- a housing boom,
- a heartening turn for natural gas, and
- the D.C. drag.
Housing's Coming Boom Cannot Be Denied
Posted at 1:23 p.m. EDT, May 10, 2010 What goes down must go up? I am looking at some housing stocks and I am marveling that they are snapping back even faster than I thought was possible. My major focus is Standard Pacific ( SPF), a stock that I like very, very much as a play on the rising price in housing and the ability to grow by snaring good land inventory -- something that SPF is doing right here. SPF is one of those tells, more than Pulte ( PHM - Get Report), Horton ( DHI) or Toll ( TOL - Get Report), that makes me crazy angry with the bears. If the bears were right and the shadow inventory is growing and the prices are coming down, then why would the average price of an SPF home be going up? Why would they be buying more land? Why bother? I simply don't know how to reconcile all of these articles about short-selling and foreclosures and downticks in housing -- putting aside some parts of Florida and Nevada -- with this company's pronouncements. I am stuck with the facts, and the facts are all about things getting better, not worse. With the continued low housing build and the pent-up demand that comes from household formation that has not yet led to home-buying -- the longest period on record when I haven't seen people move out and buy -- it is very natural to believe that the lack of new housing is going to affect the inventory even if there are many foreclosures. Now we read so many one-off articles: Freddie Mac's ( FRE) portfolio, Bank of America's ( BAC - Get Report) portfolio, the portfolio of people being kept in their homes by HAMP. But they don't jibe with SPF, which is in the hardest-hit area of all. The news out of Fannie Mae ( FNM) sounds sufficiently dire. Yet, I emphasize, again, these institutions are letting people stay in their homes, so the supply will get sopped up. I would feel very differently if they had to leave. I would love to believe the bear case. Nothing wrong with just saying, as I did for so long, that even though I think housing has bottomed, I don't want to own these stocks. No can do. Too much good happening underneath all the RealtyTrak/Amherst/ New York Times gloom. Random musings: Can you believe some of these euro-related stocks like Eaton ( ETN - Get Report) and Cummins ( CMI - Get Report)? ... How about these retailers that have snapped back, like TJX ( TJX - Get Report) and Big Lots ( BIG - Get Report) and Bed Bath & Beyond ( BBBY - Get Report)? They have rallied back to where they have failed. Dicey levels. At the time of publication, Cramer was long Bank of America and Cummins.
A Heartening Turn for Nat Gas
Posted at 11:15 a.m. EDT, May 12, 2010 At least natural gas wasn't left out of this new energy legislation introduced by Sens. Kerry and Lieberman this morning. Most heartening. You can see the stocks are enjoying a bit of a run, too, although that might have more to do with natural-gas prices finally climbing above $4. My contacts in energy are unanimous in believing the bill won't pass any time soon because of the contentious issues involving coal. But I believe the use of natural gas in 18 wheelers will make the issue of going nat gas a "no brainer," as Andrew Littlefair, the CEO of Clean Energy Fuels ( CLNE - Get Report), the chief proselytizer for the industry (along with huge owner
The D.C. Drag
Posted at 9:14 a.m. EDT, May 14, 2010 Lately I have come to disdain the question executives are always asked: "What keeps you up at night?" I mean, come on, there are always worries. It is another one of those questions designed to create a negative thesis. However, I do believe we can now answer the question simply: Washington. The president and Congress just won't stop in their endless pursuit of business. The Visa ( V - Get Report) swipe fee last night out of nowhere is a good example -- and I feel it because we own it for Action Alerts PLUS; at least we have been scaling back into strength and it is a small position. But there is no position in our portfolio that I believe is beyond the reach of intervention. Every oil, every bank, every retailer, every transport or industrial -- I am worried about all of 'em. Some of it is because the bashing of business is so popular that Congress and the president feel they can run on it. Some of it is a belief that, post- BP ( BP - Get Report), companies have owned the government and it is time to strike back. Plus, Greece. That one country is holding the whole euro hostage, and even though I think they will take the medicine, there is enough worry from other countries that we can't get it off the front pages even though I think that the big risks are off the table. More important, as I said