We mentioned yesterday [Mortgage Applications Spike to Record] that if you wanted to play the dropping mortgage rate angle, Bankrate.com (RATE) was a choice.
My decision to sell Lennar (LEN) a few days ago now looks silly because as you know, all these government programs, means the US consumer will soon be able to use their house as an ATM again and people will once more begin daytrading houses - here is Lennar, and the homebuilder index - notice the moves over the past week and today.
And then of course, with their newly flush pockets, that means people will be back in the malls spending the hard earned money that they refinanced into. (don't worry that many don't have jobs and many others are underwater - we can't talk about that when we have a thesis to ride) Retailers flying again as they did yesterday despite terrible same store sales.
Not to mention the home improvements we are going to do with this new found money from our home ATMs.
And of course all these new homes that will fly off the shelf, need new appliances
See, this would be a bit surprising if this was not the same playbook we see played everytime there is "hope" - we saw the exact same movements just 3 months ago [Sep 11: Hot Money Says a Housing Turn is Coming Soon] Well *that* was a great trade for a few days as well... until it imploded when "reality" reared its ugly head.
Same names, same run ups, same "hope", same everything. If it were not so predictable it would almost be amusing. Remember, the market is of course a discount mechanism and extremely efficient ;) Hot institutional money needs to find something to run up, so now they have a catalyst and away we go. I expect hedge funds to reignite this trade over and over in 2009 on any government program or data point that is "less worse" than the month before. The casino lives on. Most important to know, is you can see how dependent the entire national economy is on the house ATM.
No positions but wishing I had kept Lennar for a few more sessions
