What's really going on in housing?
Masco's and Armstrong's dour numbers are at odds with those of every homebuilder we've heard from.
Monday night, we saw a downbeat outlook from Masco (MAS), the kitchen-bath company, and a horrendous report from Armstrong (AWI), which makes floor and ceiling tiles. Both indicated the U.S. had taken a sudden turn for the worse. Armstrong's was right up there with the worst calls of the quarter.
On the other hand, USG (USG) and Whirlpool (WHR), while acknowledging that the world has been weak, didn't say all that much that was negative about the U.S. Instead they reiterated the party line -- that things are improving off a small base.
It is possible that Masco and Armstrong are right, but their book of business is dramatically at odds with that of every homebuilder we have heard from, as well as with that of Lumber Liquidators (LL), which boosted its outlook significantly. Plus, we just heard Weyerhaeuser (WY) say good things about home sales in the U.S., along with Pulte (PHM), D.R. Horton (DHI) and Meritage (MTH) last week.
I'm sure Armstrong isn't deliberately sandbagging, and much of its downbeat commentary focused on commercial. For instance, there was this gem: It has seen a "fairly precipitous drop in the second quarter in almost every commercial subsegment, education, health care, retail."
Masco isn't putting out the white flag either. It is simply saying the economy is "losing momentum" and the second half will be "less robust."
Still, Masco and Armstrong sliced through the bull case pretty effectively, despite all the national data and individual housing company data we've seen.
Stocks are on hold ahead of the Federal Reserve decision. Otherwise, I think these two reports would be doing some real damage to the housing case Tuesday -- damage I actually would have wanted to buy. That's particularly so with stocks like USG, which is not seeing these kinds of declines in the U.S. while it simultaneously extricates itself from the European markets that continue to haunt both Armstrong and Masco.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long WY.
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No Jobs, No home buying. No jobs. No buying much of anything. U.S. Companies are holding on to tons of money right now. They won't let go of it for hiring, improvements and upgrades on equipment till this election is over. They are worried about Obama because he is not laying out any future plans on taxes, etc. etc. etc.
We need Manufacturing back in this country. I'm tired of smoke and mirrors out of Washington.
The price of homes in SWF has risen soley due to investors gobbling up the shrinking supply of homes the banks are releasing onto the market.There is still plenty of homes in the shadow inventory locked up;vacant and not yet for sale. You can call the bank and they will not be intested in selling that house yet;after all the upkeep (taxes &ins)is cheap in SWF so it pays for the banks to hold back the real supply and in fact thats manipulating the price higher what pople are willing to pay for a house.In other words if the main supply of homes for sale is the banks forclosure inventory and the slowdown the supply to a trickle ;up goes the price.Didnt they get bailed out for their losses already and now they want to squeeze just a little more money from the consumer. Aprox change from last summer to winter 2011 of 55-65 70 sq ft to 80-90-100 and better a sq ft; and I'm not a proffessional just an observer.
futhermore CEO'S ARE MAKING 18 MILLION off the backs of workers who make poverty wages
the CEO'S screw up and get bonuses...the workers screw up , they get fired
NOT GOOD FOR HOUSING................but that's free market capitalism
It's true the housing market will not come back until jobs come back. Jobs are not going to come back until we can compete with China and India or we move on to something else. It looks like we are moving on to something else as we are becoming more of a services work force then a manufacturing work force.
People need to stop complaining and adapt to the new economy.
If you are still in manufacturing you need to take it upon yourself to be as profitable as you can for the company. If you are in a union like I am that is going to be extremely unpopular with your coworkers but don't give in and take pride in doing the best you can everyday.
What are you doing to make this country better?
Right now the news(entertainment) industry is creating news that makes the economy look better than it truly is. After the election it won't matter who is in office, the entertainment industry(news) will report the true numbers. Then you will see how bad it really is. If these numbers of unemployed Americans were to be included in the stat's of the day, you would see how ineffective Obama's plan has been. Now we get to include the returning vets and the numbers really soar.
There should have been some plan for the vets to get help before bringing them home. There has been a high rate of foreclosed homes in the military and yet we have no plan of giving them support after they did their duty and put their lives on the line. I'm glad they are home, but we need to find a way to help them out until they can get back on their feet. Many are injured and unable to return to work so their numbers will not be counted either. We need to send a message to Washington, we have to change the way policy is created there and motivate them to implement change. Quit pouring money down the drain, and cut spending so the economy will have a chance to grow. America wake up, the economic policies in place now have not been working. Stand up and be counted and show Obama that his plan is not making any headway.
AND NOW THIS SHIPDIT THINKS HE KNOWS THE HOUSING MARKET, WHAT NEXT JIMMY BOY, YOU GOING TO TELL US HOW TO PICK LOTTERY NUMBERS????
You pay $125,000 to build the house on this lot. Total Investment is now $200K
The bank would most prpbably appraise this completed project aroung $150K
You are already $50K in the hole and havent even finished decorating.
Housing is a BAD INVESTMENT by all standards...
I see homes being built in stagnant subdivisions all over the place. It doesn't mean anything but that banks are forcing builders to put something on the vacant land they lent credit on. First, we still look at housing starts but we have the lowest number of working people since WWII. That's the idea of sprawl driving off the cliff. Second, we have seen the Dow lift on housing purchase contracts, but we know a contract is not a closing. Third... no one with commonsense looks at today's economic conditions and makes a long-term investment in a money pit, when there are so many good homes to be had for a lot less.
Big builders were given $25 billion by Dubya while he was telling us about the 'robust' economy. They used that cash to settle out of liens on parcels they are now building in again. The expectation is one from the 20th Century... if we build, they will come on Sunday drives and bury themselves in big mortgages and play keep up with the Joneses. Those folks Short Sold and live in trailer parks now, paying cash and eking out on a fraction of their former incomes. We are--- way off track. If Bernanke gives banks new capital, it will be very short-lived, dig us deeper and reveal more of the truth- that financial corruption has destroyed us and we cannot begin again until after we destroy it. I believe the suppliers, I think the builders are liars, I know the banks are crooks. I don't think I'm alone in those positions.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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