Pick up Housing

 | Apr 03, 2013 | 2:46 PM EDT
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Turns out that the real worries weren't the stretched valuations of the food stocks or the drugs, but the valuations of the cyclicals that need a stronger economy.

The metals are in free fall and the grains are getting clubbed. I think that oil and gas are headed lower.

And this all plays into the hands of the Fed's bond-buying program. Ben can continue to get away with where he is going because we aren't getting an employment pickup and we aren't getting any inflation.

Second, I don't believe that the materials and metals have huge downside here. I bet that a Caterpillar (CAT) could go down to $75, but not $69 like it did in 2011 and I think that's a stretch.

At this point I think the war talk is more in play than the economic weakness that is taking down everything GDP-sensitive.

You can't game any war with the North Koreans. I don't think that we're about to have anything, but the news is frightening enough that you can use it as an excuse to sell.

That's why my bottom line is that you should start to pick up something related to housing as that's showing no sign of cooling and with the Fed on hold you are going to keep seeing good numbers.

That's my favorite space after this run in the soft goods and the horrendous selloff in housing-related companies.



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