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Many have claimed that there’s no end is sight for this downturn, or recession or depression– until we see an uptick in the housing sector again.
Still others claim that until the banks are “fixed” and back on their feet, we cannot experience stable economic growth through strong credit support.
It appears each claimant is at least partially right, and moreover, that each of those sectors live and die together, wrapped in a form of symbiosis that is both mutually beneficial… and destructive.
This may all be “Master of the Obvious” stuff for you, but I figured I’d bring it to illustrative life for you anyway. There’s not been much talk of the housing sector recently on these boards, and maybe that “out of favor” status is warranted. Whatever the case, it’s clear that both housing and the bank index are again marching in lock step, and seemingly to their doom.
First I’ll show you $BKX –– no surprise for my readers, who’ve seen my starting to ring up purchases in the anti-bank index SKF because of this very weekly (sic) chart:
Note now that in comparison, I won’t use the Housing Index ETF– XBH— mostly because it’s made up of a lot of non-house building stocks. Same with another housing index– ITB — where some 70+% of the stocks encompassed is not home builders but instead retail accessory places like Pier 1 and Home Depot. No, I simply took the most popular name in the home building industry– Beazer Homes (BZH)– and ran the weekly chart. The similarities are astounding:
And like $BKX, it seems BZH is readying for a rebound as well. It makes no matter, I wouldn’t trust either as far as I could throw their Chief Investor Relations Officer. These are sectors that are ripe for shorting at any major moving average (which on the weekly charts above would be the 13 and 34-week EMA’s).
Have fun and keep an eye on both for any profitable divergences. Make no mistake, both sectors are hurting right now and should continue to do so into the near future. That doesn’t mean a scalp won’t be available on the upside every now and again.
My best to you all.
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Will re-read.
Sartre v. Nietzsche.
Wholly Crow!
Housing is gonna suck until the excess inventory is used up.
Housing is going to suck until the credit markets open up. Until the average home buyer can get a loan, inventory will not get used up. That’s why banks and housing are intertwined.
Yep, I just never realized how absolutely much in lock-step they’ve been recently.
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Hey, take heart. If we go too long, consumers can just buy homes outright…
You can do that in Detroit City right now!
With some foldin’ cash!
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And that is the truth!
Interesting chartography, Jake.
I am currently in the mist (sic) of buying a house and find that Wells Fargo is not only willing to make a jumbo loan for the house at under 4%, but our account manager at Wells’ private bank has offered a 2.75% line of credit for the down payment.
We have always been very reluctant to borrow, despite the leverage-praising preaching of all of those “Rich Dad/Poor Dad”-type farqtards. But it seems like some banks are now more than willing to lend as a strategy to attract customers with whom they can do other business. The process has been time-consuming, but very smooth.
Don’t know if this is a sign of bottoming out, but it feels like that’s what Wells is banking on. (No punning)
I don’t know that I’d be buying yet, Anton… no matter the terms.
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You may well be right, Jake. Had those thoughts myself, of course. But I’m paying much less than the original owner, who added a pool and lot of other stuff. We’ll also be on 5 acres, so I have plenty of room to plant food if we face the Acrapolypse (sic).
“The dead rat is on the floor, if it exists at all, Sartre, you walleyed jackanapes.” – Fred Niezsche
Thanks Jake,
Perfect timing. I was just going to ask what index or stock to look at to get a sense of what’s going on with housing.
Jake,
I was looking at $BKX on the weekly on March 5 and March 12, 2007 and the candle wick goes all the way down to the bottom of the chart. Do you remember what happened back then?
“…New Century Financial Corp. warned Monday (the 5th) of a series of serious financial problems that cast its future in doubt – and cast a pall over much of the nation’s financial sector.
Irvine, Calif.-based New Century said that all of its own lenders are cutting off financing, that it has been found in default of many of its financial agreements, and that it does not have the funds necessary to meet its obligations, which could reach $8.4 billion. The company’s market value has shriveled to only $178 million.”
Thanks!
Senator
Getting long Skiffles and will build the position slowly via options and shares. I am just glad football is starting of course that will change if the GMEN lose to the foreskins. I like Nicks and Jacobs for big games today. Many thanks for your awesome work.
You jinxed us!
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Apologies Senator
Jake:
Fly seems to think we are now in or about to be in a bear market. How do you think this will affect the PMs and Miners. I am also wondering whether the European crisis temporarily props up the dollar which could also put pressure on the PMs.
Watch the dollar.
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http://news.silverseek.com/SilverSeek/1315318111.php
The ‘ROOT’ causes are ‘FRAUD & CORRUPTION’ at all levels (Wall St.- DC -Corporate Board Rooms- Military Industrial Complex etc…), whereby the Banks-Debt- Housing etc…are merely the symptoms of the CANCER ie…FRAUD & CORRUPTION! Until or Unless the CANCER is GUTTED in its entirety, we move one day closer to THIRD WORLD BANANA REPUBLIC status!!
Anybody know why AG is down so much relative to the other silver miners today? I’m strongly considering adding to my position at these levels.
AG has like a 7.0 beta, so it’s going to be a touch more volatile.
When silver turns, it will run harder than most.
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Have you read anything by Martin Armstrong? If so, do you think he is just a nut, or something bigger there?
Is he the imprisoned guy? I’m not that familiar w. him.
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Yes – I think he might be out now. Some of his posts rant on the political system based on how he was handled in the system (I have no opinion on his handling either way). His theories are based on cycles and public vs private investments and the $$$ moving around the globe. His posts can be found here:
http://www.martinarmstrong.org/economic_projections.htm
I found some pdf of a book he wrote and some older presentations that are on my list to read
PZG!!
Jake,
What do you expect will happen during the transition from USD final collapse to the new world reserve currency? I don’t expect any sort of confiscation of PMs, but I do expect heavy manipulation of PM prices when that happens.
I also get the feeling the IMF’s SDR basket will include digital gold, which will allow the SDR to be backed by gold but will also allow gold’s value to be diluted, since the digital form will be a manipulated fiat currency.
What’s your take?