Tuesday, July 19, 2022

Morning Note: A Long Ways From Mass Affordability...

Suffice to say that homebuilders aren't feeling so good about their prospects these days.

Here's from July's NAHB Housing (homebuilder sentiment) Index (HT Peter Boockvar):
“Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home. In another sign of a softening market, 13% of builders in the survey reported reducing home prices in the past month to bolster sales and/or cancellations.”

“Affordability is the greatest challenge facing the housing market. Significant segments of the home buying population are priced out of the market.”

And here's the visual (below the horizontal line denotes recessionary conditions): 

Single family housing starts released this morning for July reflect builders' angst (although multi-unit housing [apartments] is holding up fine):

As does single family permits:

While one would think that data rolling over like this would inspire the Fed to back off the tightening, with regard to housing at least, this is precisely what they're after -- and we're quite a ways from mass housing affordability. 

After yesterday's longer than usual note, we'll keep this one short... If you didn't happen to catch yesterday's message, please do. I believe it's telling, and timely...

Asian equities leaned red overnight, with 9 of the 16 of the markets we track closing lower.

Europe's leaning green so far this morning, with 13 of the 19 bourses we follow trading up as I type.

As are US stocks to start the session: Dow up 236 points (0.75%), SP500 up 1.01%, SP500 Equal Weight up 1.36%, Nasdaq 100 up 0.85%, Nasdaq Comp up 0.94%, Russell 2000 up 1.81%.

The VIX sits at 24.45, down 3.36%.

Oil futures down 1.24%, gold's up 0.30%, silver's up 0.70%, copper futures are down 2.20% and the ag complex (DBA) is up 2.49%.

The 10-year treasury is down (yield up) and the dollar is down 1.05%.

Among our 35 (adjustments this morning netted us 3 fewer) core positions (excluding options hedges, cash and short-term bond ETF), 31 -- led by Eurozone equities, Albemarle, AMD, oil services and materials stocks  -- are in the green so far this morning. The 4 losers are ag futures, base metals futures, intermediate and long-term treasuries.

More from the great one:

"...my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities."

Have a great day!