Market Talk

We’re not tough enough to take the pain.

That’s why it’s come down to this, citizens — the Fed priming more QE, doing “whatever it takes” to alleviate the hardship. The ceaseless efforts to artificially prop up asset prices. The extraordinary amount of Americans’ monthly personal income now derived directly from Uncle Sam.

It should be much more expedient and ultimately less costly for the government to simply step back and let the economic chips fall where they may. But it’ll hurt, and the nation’s leadership doesn’t think we citizens can handle the sting.

Indeed, we often come across like a society of coddled whiners who can’t stand to even be the slightest bit inconvenienced, never mind subjected to any degree of physical or psychological travail. We can’t handle bad reception on our iPhones, why should the government expect us to deal with the hardship that would come with allowing home prices to reach their natural level, to finally unleash market-clearing prices and probably the failure of more big banks and other institutions? Continue reading…

This baby's still available, and the price keeps dropping!

Goldman Sachs turns more bullish on homebuilders, a questionable move considering many still believe there’s too much inventory on the market for a sustainable housing recovery.

Nevertheless, Goldman raises its view on homebuilder stocks to attractive from neutral, predicting 30% growth in new home sales next year.

Aggressive prediction, especially considering many expect the unemployment rate to keep rising into double digits next year. But the firm says “troughs in non-farm payroll losses are a better gauge for a return to growth in new home sales than waiting for the peak in unemployment,” and investors waiting for the peak are usually seven to eight months and 60% too late.

Counter to Goldman’s take, however, Citigroup says now’s not the time to buy builders.

“We think valuations are stretched, and we note that based on recent price action, less good news is effectively bad news for the stocks,” firm says.

Continue reading…