Posts for Ticker ‘Housing’

The Bear Market’s Big Sucker Rally (MSFT)(BA)(GE)(F)(FNM)(FRE)(WM)(LEH)

AngrybearIn community college Economics 101 students learn that there can be dips in bull markets. Usually these are caused by a single event like a change in the party that runs Congress. The same holds true for bear markets. Suckers jump in on one piece of news or another. The market spikes up. A week later, it’s gone.

The Fannie Mae (FNM) and Freddie Mac (FRE) rescue pushed the market higher and may do so for a few days. In Asia, they know better. The rally never made it beyond the first 24 hours. Markets turned down in Day Two.

Read More »

Posted on: September 9, 2008 – 4:45 am in Economy, , , , , , , , , , , , , , , , ,

Pimco Bets The Farm On Mortgage Debt

The Pimco Total Return, run by highly-worshiped bond manager Bill Gross, is putting most of its chips into mortgage debt. The fund, which manages $130 billion, is counting on the federal government to make the bet work.

According to the FT "Mr Gross said his decision to raise exposure to mortgage debt in recent months was based on the US government’s implicit guarantee of Freddie Mac and Fannie Mae, the government-sponsored mortgage agencies."

Gross is usually right, but, with his exposure to mortgage-related paper tripled over that last few months, he could be facing his Waterloo. The housing crisis in the US could still get much worse. Recent data shows that housing prices are still falling. Consumer ability to pay housing debt is being hurt by rising costs of food and fuel and unemployment, which is edging up. A number of subprime ARMs will reset through the summer.

Pimco has been an unusually good performer over the last decade. Nothing good lasts forever.

Douglas A. McIntyre

Posted on: May 23, 2008 – 4:22 am in Housing, , , ,

Housing Stocks…Ignoring Poor Housing Data (HXB, PHM, DHI)

The National Association of Realtors monthly Pending Home Sales Index for August came in at 85.5, Month on Month -6.5%, and Year over Year -21.5%.

This is perhaps the worst data on recent record, but it is worth keeping in mind that this data is August and before the FOMC rate cut.  It was also during the worst mortgage month when every single headline was revolving around headlines and story lines saying "billions of dollars lost here" and "billions of dollars lost there" were on every television station (while "Flip That House" versions were still running rampant on TV).

The SPDR Homebuilders ETF (AMEX:XHB) is up almost 5% today at $23.20 and the ETF did maintain its strength after these numbers came out.  Citigroup’s upgrade for a trade yesterday is turning out to be quite a call. The XHB ETF closed Friday at $21.40, almost an 8.4% gain in two days.

Of the largest homebuilders, it looks like a 7% gain in DR Horton (NYSE:DHI) and in Pulte Homes (NYSE:PHM) are leading the pack. 

Jon C. Ogg
October 2, 2007

Posted on: October 2, 2007 – 9:27 am in Housing, , , , ,