Thursday, July 16, 2009

Housing Costs are Higher???

First, sorry for not posting as much. Very busy with projects at the house and determining my next career move which may be rejoining my old company who needs me back. A few options so its no sweat. I never even had to stand in an unemployment line.

Anyways, the market is really showing signs of strength based on earnings and ... economic data? Yes, it is gaining on economic data showing that the economy is improving, or so we are told. Lets take one piece of data. CPI. This gives an indication of weather we are moving into inflationary or deflationary territory or if things are stabilizing. This is a number that the government calculates based on a wide range of data points. One of them is housing or rent costs. Basically, how much does it cost you to live where you live. And according to the CPI data, housing costs went up in Q2 relative to Q2 2008??? Say what? Yep, even with house prices plummeting and everyone and their brothers are refi'ing, in order to reduce monthly payments, the government is telling us we are paying more for housing now than we were last year.

Talk about totally discrediting this once thought of important data point. This proves you can not trust any of the numbers coming from the government. This is nothing more than trying to stimulate the economy by cooking the books. It may work, but how can we trust anything that the government is telling us.

Another piece of data. The Fed released it's meeting notes and in them, it said they expect unemployment to reach 9.7% this year and 8.8% next year. Are they all living in a cave? we will hit 9.7% within a month and 10% by October. Next year, unemployment is not going down unless they stop counting those who have been unemployed for more than 6 months and are no longer eligible for unemployment.

So, let the market run. Tech is doing well and big banks should do well. Healthcare may do well. Outside of that, retail, real estate, consumer discretionary, are all going to get hit hard once the real data comes out. It may not be until August until that happens.

Remember, just a few days ago the market was in the 870 range and all the TV analysts who were targeting a move to 850 or lower are now saying 950 or higher. It all changes quickly in an environment like this. don't fall in love with a trend. In this market, the trend may be your enemy, not your friend.


As pointed out TBT was a steal. Should continue to climb to the 55-56 range.

UNG is starting to look tasty again at these levels for a long term play. I like Oct and Dec calls. Nat Gas is at historic lows and could easily double by end of year.

I like AXP as a short position big time once this rally looses momentum. AXP is a dog and they can continue to cut jobs to offset loses and fool the investor but sooner or later, that will bite them.

Wow, look at SRS. I bought at 20.30, sold at 23.10 and bought back in today right at 19.00. Its a great play to swing with this one. Don't fall in love with it though as we have learned in the past. Take that 15% gain and be happy.

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