tag:blogger.com,1999:blog-1110014885778996459.post7487605860562764263..comments2024-03-29T00:15:52.716-07:00Comments on Idiosyncratic Whisk: The Aggregate Demand Problem: Housing EditionKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-1110014885778996459.post-63591414510341589932014-10-11T06:31:44.856-07:002014-10-11T06:31:44.856-07:00TravisV here.
The question of the housing market ...TravisV here.<br /><br />The question of the housing market is very complex, so I defer to the judgment of smart guys like you, Scott Grannis and Gundlach.<br /><br />More broadly, it looks like a huge negative demand shock is happening in Germany, while something in Asia (uncertainty about China's future economic leadership?) is creating another (smaller) negative demand shock. And yeah, in an effort to offset those shocks, vague Fed gestures that they'll keep rates low for really really really really really REALLY long aren't very effective. They need to commit to more aggressive forward targets (at least some are expressing concern about inflation breakevens, since those reflect market expectations of the future).<br /><br />Some U.S. stocks and high-quality multinationals have now dipped substantially so I'm looking to buy. The fact that domestic stocks like Hershey, Sysco and TJX have held up indicates that the U.S. hasn't reached emergency territory just yet.<br /><br />The Germans are stubborn so I'm inclined to wait on stuff like Irish / Spanish real estate right now.<br /><br />China / South Korea / Asia are falling off a cliff but they're more pragmatic so I'm looking for possible deals there too.<br /><br />Here are some equities / ETFs that happen to be on my radar screen at the moment:<br /><br />Bank of America<br />Goldman Sachs<br />Nestle<br />Unilever<br />Quanta Services<br />Cummins Engines<br />Deere<br />Lindsay<br />ExxonMobil (Buffett!)<br />McDonalds<br />iShares South Korea (EWY)<br />Posco Steel (Buffett / Munger / Mohnish Pabrai)<br />Irish and Spanish REITs (Green REIT, Merlin Properties, Hispania Activos)<br /><br />Ford Motor and Sturm Ruger have also fallen a lot but I haven't studied them as much........Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-78065100753879879062014-10-11T01:37:09.155-07:002014-10-11T01:37:09.155-07:00I think I did get ahead of myself with a bullish h...I think I did get ahead of myself with a bullish housing call. The Fed pulled back the reins too soon. Until there is some ray of light in the mortgage market, I am holding off on it. I agree with him that exposure to the investor market and rental markets is probably best right now. I still don't know where the chips will fall though.<br /><br />I was short on bonds, but I've pulled out of my position. The risks have become too skewed to the negative. The Fed's accommodative language was good to hear, but their lack of ability to act forcefully with liquidity if it is needed, and their tendency to see falling rates as a positive sign, make the downside very bad. It's a skew thing, though. I still see the economy continuing to improve in the most likely scenarios. But, if it does, housing will probably lag. Once homeowners deleverage enough to make a functional real estate market, though, I do still expect an unusual growth spurt, led by housing, late in the recovery cycle.<br /><br />Where do you stand?Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-71774449228614290512014-10-10T22:26:44.625-07:002014-10-10T22:26:44.625-07:00TravisV here.
I haven't read these yet but th...TravisV here.<br /><br />I haven't read these yet but these headlines give me pause. Gundlach is a smart guy.<br /><br />http://www.businessinsider.com/gundlachs-short-xhb-call-2014-10<br /><br />http://www.businessinsider.com/gundlach-2014-sohn-conference-presentation-2014-5Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-40870542621736260112014-10-07T16:43:01.370-07:002014-10-07T16:43:01.370-07:00TravisV here.
Excellent graph! Maybe I should buy...TravisV here.<br /><br />Excellent graph! Maybe I should buy Lennar!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-14700212322065007632014-10-07T15:44:03.182-07:002014-10-07T15:44:03.182-07:00This is a sign of hope:
https://research.stlouisfe...This is a sign of hope:<br />https://research.stlouisfed.org/fred2/graph/?g=MPEKevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-1125847948938493932014-10-06T10:44:24.904-07:002014-10-06T10:44:24.904-07:00Sorry - the first stage of deflation....Sorry - the first stage of deflation....Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-44081614983745216202014-10-06T10:43:48.478-07:002014-10-06T10:43:48.478-07:00The problem is that the Fed at this point is argui...The problem is that the Fed at this point is arguing about when to tighten. What if we are seeing the first stage before inflation? Is there any possibility that they would do another round of QE? I don't think they would unless things get really, really bad first. The downside risks right now are scaring me a little bit.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-90567588700731444722014-10-03T18:32:43.294-07:002014-10-03T18:32:43.294-07:00Thanks for the input, you two. Time will tell.Thanks for the input, you two. Time will tell.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-48252304488405991812014-10-03T18:17:46.856-07:002014-10-03T18:17:46.856-07:00Amen, excellent blogging. I suspect US hits zero ...Amen, excellent blogging. I suspect US hits zero inflation ahead...the job figures were heartening but...seems like some stalling going onBenjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-351285848863798512014-10-03T13:59:06.094-07:002014-10-03T13:59:06.094-07:00TravisV here.
In case you missed it, Prof. Sumner...TravisV here.<br /><br />In case you missed it, Prof. Sumner wrote the following:<br /><br />"I’m asked a lot about falling inflation expectations. At this point it looks like an aggregate supply thing—falling commodity prices. But we need to watch it closely, to look for confirmation in other markets like stocks."<br /><br />http://www.themoneyillusion.com/?p=27708Anonymousnoreply@blogger.com