The housing bubble continues to grow larger and larger as the homebuilding sector continues to show record results. The earnings from many of these companies are bordering on obscene. Today, Pulte Homes (PHM) gained 3.20 to 95.85 after declaring a stock split and a dividend increase. Beazer Homes (BZH) was up 3.71 to 67.24 after earnings beat estimates and the builder raised guidance for the year.
These results are proof positive that the Federal Reserve has no intentions of slowing or halting their rate increases anytime soon. In fact, I don't think the Fed will stop until the housing bubble bursts. I am not expecting a NASDAQ type crash in the housing market, but a 25%-35% retracement would be healthy, and perfectly normal.
The Dow gained 68 points to close at 10,705, on volume of about 1.56 billion shares. The S& P 500 was up almost 7 points and the Nasdaq gained 12 points. Advancers led decliners by a 3-1 margin on the NYSE and by 3-2 on the Nasdaq. The 10-year Treasury note was up 16/32 to yield 4.19%.
The earnings in the oil patch continue to be startling as well, as oil companies continue to pick-pocket the consumer. Exxon Mobil (XOM) increased its stock buyback program after second-quarter profits climbed 32%.
I am expecting the Bush Administration to announce that the petroleum reserve is full, and buying will halt in the month of August. This news should be enough to temporarily bring oul prices down to the low 50's. As a heads up, we will be adding Valero Energy (VLO) to the portfolio on the pullback. In the meantime, we will be selling Lockheed Martin (LMT) tomorrow on the open.
