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Dave Kranzler

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  • Wells Fargo Summarizes The Case For Staying Optimistic On U.S. Housing [View article]
    Seriously, were ANY of his "feel good" assertions supported by hard fact? "Hard fact" here is defined as any economic occurrence that leads to a profitable economic transaction.

    There were none. Sorry.
    Oct 20 10:18 AM | 1 Like Like |Link to Comment
  • Strong Home Sales In California Put KB Home Solidly In The Penalty Box [View article]
    "Strong sales in California?" Seriously? Dude, where are you getting your facts?

    Here's the truth: Home sales in California dropped 2.4% in September from August:

    KBH has bigger problems than just missing its sales bogey. It has a higher debt level now than it had at the peak of the housing bubble, on 1/3 the level of unit sales.

    It also is engaging in misleading accounting to boost its GAAP net income. I'll let you do the homework on that one and report back on the nature of the misleadin accounting.

    It's TTM cash flow from operations is severely negative.
    Oct 20 10:15 AM | 1 Like Like |Link to Comment
  • 10 Scary Charts: October 17, 2014, Update [View article]
    Explain this to me: If the Federal budge deficit was only $465 million or whatever the exact number was "reported' to be, then how come the Federal Treasury debt outstanding INCREASED by $1 trillion during the same period of time?

    Someone is lying. Either the OMB is lying or the reported amount of Treasury debt issued in the last year is a lie. I highly doubt it's the latter.
    Oct 19 11:13 AM | Likes Like |Link to Comment
  • Did The Economy Hit A Wall Over The Summer? [View article]
    John Williams, in general: The image of an economic boom—suggested by headline second-quarter real GDP growth of 4.6%—increasingly has faltered, proving to be an illusion created by overly-optimistic assumptions in an environment of extremely limited reporting quality. Underlying second-quarter economic detail never supported the "boom" numbers. Underlying third-quarter reporting detail, so far, has shown sharply-slowing growth relative to the second-quarter, and it should not come close to supporting market expectations of headline 3.0%-plus third-quarter 2014 GDP growth
    Oct 16 02:28 PM | 1 Like Like |Link to Comment
  • Did The Economy Hit A Wall Over The Summer? [View article]
    John Williams, Defense spending from bombing Syria into the stone-age offset a big drop in auto production:

    Reflecting still-softer automobile sales (inventory adjustment), auto manufacturing fell by 1.1% in September, following a 5.4% decline in August. The headline manufacturing sector, however, saw more-than-offsetting September gains in defense-industry and in business equipment production. Oil and gas drilling/production continued to boost the mining sector, while unseasonable air-conditioning usage spiked production of electricity at utilities
    Oct 16 02:27 PM | 1 Like Like |Link to Comment
  • 'Bullish On Bonds' - An Update [View article]
    Actually, Mark you do have it wrong.

    First, real estate is not in "limited quantity" relative the ability of the average middle class household's ability to buy a home. Sure, if China invades the U.S. and moves 10% of its population over here, then housing will be in short supply.

    Second, and foremost, the value of the entire housing and commercial real estate stock has been driven 100% by the availability of debt and the fractional banking system. The deflationary bust to which the author refers will wipe out the value of that debt, which in turn will be like pulling a rug out from under the value of housing and commercial r/e.

    I do agree that unlevered farmland, completely unencumbered by liabilities, will act as an inflation hedge - always. But the REASON for that is that the land itself produces depletable necessities which vary in price with true inflation.

    Housing is done. Think about it this way. What if every prospective buyer had to put 50% down, as was customary for most of the post WW2 era? How much would 98% of the country be able to pay for a home?

    In other words: LOOK OUT BELOW.
    Oct 15 10:29 AM | Likes Like |Link to Comment
  • How Homebuilders Should Fare In A Market Correction [View article]
    Yes, there's what's known as the law of diminishing returns in economics. As applied to that data series, it means that as the data-pool grows smaller, the "shrinkage" will have some months that shrink less than others.

    With mortgage rates right at 4% now, you should be concerned that home sales are not picking up a lot more.

    Furthermore, I don't think you can say that the trend is becoming "less negative." There's not enough data points to make an assessment with any kind of statistical confidence. Man, housing bulls will spin anything into a faux-positive.

    Also, according to standard laws of probability, there would naturally be a positive event observance after 8 successive negative observations.
    Oct 13 03:54 PM | Likes Like |Link to Comment
  • How Homebuilders Should Fare In A Market Correction [View article]
    Homebuilder stocks are getting incinerated today.
    Oct 13 03:50 PM | Likes Like |Link to Comment
  • How Homebuilders Should Fare In A Market Correction [View article]
    Lumber prices are not necessarily correlated with housing starts and housing sales, especially the latter. I have tracked this since 2000.

    A lot of factors go into lumber prices, not the least of which are seasonality and inflation.

    When you strip away the statistical adjusments that the NAR and the Census Bureau apply to their data, home sales have been declining for about a year. That's why the DJUSHB is falling along with interest rates, per the graph in my article.

    As for TOL, it's probably my number 1 short-sell idea. I have a report you can access on my website that details why TOL is nothing but a bag of misleading accounting and bad business decisions, like buying Shapell at the very peak of the dead cat bounce in California.
    Oct 13 01:16 PM | Likes Like |Link to Comment
  • How Homebuilders Should Fare In A Market Correction [View article]
    Umm, your "low rates" comment needs to be backed up with fact. This article demonstrates that the homebuilder stocks YTD have gone LOWER with rates going lower:

    Please, when you make an assertion, back it up with evidence and data. Also, the homebuilders have been missing earnings. Not only that, their "net income" has been artificially boosted with accounting gimmicks like "capitalized interest."

    The real test on the homebuilders is to look at "cash flow from operations." I see no mention of that in your report. BUT, if you look at the 10-Qs for every stock on your list, you will see that all of them have NEGATIVE cash flow from operations per their Statement of Cash Flows.

    It would help if you dug a bit deeper into the accounting of these homebuilders, as I have done.
    Oct 13 10:53 AM | Likes Like |Link to Comment
  • Real Estate - The Fed Threw Us A Bone [View article]
    Here ya go Markos - some facts:
    Oct 10 12:09 PM | Likes Like |Link to Comment
  • Real Estate - The Fed Threw Us A Bone [View article]
    Here's all the proof you need that the housing market is collapsing: the homebuilder stocks are in the process of burning to the ground.
    Oct 10 10:34 AM | 1 Like Like |Link to Comment
  • Real Estate - The Fed Threw Us A Bone [View article]
    The market isn't growing. Where's your evidence, Markos? The data shows that existing home sales have declined yr/yr for 10 straight months. Existing home sales are 90% of the market.

    Home sales have declining DESPITE the fact that we just went through the peak buying months of the year with the lowest rates in a year AND near-record low mortgage rates.

    When the average middle class household can't even afford a down payment, let alone support the monthly costs of home ownership, home sales decline. We're seeing that everywhere in the numbers.

    Please cite data references if you are going to make assertions like, "the market is growing."
    Oct 10 10:33 AM | 1 Like Like |Link to Comment
  • Reports Of Housing's Demise Have Been Greatly Exaggerated [View article]
    Yes, housing is seasonal and that's what's so stunning about the 10 months in a row of year over year declines in existing home sales. Existing home sales represent 90% of the entire market.

    Not only THAT, the unit volume was tanking in the context of the mortgage rates being at the LOWEST in a year and lower than last summer, for the most part.

    Hmmm...sales declining in the strongest seasonal period with mortgage rates at the lowest in a year and near all-time lows...

    By the way, anyone ever get a look at how the "seasonal adjustments" are calculated? Let me know if you ever find out. AND, using unreliable numbers and then annualizing that number only compounds the unreliabiltiy.

    Finally, Case-Shiller is not the best index for home prices. There are several reasons for this and I've posted on SA on this topic a couple times.

    Bottom line: housing hit a wall in August and is tanking now.
    Oct 1 09:34 AM | Likes Like |Link to Comment
  • The 5-Year Real Estate Short [View article]
    The downward spiral in the housing market was saved by the Fed's $1.7 trillion injection of QE into the mortgage market (QE per the latest Fed's balance sheet), enormous taxpayer subsidization of Government sponsored foreclosure prevention refinancings (50% of which are now in default again), Government (taxpayer) subsidized FHA mortgages - most of which are of the sub-prime variety as the 2008-2010 FHA paper is now experiencing huge delinquency and default rates, and a soon to be proved ill-fated move by private equity funds who enabled the massive transfer of foreclosed and distresse inventory into the hand of these large investment managers using primarily public and private pension fund money fund these soon to fail investments.

    As I carefully peruse several homebuilder 10k's going back to 2011, I find that ALL of them have been generating NEGATIVE cash flow from operations. This is why the homebuilder stocks have significantly negatively diverged from the SPX since May 2013.

    I don't care what kind of negative and disparaging rhetoric comment-only contributors like Oilfinder want to toss into the comment sections of the the work of others, I am up over 20% in my homebuilder stock short positions. When the stock market heads south, I expect to make at least 70% on my money.
    Sep 27 06:23 PM | 2 Likes Like |Link to Comment