Single Family Housing Starts reported this morning at 728,000 is a new high for this business cycle. At the moment SF Housing Starts appears to be in the early stages of a significant uptrend after 18mos of being relatively flat. The HMI index forecasted higher levels to come more than 1yr ago. This is a good example how while not providing a precise prediction an indicator does provide the direction of the coming trend even without being able to do so with timing nor level. If one looks for precision in economic activity, then expect continuous disappointment and confusion. But, investors can still work with trends even without precisely predictable outcomes.
David Einhorn Buys Three New Stocks: These Are The Names And Theses (Q3 Letter)
David Einhorn's Greenlight Capital funds returned 5.9% in the third quarter of 2020, compared to a gain of 8.9% for the S&P 500 in the same period. This year has been particularly challenging for value investors. Growth stocks have surged as value has struggled. For Greenlight, one of Wall Street's most established value-focused investment funds, Read More
Stocks continue to offer better return/risk characteristics over bonds if one is seeking long term returns in my opinion.
Also, getting inquiries about the mortgage delinquency “spike” last month…. Here is the explanation:
Black Knight Financial Services (BKFS) released their Mortgage Monitor report for November today. According to BKFS, 6.08% of mortgages were delinquent in November, up from 5.44% in October. BKFS reported that 1.63% of mortgages were in the foreclosure process, down from 2.50% in November 2013.
This gives a total of 7.71% delinquent or in foreclosure. It breaks down as:
• 1,925,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,163,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 829,000 loans in foreclosure process.
For a total of ??3,917,000 loans delinquent or in foreclosure in November. This is down from 4,497,000 in November 2013.
Black Knight had several comments on the “spike” in delinquencies in November:
- November’s spike in delinquencies was the largest month-over month increase (for any month) since November 2008• Much of the increase seems to have been calendar-driven; two federal holidays (Veterans Day and Thanksgiving) and the last two days of the month being a weekend resulted in just 18 possible payment processing days• The five largest M/M delinquency rate increases over the last 7 years have all occurred in months ending on a Sunday
If this was just seasonal (and calendar related), then delinquencies should decline solidly in December.