on real estate and Tesla bonds

http://www.mauldineconomics.com/frontlinethoughts/all-things…

High-yield spreads would have had to be widening. They are not.
(I pay attention to high-yield spreads, a classic warning sign of a turn in market behavior. Are they at dangerous levels? Damn, Skippy, I cannot believe some of the bonds that are being sold out in the marketplace. Not that I can’t believe the sellers are willing to take the money – you’d have to be an idiot not to take free money with no strings attached. I just don’t understand why major institutions are buying this nonsense.)

why Tesla sold straight bonds - terms too good to turn down .Record low “junk” yields.

And I think I know why institutions buy them, for the same reason they bought Venezuelan bonds, If they win they keep the profits, if they fail the taxpayer bails them out and the executives keep their “performance “ bonuses . 2008 trained executives not to avoid risk but rather to seek it out.
If they win they win ,if they lose they still win, just not quite as much. With the salaries some financial institutions pay to the top folks it only takes a few good years and you are set for life.

And the super high real estate profit margins about 47% compared second best information tech about 18% speaks well for homebuilder stocks. I never would have guessed it was that high

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And the super high real estate profit margins about 47% compared second best information tech about 18% speaks well for homebuilder stocks. I never would have guessed it was that high

Super high real estate profit margins can be fleeting. 47% is most certainly not a standard year.

In a span of 3 years, the residential builder I worked for had a piece of (still undeveloped) property triple in price. An offer was made and declined.

With the increase in value, we had purchased another sizable piece of property, with the bank gladly loaning the cash.

Six months later, the “triple” was a double. The owner wasn’t about to sell for only a double when he had at least a triple a few months back.

Six months later there was no profit.

Six months after that, he couldn’t give it away, laid almost everyone off (myself included) and had the second piece of property repo’d (Repo took more than 6 months to complete).

His company is still a shell of what it was. I have been in commercial ever since.

When I started and throughout my time there, we talked about saving for rainy days. He lost sight of his own wisdom (growing smartly) because his new motto became “land always go up, since they don’t make any more of it”. Oops.

And in case anyone was guessing, yes this was in '05-'07 (by '08 I was gone, even though the bottom hit in '08)

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LG Homes has several subdivisions in Houston, some near Galveston bay

Local knowledge would be helpful but LGHI seems likely to take a hit. The storm is apparently stuck in one location due to highs on each side and the shore line curvature.

I would not say anything else about LGIH until after the open tommorow.

https://twitter.com/TerpWeather/status/901794568106074112

I live in the middle of Houston (Montrose), and the flooding is minimal.
That said, any area that dips down, say 5+ feet, is going to be filled with water, and cars will get swamped.

Construction sites are a mess now, but if not in a bowl, should drain pretty fast after the passing of this lingering tropical depression.

HP

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2+’ of rain has to play havoc with any construction site, even if not in a depression …

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Heavy rain fell in central Houston 7-11pm. Moved our cars to 2nd story space. A lot of water and nowhere for it go. I feel for those in low lying areas.

LGIH Galveston Co. hopefully will make it thru OK.