Stocks rose off that billion-dollar builders deal.
TOP SHELF on Happy Hour:
Today's billion dollar stock-for-stock deal between Pulte Homes and Centex sounds great for housing, but is it really? The housing market is open to all sorts of smaller builders who can put up houses here and there on a local scale. They continue to add to a market where there is already 19 million units of excess supply, a.k.a. lots and lots of unoccupied homes. The point is that the Pulte/Centex deal is OK news for the housing market, but it doesn't change the fundamental problems facing both companies: too few home buyers, too many homes, and too many builders.
The sector has a history of guppies eating whales, but that's unlikely to continue because most of the builders are simply too damaged. Traders were making bets today on who will be the next to merge. Interestingly, shares of DR Horton declined, possibly because it's simply too big and relatively healthy to be bought by anyone. Be careful building a portfolio with builders.
Bottom Shelf on Happy Hour: It's not just taxes for the rich hitting a slippery slope. Now prominent Democrats are calling on Treasury Secretary Geithner to expand his call for the heads of failing bailout banks, to include any American company that relies on business with the government. According to Clinton Labor Secretary Robert Reich, this includes agri-businesses, health care providers and military contractors.
Reich writing in the Huffington Post, “All told, about one out of every five large American companies depends on government contracts, and a majority of these firms are losing money right now. So ... Off with their heads.”
One out of every five large American companies have contracts with the government because the government buys things. The government should buy less thing and not worry about who is running the company they are buying things from. When they buy less they will not be spending less of MY money and less of YOUR money. They have a hard time remembering whose money they are constantly spending. Most of the time they are spending it on unwanted and uneeded junk.
Subscribe to Comments
jack
One out of every five large American companies have contracts with the government because the government buys things. The government should buy less thing and not worry about who is running the company they are buying things from. When they buy less they will not be spending less of MY money and less of YOUR money. They have a hard time remembering whose money they are constantly spending. Most of the time they are spending it on unwanted and uneeded junk.