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January 25, 2007

Home-builders, chip-makers, transports in tailspin, Thurs., Jan. 25, 2007, 3:10 PM

While some economists tried to put a positive spin on it, the Existing Home Sales data for December is not good. With mortgage rates rising in January, the current month will likely be worse.

If you can't sell your old house, you are not likely to buy a new one, which means problems for the home-builders.

Here is today's list of the worst performing U.S. home-builders (with interactive charts).

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It seems that Citi and Goldman Sachs were a little early.

And the chip-maker problems are not just Intel and Advanced Micro Devices. The big loser today is Taiwan Semi (TSM), which is down about -5.4 pct on the day.

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Do you think maybe TSM has come too far since July?


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The transports are also running into strong headwinds today, which is surprising in light of Crude Light being off -$1.14 to $54.32. Do you think there is a message here?

Finally, re the Bloomberg article about Henry Blodgett: Henry was a highly specialized sell-side analyst who happened to get caught up in the clubbiness of Wall Street that was enjoying huge bonuses during the 1999-2000 cycle peak. It is not surprising to me, now that he has been removed from the industry for a few years, that he sees how important it is that traders take in the big picture to have any real chance at success. But, he also claims to be led now by the words of Prof. Burton Malkiel ("Random Walk") and the belief that Jack Bogle-inspired passive index funds is the only way to go. Wrong, wrong, wrong. Maybe in Henry's third coming, he'll get it all the way right.

Posted by Posted by Bill Cara on January 25, 2007 03:10:42 PM | Category: Cara Today in the Market

Discourse

Bill, glad to hear you are better.

The analysts bullish on homebuilders are really smoking something. For instance, Beazer says they will earn $1.25 to $1.50 next year after losing money this quarter. Analysts were looking for full-year earnings per share of $2.47. So at $45 per share they are at a P/E of 30 or more!

Posted by: moab [TypeKey Profile Page] at January 25, 2007 3:25 PM [link]

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