HOUSING STARTS ARE FINISHED

The U.S. housing market is definitely weakening.  That 5.9% MoM slide in housing starts, to 575k at an annual rate in February, was far more than just a weather report because even excluding the Northeast, activity still fell 5.4% on the month.

The single-family sector dipped 0.6% MoM, to 499k at an annual rate.  Single- family starts appear to have bottomed out last spring/summer, but the problem is that there is no follow-through despite all the stimulus — in large part because of the still large overhang of supply.

The multi-family sector was the key culprit, falling 30.3% MoM in February back down to 76k at an annual rate.  Moreover, there is no reason for the weather to have played a role in the fact that building permits were down 1.6% in February — the second decline in the past three months.  And, the NAHB index is highly suggestive of further declines in both home sales and housing starts in coming months.  Single-family starts and the NAHB are both back down to June-July levels and yet the S&P Homebuilding index is up 40% from that time.  That is what you call …. a whole lot of air.

….also in today’s comment HERE

• While you were sleeping — the Fed’s commitment to keep rates low for the foreseeable future and Japan’s move to expand its liquidity provisioning are helping bolster investor risk appetite; the U.S. dollar and the Yen are softer, while gold is gaining ground, up three days in a row.
• What’s next? So far, the market has been able to digest California, Dubai, and Greece, but what about China?
• Subtle changes to the Fed statement. The Fed did not shift its stance on the funds rate, but there were subtle changes in the language about employment, capex, and real estate, both commercial and residential
• Is income still king if the U.S. gets downgraded? The answer is yes
• Canada also likes the income theme — bond mutual funds saw an inflow of $1.3bln, while equity funds only saw a net intake of $105mln
• U.S. housing starts are finished
• Good news on the inflation front in the U.S.; import prices fell in February
• The Canadian dollar is shooting for par

Gluskin Sheff + Associates Inc. is one of Canada’s pre-eminent wealth management firms. Founded in 1984 and focused primarily on high net worth private clients, we are dedicated to theprudent stewardship of our clients’ wealth through the delivery of strong, risk-adjustedinvestment returns together with the highest level of personalized client service.

$1 million invested in our Canadian Value Portfolio in 1991 (its inception date) would have grown to $10.7 million on December 31, 2009 versus $5.5 million for the S&P/TSX Total Return Index over the same period.

2 Articles posted:

Can Copper Climb Higher?

Top copper stocks

Can Copper Climb Higher?

Talk about a comeback. Since its March 2009 bottom, copper has risen more than 140 percent, with the May COMEX contract closing at $3.38/lb on Friday:

Yet for the past two months, copper has stayed stuck in a trading range, volleying back and forth between $3 and $3.50/lb without any indication of permanent gains or losses. Not even the earthquake that struck Chile last month or its subsequent aftershocks could spark a breakout. Last Thursday’s 6.9 quake, for example, didn’t even register in the copper market, with prices remaining flat at $3.37/lb for the day.

So can copper resume its upward climb? Or is the metal just biding its time before a major pullback?

Deflating Chinese Demand

Copper, as you may recall, is one of the world’s most widely used industrial metals, particularly in construction. Builders account for 40 percent of copper usage in the U.S., which is more than any other industrial user; the metal is a key ingredient in electrical wiring and modern plumbing. Copper’s also crucial for car fabrication, which uses a surprising amount of wiring; these days, the average luxury car contains about a mile’s worth of copper. Electric and hybrid cars use even more.

After the 2008 market meltdown, we saw industrial demand for copper shift from consumers in developed markets to those in emerging ones—primarily, of course, in China, which bought loads of the stuff during its stimulus frenzy last year. In fact, GFMS reported that China’s copper consumption swelled from 1.8 million tonnes in 2000 to a predicted 6.5 million tonnes in 2009—or an average annual growth rate of 15 percent. According the International Copper Study Group, China accounted for 40 percent of all world copper usage in the first 11 months of ’09, which more than offset the 16 percent slump across the rest of the world (including a 20 percent decline in the U.S.).

But Chinese demand may finally be slipping. Post Chinese New Year buying has been weaker than expected, reports Reuters, and worries about inflation in the country are on the rise. In February, the Chinese Consumer Price Index rose 2.7 percent year-over-year—that’s a 16-month high and above previous predictions. Rising inflation has led many analysts to suggest that China may soon rein in spending and tighten up its monetary policy (which would subsequently cut into the country’s appetite for copper).

“Some are concerned growth in China as we saw it over the last month will not be sustainable,” Commerzbank analyst Eugen Weinburg told Reuters. “Some expect further tightening in China soon, possibly in a question of weeks.”

….read page 2 HERE

Top copper stocks

An article written about Capstone Mining Corp., Lundin Mining Corporation, Hana Mining Ltd., and Copper Mountain Mining Corporation – HERE

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