Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Before The Bell: Housing Fire Sale; Capital One's Wallet?

By

Homebuilders are ridding themselves of houses. Capital One cut its forecast, expecting more bad loans. Futures are lower.

PrintPRINT
Morning Perspective: Housing Fire Sale

Bloomberg reports that homebuilders are ridding themselves of inventory using fire sale tactics. Morgan Stanley (MS) recently paid 40 cents on the dollar for 11,000 properties across eight states from troubled homebuilder Lennar Corp (LEN), marking a 60% decline as the housing slump persists.


Stay informed, stay successful. Get your free two-week trial of the Buzz & Banter and get real-time information, observations and ideas from our Minyanville professors.


One analyst stated that homebuilders such as Lennar - the largest by revenue - are happy to accept lower prices to generate cash in the face of slowing sales and eroding land values. For more on the housing sector, read Professor Mike Shedlock's Who Benefits From Soaring Mortgage Refinance Volume?


From the Bull Pen: Bulls see the iShares US Real Estate ETF (IYR) sitting near multi-year support ($55) dating back to 2003. Sell-stops may be set below.


From the Bear Cave:
Bears can play the downside in LEN should the stock rally to its 50 day ($18); buy-stops set above.



Capital One's Wallet?

Bloomberg reports credit card company Capital One Financial (COF) cut its forecast for fiscal 2007 by 20% due to increased expectations of bad loans. The company said it expects 2007 profit of $3.97 per share versus a previous forecast of $5. Capital One also increased its loan-loss provisions to $1.9 bln with $80 mln in legal reserves and expects 4Q EPS to come in around $0.60. Minyan Peter mentioned Capital One last month in Still In The Cards.


From the Bull Pen: Many consider MasterCard (MA) as best-of-breed in the credit card companies. Sell-stops may be set below recent lows ($185).


From the Bear Cave
: Bears pressing the downside on COF may set buy-stops above $45. Discover Financial (DFS) is also an option; buy-stops in the near term above $14.70.


Quick Check Around the World

Asian trading closed with the Hang Seng -1.39%, Nikkei -1.45%, Sensex -1.38%, Taiwan -0.34% and Shanghai +0.38%.

A quick look towards Europe finds the CAC +0.04%, DAX -0.31%, FTSE -0.15%, ATX -1.25%, Swiss Mkt. -0.19% and Stockholm -0.47%.


A Look At Commodities

Commodities are weaker this morning. Crude oil is down -1.73 to 93.93. Gold is lower by -10.20 to 871.50. Silver is off by -0.219 to 15.515, and copper is lower -0.90 to 326.45.

The dollar index is lower -0.008 to 76.415.

As of 8:35 AM EST, S&P and Nasdaq futures are lower by 7.20 points and 11.50 points respectively to 1404 and 1945.


On the Radar

Economics

Initial Claims 322K vs 340K consensus, prior week revised to 337K from 336K

10:00 Wholesale Inventories: 0.4% cons
10:30 Crude Inventories

Today Fed Chairman Ben Bernanke speaks in Washington at 1:00 PM EST.

Click here for the full trading radar.

Good luck, Minyans!
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE