9 comments to “Texas Market Is Where The Party Is”

Robert Coté on April 17th, 2008 at 8:13 am said:

• Let’s see Larry’s last 4 big calls.

  No mortgage mess, Nov.
  Financials are strong, Jan.
  There is no inflation, March.
  Transports lead the way higher, April.

  I love you blog but I’ll hold my powder. Texas still remains attractive. Don’t confuse silly cheerleading (Kudlow) and a losing team (US RE) with the possibility of a few outstanding players (Austin, Houston).

Sean Carr on April 17th, 2008 at 10:17 am said:

• I believe I have the same chart which shows sub-prime resets peaked in March. However it also shows resets will remain greater than 50% of peak thru July. Also the peak reset month for Jumbo and Alt-A, while only about 30% of the peak volume or sub-prime ARM resets, doesn’t occur until June 09. I’m wondering what the correlation is in lag time from peak reset to peak foreclosure rate?

  Also, for what it’s worth, the spread between the A2/P2 and AA paper from the FEDs commercial paper (CP) report shows that the concern of default for the A2/P2 paper remains high by traditional levels. It seems the credit crisis continues to slowly crawl it way though the system. I’m going to have to sit on the fence awhile longer.

BawldGuy on April 17th, 2008 at 10:28 am said:

• You’re a writer for the NY Times, right?

  Kudlow has been right far more times than most of his peers. Of course he gets them wrong. Cramer didn’t call Bear Stearns, and told his viewers to stay put. It happens.

  Larry’s batting average has been dang impressive in the long haul. What I like about him most is how when faced with evidence contrary to his current position, he notes it publicly and modifies his position accordingly. As he should, and as you and I do.

BawldGuy on April 17th, 2008 at 10:36 am said:

• Sean — The chart I viewed showed a Dec/Jan peak with a fall off the cliff immediately afterward. The point Larry was making was that between the lull in scheduled resets, and the precipitous fall we’ve seen lately in rates, borrowers have been given two shovels to help in digging out.

  ‘By traditional standards’ is the key here. I agree with you, they’re still showing a ‘high concern’ level. The fact lenders are still lending at the pace they are, tells me their concern hasn’t reached levels keeping them on the lending fence.

  That said, it’s clear they’re not jumping off that fence head first. Time will tell.

  Thanks for stopping by, Sean.

David Shafer on April 17th, 2008 at 12:13 pm said:

• Data from Countrywide which services almost 30% of all loans shows that variable rate re-sets accounts for less than 3% of foreclosures. I would be more concerned with the job layoffs and business failures ongoing.

BawldGuy on April 17th, 2008 at 12:42 pm said:

• Couldn’t agree more. That said, some of the most recent earnings figures were surprisingly good, at least to me. How ’bout you? Were you a little surprised at say, IBM’s report? What about earnings in general?

Robert Coté on April 17th, 2008 at 1:32 pm said:

• The employment figures were good. 372k with almost no adjustment. The earnings are good but may not justify current valuations. Not my focus.

  The thing about the transports is what is happening to all the stuff being transported. Retail, construction spending, the Philly industrial survey are not responding. Inventories are up too. I think this time the transports are predicting one of the other two of the three recoveries they predict for every real recovery. We never had a housing led decline before either. Also be careful about “earnings.” They aren’t even called earnings anymore but “meeting analysts expectations.” Intel “met expectations” by having expectations revised 12% below guidance of mid January. There is so much trading going on in the stock market it is hard to find investing opportunities. Sound like the real estate market of 2006?

BawldGuy on April 17th, 2008 at 3:25 pm said:

• Yeah, I love the way they game the whole expectations thing.

  What is different, at least from what I’m seeing is exactly what you’re saying. Normally, inventories aren’t allowed to increase. Instead, they’re forced to minimum levels.

  That’s when you see transports fall dramatically. As you pointed out, inventories aren’t being forcibly reduced, and shippers are pretty dang busy.

  I look at what the big time pros are buying. Many of them are now advising reentry into the financials. Whether that indicates they’re seeing the light at the end of the tunnel or not, time will tell.

David Shafer on April 18th, 2008 at 8:14 am said:

• I invest in a real estate development company (do some work for them too). Another investor is a hedge fund founder. He see’s the big money laying low when it comes to equities and moving away from international real estate. Thinks it is the right time to move back into US real estate. He is only one opinion, but does manage in excess of $8 billion.
  Also starting to see some accounts of European real estate and some Asian acting like the US market 18-24 months ago.
  So for me I am more bullish on US RE, than equities in general. But, I think that both will do fine over a 5-10 year horizon if you pick your spots (Go Warren GO!). Short term thinking has gotten me in trouble in the past, so it is for amusement only that I watch the twists and turns!

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