After rumors of ugliness overseas that were not true pushed crude prices up in after-hours trading last night, the price of a barrel of crude retreated somewhat today, but it is still a hot property. As of this posting, a barrel of crude is up 1.57 a barrel to $64.50 and change.
Meanwhile, as the WSJ reports, a day after the government said sales of new homes fell for the second straight month while the supply of unsold homes continued to climb, one of the biggest U.S. home builders said the situation is too dim for it to provide future earnings guidance.
The financial results of Lennar are closely watched as a barometer for the housing market because it’s one of the biggest, and also because it has such a large share of homebuilding activity in Florida, Texas and California, the Miami Herald notes.
Lennar announced yesterday that its quarterly profits fell 73% from a year earlier, and that the housing slump and worries about fallout from the subprime lending market make the company’s future unpredictable.
Meanwhile, Business Week reports today that Beazer Homes, another of the major U.S. home builders, is the subject of a broad criminal inquiry, with the FBI, the Internal Revenue Service, the inspector general of the Department of Housing and Urban Development and the Justice Department looking into its lending practices and other transactions.
PBB subscribers know that we’ve been ahead of the curve in forecasting this situation. And why should we care about houses? Simple. Because we think the situation is going to worsen, and as it does, the U.S. economy is going to pay the price.
And this contraction will directly affect the ability of the U.S. airline industry to generate revenues. For that matter, it’s our opinion that this is already happening.
If that was not enough good news, the durable goods numbers came out today, and well, they were ugly, ugly, ugly.
Happy Wednesday everyone!