see this existing sales data deteriorate for at least one or two months more. The spring is the most important selling season for housing, so a lot is weighing on what happens after February. Inventory declined, which is a very positive piece of news, but the level remains inflated. Inventory continues too high to support prices and to inspire home builders to look to expansion. We think it will be another 6-12 months before prices stabilize, and much depends on the very volatile geopolitical outlook (I'm talking about Iran).
Consolidation Begins in Retail
Did you notice? It may have already started. Macy's (NYSE: M) is closing nine locations and laying off some 900 employees, though they will have opportunity in nearby stores as they avail themselves. Wall Street Greek is telling you that this will be the them that drives 2008, besides continued geopolitical stresses. Keep your eye on retail, and notice the empty buildings where your favorite stores once offered goods.
Market-Moving News
- Greek: Week Ahead - Ominous al-Qaeda Precedent
- Bloomberg: Existing Home Sales Rose in November
- myway: Bhutto's Husband Becomes the Candidate
- AP/Yahoo!: Pakistan's Shares Crash
- AP/Yahoo!: Asian Markets Strong in '07
- CNBC: Oil Hovers Around $96
- DailyFX: Odds Against Major Dollar Bounce Now
- AP/Yahoo!: Times Square Ball Goes Green
- Forbes: Best Selling Vehicles of 2007
- CNN Money: Real Estate, the Best and Worst of 2007
- Bloomberg: Defaults on Insured Mortgages Rise 35%
- CNBC: Gold Makes Largest Gain in 30 Years
- Yahoo! Earnings Calendar
- CNN Money: Kerkorian Buying into Delta Petroleum (Nasdaq: DPTR)
- AP/Yahoo!: US Air (NYSE: LCC) Addresses Issues in '08
- TheStreet: Baidu (Nasdaq: BIDU) CFO Dies, Shares Fall
- CNBC: Merrill (NYSE: MER) in Talks to Sell Another Big Stake
- TheStreet: Macy's (NYSE: M) to Shut 9 Stores
- Financial Times: Kenya Shady Election Drives Violence
- Economist: Markets in '08
- Iran Daily: Tales from the Dark Side
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posted by The Greek | 11:24 AM
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