Housing Crashes, Coinbase Clashes & Tesla Trashes
Friday Feedback: The “Housing Crashes” Edition
Arrr ya ready, Great Ones!
Aye! Aye! Mr. Great Stuff!
Oooh! Who lives in Kentucky out in BFE?
Mr. Great Stuff!
Absorbent and yellow and porous is he!
Mr. … wait, you get us with this every time!
Yeah, and I still think it’s funny.
Y’all know what today is: It’s Friday Feedback!
Today’s the day we douse ourselves in honey and dive into the Great Stuff email “bag” … and answer everything that sticks.
So that’s what you do for fun in Kentucky?
I don’t know that anyone does this in Kentucky for certain, but it wouldn’t surprise me. I mean, it’s Kentucky. Anywho, that’s beside the point … ya freaks.
If you’ve got a question about the stock market, investing, options trading, bonds, analyst ratings, you name it … we’ve got an answer and we’re just itching to share it with you. Yes, that’s what that itching is … and you’ll not convince me otherwise.
Even if it’s not market-related, we’ll still answer back. I mean, we talked about Spam last week with Great One Dick K. Your question can’t be as strange as that conversation … trust me.
So drop us a line at GreatStuffToday@BanyanHill.com and help us help you! Or something inspirational like that.
And now, without any further ado … here’s our featured presentation:
April numbers for the housing market were released and the U.S. new homes sales hit a two-year low, as well as the prices on homes surging. Is the housing bubble about to burst and the housing market ready to crash?
— Todd B.
Why, hellooo there, Todd! Thank you for writing in!
Now, Todd … I know you wrote in to help promote another financial publication, and I just want you to know — if you’re actually reading this — that we are considering things. You know how these things go. I can’t just push an unknown analyst without due diligence. So, that’s what we’re doing.
That said, your opening question was just too good to pass up. In response, well … we’ll do it Live:
Housing crashes, a new homeowner cries.
His equity falls to the floor.
Angel investors open their eyes.
The confusion sets in … before the Fed can even close the door.
Housing crashes, and home prices die.
Demand falls to the floor.
Homeowners close their eyes.
The confusion was Wall Street’s.
It belongs now, to the workers down the hall…
Todd, I can feel it coming back again. Like 2007, we’re chasing the wind. Forces are pulling from the center of the Federal Reserve. I can feel it…
In fact, I’ve warned y’all for the past year that this was coming. That the current housing market was unsustainable. I mean, the surge in home prices was unsustainable as it was with inflation soaring and easy money and incentives everywhere.
But then you throw in hedge funds, major Wall Street investors and publicly traded companies buying up houses left and right?
Y’all had to have known this was coming. I knew it was coming.
As Todd stated, the U.S. Commerce Department reported this week that April new home sales plummeted 16.6%. On a year-over-year basis, new home sales were down nearly 27%!
Now, before some of y’all curse the Fed for raising interest rates … this was the fourth straight monthly decline in home sales.
In other words, the Fed didn’t start the fire. It was already burning since the money presses were churning. What’s more, the housing market is still hampered by supply chain issues.
For instance, the number of stalled new home construction projects jumped 47% in April — despite the fact that building permits and authorizations continue to rise.
In other words, even if the cost of financing a home wasn’t going up … the price of said home would still rise because building a home right now is just a logistical nightmare in many parts of the U.S.
But probably the biggest warning sign that the housing market is on its last legs is that home prices are still soaring … despite the Federal Reserve hiking interest rates and sending mortgage rates to their highest levels in decades.
In fact, home prices jumped 19.6% year over year in April even though demand dropped. That’s not a good sign at all. Nope.
So, Todd … is the housing bubble about to burst? And will the housing market crash?
I’d say the bubble has already burst. I think Wall Street knows it. Right now, we’re just waiting on the other shoe to drop before things get ugly.
This time, let’s hope every single lender on the planet isn’t leveraged up to their eyeballs. You know … so we don’t have another Lehman moment.
Thanks again for writing in, Todd!
Bad News Bears?
Spots are filling up fast to Mike Carr’s LIVE reveal of the Greed Gauge on May 31.
And it’s no wonder — after all, Mike has created a brand-new way to look at fear in the market.
It blows CNBC’s favorite sentiment indicator out of the water … outperformed the S&P by 3-to-1 over the past 20 years…
And today, Mike’s Greed Gauge is flashing a critical buy signal for the stock market.
Well, that was … cheery?
I really wish I had better market news for y’all. But to quote Eric Draven from The Crow: “It can’t rain all the time.”
Still, I’ve decided to take a more Jimmy Buffett outlook on things: “If we weren’t all crazy, we would go insane.” Now I just need to find my lost shaker of salt…
In the meantime, let’s see what else is in the ol’ mailbag today:
Meow Meow Beans
Dear Mr. Great Stuff:
As I read last night’s issue regarding the new Coinbase employee rating system, all I could think of was the Meow Meow Beanz episode of Community. I figured you are always on with obscure references, so I’m surprised you missed that opportunity. If you haven’t seen it, it’s worth a stream as it’s a great stoopidly funny episode that highlights the ridiculosity and absurdity of this world we live in. Keep up the Great work!
— Daniel M.
Thanks for writing in, Daniel!
I hate to say this, but I never really got into Community. After this reference, however, I think I’m required to add it to my watch list.
Still, I think the Black Mirror episode “Nosedive” encapsulates the shear idiocy of this idea pretty well … at least from my perspective. I find this idea particularly terrifying.
Judging from the sheer number of Great Ones who wrote in on this topic, many of you feel the same way. Here’s a quick summary:
We’ve got Daniel, having a good laugh at the idea of rating employees.
We’ve got Dan G., who pointed out that this will likely increase workplace harassment and hostility.
We’ve got Tim P., who, as a 45-plus-year business owner, thinks that anyone implementing this idea is “so stupid and clueless.”
And we’ve got Jack T., who points out that this could be used to target people who are not sociably popular and/or wear “objectionable clothes.”
Jack actually hits on a major concern of mine. Y’all know this kind of rating wouldn’t stop at clothes … and since this is a financial publication, that’s all I’m gonna say about that.
I mean, the idea is so bad that I’m actively reconsidering whether to keep Coinbase (Nasdaq: COIN) in the Great Stuff Picks portfolio over this point alone … and we haven’t even touched on the whole NFT thing Coinbase is pushing hard.
If you read my Coinbase commentary that sparked all of this insanity, you’ll know I’ve marked COIN stock as a hold. I’ll have more on whether or not to sell soon…
Thanks again for writing in, Daniel!
Let’s Do The Time Bomb Again
Personally, I thought Telsa was a really great idea because I liked Nikola. Elon is a genius in his own right. The problem with successful geniuses is that they become enamored with their own press. It was the downfall of Nikola and will be Elon’s.
The valuation of Tesla the car maker according to the stock market was equal to or better GM, Ford and the company formally known as Chrysler combined. It really did not seem possible. The value of Tesla was rested on Elon’s shoulders, and he carried it for many years.
He believed the press when it said if he touched it would turn to gold, this time the result is going to be the same as his recent tweet, a turd. No, I did not invest in the golden child.
My money rests with Charles Mizrahi’s guidance.
— Dan G.
Hello again, Dan! You’ve been quite talkative lately … thank you!
So I’m gonna leave aside my personal opinion of Elon Musk … but mostly because I don’t think he’s a genius. A lot of money and a little foresight go a long way in the tech world.
Anywho, we received nearly as many emails about Tesla (Nasdaq: TSLA) and Elon Musk as we did about Coinbase’s employee rating system … if that tells you anything. I’ve always had trouble with Tesla’s valuation, for exactly the reason you state.
Tesla should not be worth more than Volkswagen, Ford, General Motors and Toyota combined. It’s just idiocy. It’s why I never recommended TSLA stock in Great Stuff Picks.
Yes, I understand that Tesla is more than just electric vehicles (EVs). It has solar panels and power walls and battery tech and AI. I get it. All of those things add up to supposedly justify Tesla’s Wall Street valuation.
My problem with all of those things is that Tesla isn’t a market leader in any of them. There are better batterymakers. There are better solar power investments. There are better AI investments. Heck, there are even better EV makers.
In short, Tesla has no moat. No barrier to competition — other than the capital needed to get started. No proprietary technology that just blows away the competition.
But Tesla has one important, very crucial thing in its favor: first-mover status.
Right now, Tesla is like Netflix (Nasdaq: NFLX) was prior to the pandemic. It believed so heavily in its own dominance that it failed to take into account the rising competition.
Tesla is repeating that same mistake right now. Once Volkswagen, Ford, General Motors and the rest start getting serious about EVs … it’s game over.
Now, I don’t think Tesla is going to collapse or go out of business or anything. But I do believe it will become another big automaker … and its stock will act accordingly.
On a final note, Dan, I love that you called out my colleague Charles Mizrahi. Charles is a no-nonsense investor. He doesn’t put up with stuff like ridiculous Tesla valuations, and, as such, he’s probably one of the best — if not the best — guru to help you navigate the current market insanity.
Need more proof? Just hear … er, read … Charles’s thoughts on the current EV battery market:
For EVs, the tipping point — affordability — may finally be arriving, thanks to a brand-new battery technology.
As soon as they become affordable, demand increases, and sales soar. Now … this stunning new technology is about to cut the cost of EV batteries IN HALF. Meaning by next year, an EV is expected to cost the same as a gas-powered car.
Mr. Great Stuff,
As a resident of Maui, I can confirm that SPAM is indeed a very popular meat dish in the Hawaiian Islands. In fact, SPAM is more popular than green eggs and ham. However, being a California transplant and a devout Pescatarian, I’m no fan of SPAM, either.
Having said that, my teenage son was born in Hawaii (and hence, a Native Hawaiian) and he goes absolutely nuts for Musubi, thereby undeniably confirming SPAM’s popularity in the islands. Without question, the gelatinous pink canned meat is a big time delicacy here and my son is not one to be duped by clever branding.
What is Musubi you ask? Well, I’ll tell you Mister, it is essentially SPAM sushi. I’ve included a photo as I’m guessing the concept of spam sushi has probably rendered you in a state of disbelieve and/or are questioning my or the world’s sanity.
— Scott L.
I love my job because of moments like this.
Thank you, Scott! You’ve confirmed something I’ve wondered about for a long time.
Also, I love sushi … which is unfortunate when you live in the middle of nowhere, Kentucky. Not much sushi ‘round these here parts. It’s just tacos, McDonald’s and Applebee’s as far as the eye can see.
But Spam sushi? Interesting. I’d try that once. I’ve tried worse … y’all ever been duped into eating Rocky Mountain oysters? Tried scrapple? Or braunschweiger?
I think that’s all for today’s Friday Feedback. Ugh … now I need some Tums.
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