Skip navigation
MOST POPULAR RELATED TAGS
  • TOPICS
  • SECTORS
  • COMPANIES

TRADER TALK VIDEO GALLERY

» More

Current DateTime: 05:36:47 25 Nov 2009
LinksList Documentid: 30483322
Expiration DateTime: 11/25/2009 5:39:22 AM

TRADER TALK RSS FEED

» Help

Current DateTime: 05:36:48 25 Nov 2009
LinksList Documentid: 30456179
powered by digg
Trader Talk Video Gallery
CNBC's Bob Pisani reports on the trading day from the NYSE.
Bob Pisani reports on the trading day from the NYSE.
Bob Pisani reports on the trading day from the NYSE.
Bob Pisani reports on the trading day from the NYSE.
Bob Pisani reports on the trading day from the NYSE
CNBC's Bob Pisani reports on the trading day from the NYSE.
CNBC's Bob Pisani reports on the trading day from the NYSE.
Bob Pisani reports on the trading day from the NYSE.

Trader Talk

Text Size
Sep.11
3:10 PM ET
Thursday, 11 Sep 2008
Market Leaders: You Won't Believe Them

So we have come to this: forget financials, forget materials, forget energy. Our market leaders are retailers and home builders.

Since the July bottom, the Philadelphia Stock Exchange Housing Sector Index is up 43  percent, while the S&P Retail Index is up 31 percent. All this, while the S&P 500 is up 3.3 percent.

Huh? Aren't consumers hurting? Isn't housing the root of all our problems? Yes and yes.

But, today Goldman added DR Horton[DHI  Loading...      ()   ] to its Conviction Buy List, saying "New and existing home sales data reported at the end of the month as well as the Case-Shiller home price index have been providing more encouraging signs as of late."

This is, to say the least, a somewhat optimistic reading of the home numbers. Signs of a bottom are still murk, and most traders feel the way JP Morgan's analyst feels: "we believe this depressed sales pace will keep inventory levels elevated through at least the next 2-3 quarters, and should result in further pressure on home prices, driving further large impairment charges for the builders."

As for retailers, they are historically early cycle plays. It works like this: historically, when EPS moves to new lows, P/E multiples start moving up in anticipation of a recovery. It's that simple. Oh, one other fact: short interest in retailers are at historic highs, so there is plenty of room for short covering.

The problem here: both of these groups are trading like there will be some kind of clear bottom in the next quarter or so. Big assumption.

A note on Lehman. While Lehman's [LEH  Loading...      ()   ]common stock remains weak today, down 40 percent to $4.35, the preferred shares are not down nearly as much. The Lehman J Shares (7.95 percent, par $25), for example, traded as low as $5.12 earlier this morning (down about 40 percent), but is now at $7.85, down 10 percent.

Why is the preferred holding and the common is not? Speculation that Lehman may be taken out: traders note that the common might sell at distressed levels in a takeover, but buyers of the preffered may be made whole in the event of a takeover.

Buy, Sell, Hold?

_____________________________
New!

- Track The Dow 30 Now


Questions?  Comments? 

© 2009 CNBC, Inc. All Rights Reserved

Tools:
PrintEmailAdd This share icon
Next Post
  • digg share
ADD COMMENTS
Remaining characters


Current DateTime: 05:21:40 25 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 01:02:04 25 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 02:05:46 25 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 01:02:04 25 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters