Centex offering 100K off homes in S Fla
Market Analysis
The Fed Needs to Look at Earnings
By James J. Cramer
RealMoney.com Columnist
1/18/2006 9:38 AM EST
URL: thestreet.com
Market Analysis
The Fed needs to be done raising short-term interest rates.
Just look at orders for new homes and the estimate misses on earnings reports.
There's danger that low inflation, low enough rates and good earnings will get wiped away.
Inflation, away from oil, is going away. But earnings are going away, too. What the heck is the Fed waiting for?
Take a look at the orders from these homebuilders; they are back to the levels of two years ago, especially that M.D.C. Holdings (MDC:NYSE) . Take a look at the earnings we have had so far this year from the S&P 500 companies; they all are below expectations.
And then take a look at how the banks reacted to disappointing earnings. They hardly moved.
These all are signals that the Fed is done or needs to be done raising rates. If I were on the Fed right now -- wouldn't that be a hoot -- I would be saying, "Wait a second, we have so many companies missing estimates, our work is complete."
Tuesday I got a bulletin from a realtor in Florida. The homebuilders are doing their level best to hide their panic, but this realtor sent me all of these Centex (CTX:NYSE) ads from around the horn of Florida offering $100,000 off if you act now. Heck, that's not just a discount, that's a fire sale.
I hope the Fed sees this stuff.
Because otherwise, the nirvana situation I am describing, of low inflation, low enough rates and good earnings, will get wiped away with high rates, low inflation ex-oil and not-so-hot earnings.
Delicate balance.
Goes either way.
We can repeat 2000 here, or we can learn from our mistakes.
Hard to believe, but Ben Bernanke is the hope for the next 1,000 points -- either way! |
