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Two Ways To Play: Real Estate Bottom?


Economic data still paints bleak picture.

In today's session we saw bits of economic data that didn't show many signs of a turnaround. We begin with news from the real estate sector.

This morning we found that home prices in 20 U.S. metropolitan areas fell in February by the most since record-keeping began in 2001, according to the S&P/Case-Shiller home-price index. The Case-Shiller index fell 12.7% year-over-year, after a 10.7% decline in January. 17 of the 20 reporting metropolitan areas are posting record low annual declines, according to the report, and ten of those are declining in double-digits.

It doesn't stop there. According to data provided by RealtyTrac, foreclosure filings more than doubled in the first quarter. 650,000 properties were in some state of foreclosure in 1Q, an increase of 112%. Areas that led the U.S. were Nevada, California, and Arizona. Even Fannie Mae (FNM), the world's largest mortgage buyer, said median home prices in the U.S. could drop by a record 5.7% this year.

With that said, it comes as no surprise that the consumers of the U.S. have lost their confidence. The Conference Board's Consumer Confidence Index fell to 62.3 in April. According to Bloomberg, it was the biggest three-month slide since 2001 and fell to its lowest level in five years. Remember last week's consumer confidence data by the Reuters/University of Michigan survey, where it dropped to a 26-year low?

For more analysis, see Professor Kevin Depew's perspective in Five Things You Need To Know.

Looking to tomorrow, both bulls and bears are hesitant to put on major positions ahead of the FOMC announcement, but here's what they may be considering.

From the Bull Pen:

Even though gold futures and the gold miners took a hit today, Professor Lance Lewis said he expects these asset classes to outperform. It's not how much the Fed cuts or pauses, but how long rates remain low, he says.

Credit card plays MasterCard (MA) and Visa (V) had a rockin' day. Bulls are cautious of their runs today (+13% and +7% respectively), but will continue to favor these stocks with solid growth prospects and less exposure to the credit sector (remember transactions, not credit).

From the Bear Cave:

Housing is where this whole mess began. Bears believe this rally in the homebuilders ETF (XHB) (over 50% since the January low) is still in the category of a "corrective" one and unsustainable.

Hope y'all had a great day. See you in the morning! Good night!
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No positions in stocks mentioned.

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