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Correlation Between S&p And Homebuilders (us)

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Found this on a TMF thread (http://boards.fool.co.uk/Message.asp?mid=1...&sort=whole)

Thoughts From The Frontline

Fingers of Instability

8/25/2006

Introduction

This week we revisit some ideas on how change occurs. We are in a transition in the world economy, and it sometimes helps to think about how these transitions take place. What is the mechanism for change? Can we see it coming soon enough to avoid the problems and take advantage of them?

But first, a few comments on the housing market. As we all know, this week the news on both new and existing home sales was ugly. And we should remember that the data is from last month, and anecdotal evidence suggests this month will be worse. This is going to put a damper on the economy at large. I have been writing for some time that the US economy is going to slow down or go into recession. How much of an effect will that have on the markets? We will look at two items. The first is a chart from David Rosenberg, North American economist for Merrill Lynch. Quoting:

"The chart below is rather intriguing - the NAHB homebuilders index leads the S&P 500 by 12 months and with a near-80% correlation - a correlation that over time has actually strengthened, owing to the growing influence that the real estate market has exerted on the overall economic and financial landscape over the past five years. In fact, we can trace almost two-percentage points of the 3 1/2% average annual rate in real GDP over that time frame to the boom in housing construction and home prices - the direct impact on homebuilding, the spin-offs to other sectors like real estate services, architecture, engineering, legal, etc and the multiplier impact from the 'wealth effect' on consumer spending, especially on home improvements and household furnishings."

image001.gif

This is very similar theme to a series of Bubb's posts a while back. I have to say that the correlation looks very convincing, but see the original TMF thread for a few reasons to treat this data with some caution.

post-210-1156613297_thumb.jpg

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Bubb was right as far as shares being a good lead indicator:

http://www.builderonline.com/industry-news...rticleID=353887

Shares of home builders rebounded Tuesday slightly after a sell- off Monday, but the trend this year has been negative. The Philadelphia Stock Exchange Housing Sector Index, which tracks housing stocks, has fallen by
27 percent since its April 5 high
.

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Found this on a TMF thread (http://boards.fool.co.uk/Message.asp?mid=1...&sort=whole)

Thoughts From The Frontline

Fingers of Instability

8/25/2006

This is very similar theme to a series of Bubb's posts a while back. I have to say that the correlation looks very convincing, but see the original TMF thread for a few reasons to treat this data with some caution.

Hmmmmmmm. It does look convincing doesn't it.

We better hope that the global phenomenon of house price boom followed by falls suddenly becomes unglobal, or we could be in for a bit of a shock over here.

:o

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Guest wrongmove

Here is a link from that article: The Downside of the Building Cycle. It contains a load of articles about housing, with an emphasis on the US market.

(perhaps RB would like to start a separate thread for each article - they are pretty bearish in general, no spin required..... :P )

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Bubb was right as far as shares being a good lead indicator:

http://www.builderonline.com/industry-news...rticleID=353887

Shares of home builders rebounded Tuesday slightly after a sell- off Monday, but the trend this year has been negative. The Philadelphia Stock Exchange Housing Sector Index, which tracks housing stocks, has fallen by
27 percent since its April 5 high
.

Where is Dr Bubbles these days?

I wonder if he is a real doctor?

:huh:

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Guest wrongmove

Thanks for the information.

Do you have to know if Dr No from James Bond game was a real doctor?

:huh:

:lol:

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What about Doc Doc Docter Beat?

dunno what his PhD was in or whether he is a 'proper' medical doctor.

but he certainly has me "dancin' to the beat" :P

also i am convinced that Dr. No wasn't a medic - i bet he'd be lousy at administering a rectal probe with those funny claw-like hands.

Edited by gasket37

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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