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David Goldberg, UBS analyst, weighs in on homebuilder stocks, and if they will continue to see a boost in the aftermath of Hurricane Sandy.
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Our construction spending rose in September to the most in almost three years led by stronger spending on homes and as the focus turns to.
Rebuilding after sandy will we see home -- stocks continue their big rally joining us now is David Goldberg seasoned analysts.
With UBS and David -- watching these stocks go up and up and up more than 200% at some of these cases.
But do they have any more to go on the heels of sandy.
Well look I think the reason the stocks have been moving so far this year it's very much momentum trade right it's not necessarily about where things are gonna and in 20502016.
Holly gets normalized earnings it's all about positive data point and so that trend continues to remain momentum stocks sure you're probably gonna see some positive momentum -- you had through the end of this year.
And into early next year.
As relates to sandy but it's -- driven the builders up -- -- -- performance so far this week it's actually not misplaced such a great thing for the big public builders.
The areas -- -- really affected by sandy are much more about private builders they're smaller construction jobs.
Geographically the big public's -- I have a huge exposure there -- so.
It's deathly helping to continue that momentum trade but -- that much in general fundamental result.
-- you know what a couple of things have got what I mean we got a -- it was a head bank of economic data today can't even list all of under the did it October consumer confidence best for years.
And you also got construction spending data so -- if those two things coupled together making -- a little bit more bullish.
This -- on the factor.
Well look out solely from a fundamental perspective I think that's exactly right we've been seeing a pickup in housing it's -- -- we're in recovery -- a lot of the debate now -- that the pace of the recovery.
Not what they were having a recovery are not -- I think.
Again if you kind of look fundamentally where we're headed this is pricing the stocks right now but anything about a momentum perspective we probably got more upside if you -- -- the data points right now.
You know we -- just looking at those mortgage rates and -- incredible new lows once again.
-- only not only seen that score.
It true that new home sales what we've been saying if a lot of refinancing.
In the market do you find we're gonna turn the corner and truly gets the new home recovery that would become a final straw you will -- to save the camel.
Well look I think what's what happened in the new home market.
There isn't a lot of demand there's -- -- -- supplying these this you know market you see this shift from existing home buyers into the new home market you've definitely seen a pick -- -- way below normal historical levels.
But that's because you haven't created that much demand mortgage availability still a problem there's still a lot of constraints from getting a mortgage that's probably not gonna change given what's going on regulatory environment.
You don't think so -- is gonna get any better after I mean we've been hearing from these banks -- saying net net loan activity is picking up Wells Fargo particular saying a loan activity.
Is very strong.
Yeah -- she really got to focus in the kind of loans that they're writing if you look at the market right now.
What you see is it's very much dominated by government agencies.
And and -- and and and the FHA right -- it's Ginnie Mae and the agencies do I think it's gonna get more in the hands of private lending.
Absolutely do I think we're it's a lot like that lot easier standards probably not it's -- -- will be easier terms of paperwork to get a loan.
But I don't either and you know from a regulatory capital perspective look at what's going on Q and QRM all these kind of new regulatory you know.
That we don't know the answers deciding banks are gonna be really apprehensive to -- -- standards at this point -- It got David on the other side of -- you know we're talking residential what what about commercial real estate are we study -- to strengthen -- doctor.
Well -- not putting a limit outside my purview and internal what we do but I but I think you probably will see continued strength re seeing jobs the economy is getting all the better housing helping to drive a little bit silence and that makes sense of worth a shot David Goldberg Kevin yeah David thank you very much -- -- -- -- much rather me take care.
Just think it was announced that.
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