Several weeks ago, Shanghai changed its building code to include more wood, in order to build cheaper housing. China intends to spend up to 132 billion on affordable housing, as the great communist experiment in China creates vast diversity between the haves and have nots. Needless to say, lumber stocks have responded with higher prices.
I’m not a big fan of lumber stocks. Personally, I am more of a pulp guy, which is why I was long FBR. However, there is something to be said about China and their burgeoning economic power. While we laugh at China’s grandiose plans for world domination, they are actually laying the ground work to control the world, economically. This is what happens to an old superpower who gets fat and lazy, drunk and stupid. You get displaced.
Today’s market has an annoying feel to it. No one wants to commit, yet here we are wasting each others time. Oil is getting “ape raped,” once again and banks are weak. The Dow is unchanged, yet I have several stocks down 3%+.
One notable mover is Research In Motion Limited (USA) [[RIMM]] . I have to believe, RIMM is nothing more than one good phone design from a BROKEN ROBOT breakout to the upside. The stock is cheap as Chinese drywall, in the low $60’s.
In short, do not underestimate your Chinese Overlords, for they will soon be whipping you at your local Li Fung prison factory. And, before committing new capital to this market, you might want to make sure both gold and oil firm up.
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Lumber needs all the help it can get
What do you think of cfp.to? Heard some Canadians have been flying over to China to sell them some wood.
I’d be careful buying any Canadian wood, Canfor(I know a few people that contract there) is a decent company but since they split off their pulp division it’s been all red ink.
fig.
as usual, great post fly. i was thinking the same about wanting to see the OIH move up before getting crazy drunk again.
quick question: are we still only playing longs?
I am still long only. It’s just to complicated to try to time the end of year bullshit.
gratis.
That means “Free” — just fyi.
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6th….Fly call admn
Peter Schiff’s EPHCX China fund is a good way to get some passive exposure. It’s done pretty well for me so far!!
Regarding Chineses real estate … me long a fair amount CHLN … will add berow 4.00
Finally! I couldn’t find a reason why increasing /LBS were causing Bob Vila to sport wood. During the lumber supply build and real estate downturn Lumber Liquidators (LL) was an awesome play, especially with homeowners trying to increase their home values.
Wouldn’t you think regional Chinese commercial banks would be expanding their balance sheets and increasing profits as lower income Chinese people seek housing and entitlements?
I thought Le Fly concentrated only on French stocks, happy to see he loves Chinese too. 😉
John Paulson is almost as bullish as Fly
http://www.fundmymutualfund.com/2009/12/hedge-fund-titan-john-paulson-bullish.html
thinks Ben will inflate us which has him still clinging to gold, and out of dollar but happy with credit and equities as we repeat Greenspan days of bubble making.
•Billionaire hedge fund manager John Paulson said on Tuesday he still sees compelling long-term returns in equities even after their sharp run-up this year, while holding no short positions in the credit markets.
•”Today our net long exposure is perhaps the highest it has ever been in our portfolio,” Paulson said during a luncheon presentation at the Japan Society.
If you’re looking for a lumber play, I remember peering at WY some months ago. However, I didn’t bite, and I don’t remember what I thought of the stock. It would be a good place to start research though, if anyone’s interested.
Anyone notice the Kueer-cup down in an up tape?
Noticed it?
I called “Winner’s Curse” yesterday, ya nappy headed whooah.
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PCL’s getting bought today (like everything else, on modest volume) …for longer-term, Canadian lumber hauled by CNI.
Li & Fung makes great garments for the proletariat.
http://www.lifunggroup.com/front.html
http://en.wikipedia.org/wiki/Li_&_Fung