# US Cyclical Stuff



## TjamesX (7 June 2005)

As the general health and well being of all equity markets is closely linked to the US economy, I think its always prudent to monitor what is going on 'over there'.

Hopefully we can use this thread to keep tabs on what significant economic news/events are coming from the land of stars and stripes, but for the moment I wanted to discuss some observations of my own that I think could turn out to be very important;

In a word HOUSING
or in two REAL ESTATE

Living down under we have had the benefit of seeing a real estate mania first hand and the things that come along with it - home equity loans, people borrowing more money, poeple thinking they are suddenly rich, property gurus , people spending money... but most importantly people in general going a bit 'loopy' and a rapid increase in home improvement shows   (just kiding). In general there has been a worldwide real estate boom..... that has yet to fully take off in america. However from the info I take in around the traps, there are signals that there is a recent surge in US real estate that won't slow down any time soon. Two of these indicators;

1) Commentary in th US seems to be saying they are in a boom and prices are overpriced (a sure signal that they are many many months away from a top)

2) Aussie RE investors have taken their money from Aus to NZ and now it seems to be heading to the states - of significance;

http://www.somersoft.com/forums/showthread.php?t=20927

Why do I think this is important?

A sure fire way to delay any realisation of a debt boom is to inject 'equity' into every homeowner in the US. I don't think people will stop spending if their balance sheets suddenly turn for the better overnight. Essentially I reckon this could be the last credit card in the wallet.

The US market could take this two ways - outflow of money from equities to RE, or confidence in the economy leading to continued equity investing, either way I think any dramatic surprise to the downside (as a result of the economy) will be delayed as a result.....

TJ


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## wayneL (7 June 2005)

TjamesX said:
			
		

> The US market could take this two ways - outflow of money from equities to RE, or confidence in the economy leading to continued equity investing, either way I think any dramatic surprise to the downside (as a result of the economy) will be delayed as a result.....
> 
> TJ




Agree! The US and the UK are desperately propping their respective markets and  seem to be staving off the inevitable successfully.

The house of cards will, of course, blow over in a twisted and tangled heap...but not yet....well who knows, these things tend to develop without people really noticing until its too late.

My tip is to have a foot in both camps.

Cheers


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## TjamesX (8 June 2005)

recent article.....



> Government economist cites speculation in some markets
> Updated: 4:34 p.m. ET June 1, 2005
> 
> Average U.S. home prices in the first quarter climbed 12.5 percent from a year earlier, pushed higher by low mortgage rates, income growth and speculation in some markets, the Office of Federal Housing Enterprise Oversight said Wednesday.
> ...


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## TjamesX (16 June 2005)

> The Associated Press
> Updated: 9:18 a.m. ET June 16, 2005
> 
> WASHINGTON - Construction of new homes rose 0.2 percent in May as the housing market continued its boom in response to low mortgage rates.
> ...




Building boom away in the US 

This is why Rinker (RIN) shares have been upgraded - and up and away


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## TjamesX (3 August 2005)

Just like AUS, House Price up, home equity loans up, big spending up.... I'm tipping these results are from;



> In the troubled automobile sector General Motors reported its US sales of cars and trucks rose 15% in July, while Ford sales rose 29%; DaimlerChrysler sales jumped by 25%.




equity mate!


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## tech/a (3 August 2005)

I have friends in the US who are riding and taking advantage of the boom in realestate over there.

Here-----commercial is currently the flavour and choice in property.
Still some $$s to be had in splitting larger blocks and building dense housing projects.
Retirement Villages of course continue to be in demand.

*While many look for reasons for doom and gloom the few take advantage of those opportunities that are presented.*


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## TjamesX (10 August 2005)

Its Aus all over again, just delayed 18 months;



> Joel Naroff of Naroff Economic Advisers agreed, saying the market is getting “out of hand.” Cocktail-party and office chatter he hears nowadays is reminiscent of the tech-stock boom of the 1990s, except that now would-be investors are looking to make a killing by flipping unbuilt condo units.
> 
> “When you see everyone starting to get into these deals, it’s getting beyond crazy,” he said. “People are saying, I’ve got to buy now, because if I don’t I’m never going to get into the market.”




http://www.msnbc.msn.com/id/8758416/

The big wheel turns, and there won't be any reduction in spending by the US consumer yet. My thinking is US company profit results will be strong for the next 12 months.

TJ


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## sam21poddy (10 August 2005)

Apart from Rinker (RIN), what other Australian shares are worth watching if they are likely to benefit from the housing boom over there?


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