To The Moon

Summary Given the large increase in the amount of gold that is flowing to the East, I think it’s easy to make the case that this massive demand for physical gold is a major factor in pushing the price of gold higher. The M2 money supply measure has been rising since October 2023. This 'stealth QE,' which is undeniable, is the reason that gold has been hitting successive all-time highs. Wysiati The following commentary is an excerpt from my Mining Stock Journal newsletter. Given the large increase in the amount of gold that is flowing to the East, I think it’s easy to make the case that this massive demand for physical gold is a major factor in pushing the price of gold higher. A similar argument can be made for silver, particularly with India and China, which require a lot of silver for th

Summary The pending home sales index for July rose 4.8% in June from May but declined 2.6% YoY. The Dow Jones Home Construction index looks to be rolling over from an irrational move higher since July 9th plus the RSI and MACD are heading south from overbought readings. Beazer Homes reported its FY Q3 numbers on Thursday after the close. Revenue increased 4% YoY due to a 4.4% YoY increase in closings. However, that’s it for the positive aspect to the numbers. Justin Paget The following commentary is from the August 4th issue of my Short Sellers Journal weekly newsletter. The charts below are through August 2nd. Housing market update Redfin posted data this past week that reflects the degree to which home sales activity is tanking. In June, 15% of home purchase contracts were canceled and

Summary Existing single-family home sales for June fell 5.4% MoM and 4.3% YoY to a 3.5mm SAAR. As with new home sales in May, every price bucket declined in all four regions except the $750k-$1mm and over $1mm buckets. With respect to potential rate cuts, the median new mortgage payment now requires 41.4% (pre-tax) of the median household income according to the data parsed by Reventure Consulting. BrianAJackson Housing market update - Existing single-family home (sales for June, released Tuesday) were nothing short of a disaster. Sales fell 5.4% MoM and 4.3% YoY to a 3.5mm SAAR (seasonally adjusted annualized rate). This is the fourth consecutive month of declining used home sales in what should be the strongest seasonal period of the year for home sales. The not seasonally adjusted, mont

Summary In taking a deeper dive into the existing home sales report for May, I noticed that the distribution of sales across the six price “buckets” shows a different story than the headline number broken out by sales region. Recent reports indicate a surge in listings and price cuts in previously hot housing markets, potentially leading to buyers in top price buckets being underwater. The homebuilder stocks went straight up the last three days of the week, with most of the move triggered by a better-than-expected CPI report. Justin Paget Housing market update – In taking a deeper dive into the existing home sales report for May, I noticed that the distribution of sales across the six price “buckets” shows a different story than the headline number broken out by sales region: The table abo

Summary The Fed announced that it was cutting off the funding from BTFP in March and it is drawing up a plan to encourage banks to use the Fed Discount Window for liquidity needs. While everyone was discussing the potential for a CRE debt crisis to foment this year, the NYCB and Aozora earnings reports confirm that it has already begun. I wanted to discuss what happened to NYCB because Japan’s Aozora Bank ADRs plunged 26.1% Thursday after slashing the value of some of its U.S. office tower loans by more than 50%. Douglas Rissing I didn’t watch Jay Powell on “60 Minutes” because I knew it would be mainstream media sugar-coated drivel wrapped around propaganda as the 60 Minutes anchor tossed J-Pow meatball questions. But I did learn that Powell asserted that it is unlikely that there will be

Summary Auto loan delinquencies and defaults continue to rise as do repossessions. While Ally offers mortgages and credit cards, auto loans represent 78% of its finance receivables and loans. In Q3, 33% of its auto loan originations were to subprime borrowers, which is consistent with the historical pattern. ALLY’s profitability is declining and the riskiness of its balance sheet is rising. Pekic/E+ via Getty Images As an indicator of rising consumer stress and stretched household finances, a report from Edmunds.com showed that auto loan borrowers with negative equity were underwater by an average of $6,054. This is the most since April 2020 and well above pre-pandemic averages. Auto loan delinquenc

Summary The sell-off in the precious metals sector is startlingly similar to the September/October 2008 decline. Incredibly, the financial markets, banking system and economic backdrop is also remarkably similar. Despite the sharp decline in gold and silver over the past several weeks, relative to 2008 both metals are holding up remarkably well. ayala_studio The sell-off in the precious metals sector – which I will argue vehemently is primarily an officially sanctioned, bullion bank market intervention with some help from momentum-based hedge fund algo programs – is startlingly similar to the September/October 2008 decline. Incredibly, the financial markets, banking system and economic backdrop is also remarkably similar, except this time adverse variables that could lead to a system meltd

Summary I have argued that the housing market hit a wall in July/August, and KB Home’s Q3 2023 results support this claim. Revenues fell 13.6% YoY and 10% from its FY Q2. Operating income was destroyed, down 45% YoY, with net income down 41% YoY. Interestingly, the culprit that torpedoed KBH’s numbers was price cutting. Deliveries were down 7% YoY and 8% from Q2. But the average selling price was cut 8.3%. Justin Sullivan The following analysis on KB Home (NYSE:KBH) is from the latest issue of my Short Seller’s Journal. KBH’s FY Q3 ended August 31st, which means the numbers captured the trend in new home sales over the summer (June, July, August) based on contracts signed in the late spring through mid-summer. I have argued that the housing