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Dollar has made it's massive move already before the first rate hike, smacking down some of the world currencies and countries who were relying on a commodity boom

What I discussed in the interview

Demographic deflation
Strong dollar exposed a flaw in non diverse economies around the world

Still not a U.S. recession trend line story

anonymous says

Appears the commodity boom is heading for a rather nasty bust based on today's headlines alone.

Oil/Dollar spread is almost perfect, they're still pumping out there too

anonymous says

So whatever fallout comes from this will be limited to non diverse economies ?

In the context of having a very big down draft in terms of demand yes.

Europe
Russia
China
Japan

Their economics are much worse in terms of growth, rate of growth and decelerating growth

For 15 months their was a thesis that the U.S. would be in recession because manufacturing is falling

It's less than 13% of our economy, we have lost 200K-300K oil and mining jobs and claims haven't budged once higher on a 4 week average because we
have 153 million working and pushing 200K a month

So for oil states we can see the decline in economic output but we are more diverse than oil states and other countries around the world.

Not to mention we have Zero threat of currency induced inflation with the dollar.

JOLTS just came out and pushing at 5.4 million, so the impact isn't that big to us

anonymous says

How does this play into Draghi's push to do "whatever it takes" to try and get his 2% "inflation" number?

What Europe Has is problem that #QE and Low Rates can't easily solve,

It's very hard when it's demographics because you can't really do much when the problem hits your shore.

Just look a Japan for decades, older people don't spend money or create inflation, younger people do or some type of economic expansion that creates inflation

anonymous says

So why the continued push for QE into infinity in Europe if it isn't helping ?

Like I said in the interview #QE is a waste, velocity is awful, not the way to fight demographics, if it did actually lower rates from a higher rate number then it would mean something, but excess reserve heaven isn't the main idea of #QE

anonymous says

As far as this country Cliffs Natural Resources and related companies are feeling some pain from all of this so kind of curious how long or how deep you think this would have to get before something washes up on our shores ?

Coal is dead, more due to Nat Gas

Less than 80K coal workers in America, so the downside velocity is limited

We are a consumption based economy, I never was in the group that low oil will expand demand curve economic in this cycle due to demographics, but it doesn't hurt outside oil states that people are spending less on gas on the lower end of income scale, but they don't spend enough to give it a big upside ...

anonymous says

I was talking about the iron ore mining with Cliffs but am aware of the current situation with coal. Whatever the lower end of the income scale saves on gas will just get spent of something else and the net result is they are or will be no better off than before.

Cliff natural is one of the least important companies in the U.S. in terms of what we would follow on recessionary trend economics,

All these commodity based companies, Steel and Iron Ore have been in decline for a long time and it hasn't budged the U.S. story.

The case can be made we are closer to the end than the start, but Cliffs and other commodity based companies simply don't mean that much to the total U.S. story

Logan Mohtashami says

Love this chart, thanks for posting. It's very enlightening.
Employment is the number one indicator when it comes to predicting the future course of housing, which clearly shows up with the highs and lows of employment coinciding with the highs and lows of housing. The job openings yellow line seems to lead the way, pointing to a very healthy housing market.

Strategist says

Employment is the number one indicator when it comes to predicting the future course of housing,

Not the best thesis to use,

We have created more than 13 million jobs we have 153 million working the demand curve today in year 7 of the economic cycle are what we amount to a recession demand curve

It's one thing to have a slow and steady rise from a deep bottom and beat estimates

However, 2015 will be the 3rd straight year of miss sales estimate some now as high as 17%-20%

Once again as I have said for a while #TOL brothers .... down once again after their report, adjusting to inflation it's a negative return now for 3 years if you bought it in early 2013 when the best and the brightest on Wall Street were saying housing is in Nirvana and TOL is #1 pick

= Lack of discipline

At this point it's such an under performing stock that it might have value as mass catch up play unless profit margins get hit on lower prices which was the cause this quarter ;-)

Logan Mohtashami says

Once again as I have said for a while #TOL brothers .... down once again after their report, adjusting to inflation it's a negative return now for 3 years if you bought it in early 2013 when the best and the brightest on Wall Street were saying housing is in Nirvana and TOL is #1 pick

Oh God. Know any good bankruptcy lawyers?

Strategist says

Oh God. Know any good bankruptcy lawyers?

One of the biggest mistake housing demand curve bulls made and if you look at total net sales estimates 3 years ago to today

775K- 825K

It was based on a assumption that jobs, population, and rates matter more than Demographic and DTI economics

This was the flaw and why once again we are looking now at the 3rd straight year of sales estimates in a year everyone was proclaiming Strong sales and yet they missed the decelerating sales from the start of the year

Lack of discipline and not reading negative revisions

Even today people have no idea that sales are coming in at a miss

If you told someone 3 years that 2015 would be struggling to get to 500K sales they would laughed at you, said you were insane, said that millions of jobs are being creating and that people need homes

Opps... forgot about affordability didn't me ....

Slow Slow Steady rise until demographics and DTI economics get better

Ironman says

So, you wanted me to invest in home builders stocks, eh???

The problem with the TOLL brothers pick which was kind of lazy in the start of 2013...

You could have traded it well, but for those that said buy and wait a few years you will get a great return because they're best of bread.

It didn't pan out and now they showed profit margin hits at the end of 2015...

Over hype wasn't necessary here in early 2013

TOL is 34.90 right now
It was 36 print in early 2013

Not all builders are the same, but here the under performing is so bad that you could use the dog of the dow theory here

Last year the builders got whacked but it left a great low bar to work from for this year because sales were going to grow but my point to CNBC on trading nation is why keep on pushing TOL it's been under performing for years

Ironman says

Strategist says

Logan Mohtashami says

Once again as I have said for a while #TOL brothers .... down once again after their report,

Oh God. Know any good bankruptcy lawyers?

So, you wanted me to invest in home builders stocks, eh???

Want to get rich? Just buy them. Day to day changes are just buying opportunities.

Strategist says

Want to get rich? Just buy them. Day to day changes are just buying opportunities.

This is true even though the price is below what it was in early 2013, their was ample time in the 3 years to buy low and sell high, if you're a trader,

Logan Mohtashami says

Strategist says

Want to get rich? Just buy them. Day to day changes are just buying opportunities.

This is true even though the price is below what it was in early 2013, their was ample time in the 3 years to buy low and sell high, if you're a trader,

I'm focusing more on the industry rather than individual stocks. I have Toll Bros and some others, but the ETF's like ITB, XHB is what my little portfolio mostly holds.

Strategist says

ut the ETF's like ITB, XHB is what my little portfolio mostly holds.

I know, I am not bearish on the ETF as much as I was on Toll, kind of what I was saying to CNBC on that day, dogs of the dow theory with the ETF but be mindful of TOL

I got like 9 emails asking me to read their quarter as selling price fell for them, I replied, my history speaks for itself, do your own homework

Strategist says

I have Toll Bros and some others, but the ETF's like ITB, XHB is what my little portfolio mostly holds.

The one item I would look out for is if profit margins due to get hit when rates go higher with these higher priced homes, right now TOL was the first to bite on the lower sales price and they got hit on he earnings.

Builders who can sell lower and middle end homes should have the advantage in terms of net sales and pricing power.

If existing inventory grows, that's to me the biggest competition for the builders because of the big price gap between new and old.

However, we are all working from low level sales, that gives the future legs

TOL down again, from $30-$34 it's a much better pick up price, because under $30 no real support until $20 but that is a Great Recession price, so as always be mindful