Well actually, one Hommie is getting hammered and the index is getting dinged. We have been following this chart of the Homebuilders Index for probably a year or so now. It has been moving along in a large, bullish Cup & Handle.
Today KB Home grossed out the market (thanks for the heads up, Hammer) with talk about stuff that you would not expect to see in a low energy and (some) materials and low interest rate environment.
“We are projecting our first quarter 2015 gross margin will drop significantly from the first quarter of 2014 hitting the low point for the year before improving sequentially for the remaining three quarters of 2014,” Chief Executive Jeffrey Mezger said on a conference call after the company released quarterly financial results. He said there was a “softening in demand” in some markets during the fourth quarter, more sales incentives, and pressures from construction, labor and material costs.
Unbelievable. It reminds me of what I posted a few weeks ago about my trash man boosting prices due to increased costs – of nearly everything other than powering his trucks. There have been other surprising instances of late as well that I don’t quite recall at the moment.
Could the payback for the balls out inflationary operation in play 24/7 and 365 over the last 6 years be brewing?
On a weekend where I took my daughter to Boston for two nights of voice coaching/recording, needed to watch the Patriots game (on DVR) and a late Rangers game, on a taxing California road trip (it may have been taxing for them too ), I somehow managed to get 35 quality pages done with NFTRH’s 325th edition.
I am happy with the report for the reason I often am when I think I’ve done a good job; I feel I am personally a better investor today than I was on Friday afternoon.
Well, of course change is coming to the macro markets. It has come every day since the beginning of time and today is different than yesterday. But I mean a change in the market’s character is likely coming in 2015.
NFTRH notes the divergent Horsemen, Gold-Silver Ratio and USD, and also cryptically notes that people need to have the proper market interpretations at the ready in 2015. It was just 6 months ago that we started managing a bounce in the roundly reviled USD in NFTRH. Now look at it, everybody’s bullish the buck.
The stock market is down big today. Oooh, that’s scary, eh? Well no, not until it breaks some parameters. Interestingly, some of my non-gold stocks are very green today. I think (think, mind you) that the market is just cleaning out the pipes as sentiment got over bullish again over the holidays. Those gaps need filling, after all.
But if and when it does go bearish for real I’ll plan to short this pig with conviction. Right now the only thing I am short is junk bonds and that is working well. I find it really interesting that everything is down in the face of the strong dollar but the precious metals. That is exactly according to NFTRH’s plan on the big picture. Exactly. In the near or intermediate-terms, other things can and will happen. But today is a microcosm of what I’d expect the big picture to look like under a strong dollar regime.
Meanwhile, the Gold-Silver ratio says Uncle Buck may be readying to take a break. It’s either that or the GSR will get back in gear and croak everything. I think the former may be in play.
- Fill’er Up –Market Anthropology [biiwii comment: a few days late but interesting viewpoint on the post-2011 disinflationary phase]
- 5 Themes for 2015 –SeekingAlpha [biiwii comment: this SA post disputes MA’s view; what makes a market and all…]
 December ISM just out, details here –NFTRH.com
and… What Happens After a Big Down Day Between Christmas & New Years –QuantEdges
So Baby 2015 has slammed the book on wrinkled old 2014 (this imagery just cracks me up), a year that featured the continuation of existing macro trends like US stocks up, global stocks wobbling, precious metals weak and commodities weak to tanking.
Personally, I found the year revolting as an honest market participant, but thankfully made like a caveman and simply used my tools to help me avoid the pitfalls of my emotions and logical mind. I try very hard to tune down the Tin Foil Hat stuff, but I continue to be in awe of Policy Central and the depths of what looks to me like depravity that they will stoop to in order to keep up appearances. Reference Operation Twist and its “inflation sanitized” selling of short-term notes and buying of long-term bonds.
Who would’ve thought managing an economy and a financial system could be so easy, so controlled and well, so sanitary? Of course, that was way back in 2011, when the macro began to quake in anticipation of change. An anti-market (AKA gold) was brought under control but good and though the masses would hold tightly to their fear (so deeply ingrained from 2008) for another year or more, 2013 and 2014 saw increasing momentum toward a complete recovery of hurt feelings from the 2008 crisis time frame.
Continue reading Welcome, Baby 2015