My Analysis. Counter with opposing arguements with well thought out analysis. The sector rose into the expected Fed Rate Cut. Just like any Co's stock rises into positive earnings expectations. Then a Co's stock sells off after the fact. Housing sector selling off as expected. Citi added to that and the markets are beginning to realize the impact of what is in store for the economy and other financials. The markets have been in denial about the impact housing has on the economy. The markets have been pricing in the global economy (China, India, etc) saving it. Not going to happen. The U.S. Consumer is going to lose confidence watching their home prices slip. Retail spending will be impacted this upcoming holiday season. The reality of housing slowdowns impact and play out in the economy over many months. There is no quick fix for it. Recession is likely and we will teeter on it and the markets will come to react to this reality. Foreclosures are just getting started. 2008 will see many more mortgages adjusting from No interest payments to much higher payments for the nations home owners that took out the NINJA Loans. The Builders aren't building anything right now and won't be building anything until the massive inventory is sold, that won't happen until all the foreclosures are absorbed(Sold) by the market and inventories decline. Right now Projects are being scrapped. I see Centex, DR Horton, Pulte projects stopped in my area. Half completed projects that have come to a halt. Between Jan 2008/Mar 2008 and beyond foreclosures will escalate and hit the spring/summer Real Estate selling season. OUTLOOK is very Poor for the coming 12+ months as far as any new projects and earnings for the builders. The housing sector will fall further so you bottom fishers beware. I think it is way to early for this sector long.
Also I forgot to add the upcoming jobs report. It will be a very interesting day tomorrow. I wonder how much the construction layoffs will impact tomorrows report. I imagine there will be a hit tomorrow or the hit will come down the line in coming quarters. No one is working. Construction is dead. I have friends that have construction companies, electricians, plumbers, contractors etc. Many Layoffs in the construction area/sector. A Buddy who has a plumbing business that was screaming with work the last few years has cut his work force from 14 down to 2. Roofers, Cabinet Makers, Flooring, Tile guys, general laborors, illegals are ALL out of WORK. Tough to find a job in this sector right now. How that will impact tomorrows numbers we shall see. IF not tomorrow it will hit soon.
I think employment will not be hit hard because construction companies employ a lot of illegal immigrants.
Given that the construction jobs lost are probably mostly predicted in this jobs report, it isn't likely that construction will throw the numbers off much. There was probably about 20K construction jobs lost this last month as expected, which has been the case every month this year. If I'm off by 50% that still only shifts the report down 10K. Any surprise is going to come from the non-financial services sector. Financial services have been announcing their big layoffs. All the people I know who work in salons, gyms, spas, etc... are all saying things just went dead suddenly last month. My wife (massage therapist) is at about 1/2 of normal.