Fewer New Homes
Stocks were very volatile again today, and ended down 127 points. There was no change in bonds.
Gold hit the $750 mark today, and bounced off it, ending at $788. Gold is something to buy with both fists right now.
Gasoline and Oil rebounded slightly. It’s sure nice to watch gasoline prices coming down – and frustrating that it’s coming down too slowly.
In the news today..…
Houses are being built, but not many. In fact, in 2008 it is very possible that this year will be the fewest new houses built since WWII. I consider this very good news as this is important to get to the bottom of the housing market. Naturally, it isn’t good if you’re in the housing industry.
Banks are still not lending to each other, as shown by the elevated LIBOR rate. While LIBOR is starting to fall, it hasn’t come back to some ‘normal’ levels. The cause of the elevated LIBOR is that when Lehman Bros went bankrupt, there were some interbank loans that went unpaid – ergo FEAR gripped the market.
Here are Yesterday’s numbers:
Dow Jones 30 Industrial – 8852 (down 127 points)
10 Year Treasury Bond – 3.94% (no change)
Euro – $1.3414
Gold – $788 (down $17) – a Buy with Both Hands Signal – price support at $770.
Oil – $71.85 (up $2.00)
Gasoline – $1.67 (up $0.04)
Yes, the housing data that came out showed continued drops in new housing starts. This IS good news because there is a sizeable existing inventory of homes (new & existing) to work through first. In fact, I am waiting for about half the home builders to go BK. I am surprised there are so many hanging onto life. Remember all the turmoil after the late 80′s boom burst and how many builders went under then through the mid-90′s.
We could have predicted this a good 12 months ago when Bob Toll (CEO & founder of Toll Brothers) said he foresaw the worst housing market in his life time.
Sadly, I don’t see the housing market getting better any time soon and it may even get worse.