We are something of a broken record, at the moment, but the US housing data looks quite disasterous.
For us, housing is a key part of the overall business cycle, and it is definitely one of the reasons we are “defensively positioned”, relative to our SAA, and not pressing the button on moving overweight growth assets, just yet.
Perhaps the good news is that once the Fed decides we’ve all “had enough”, housing demand should bounce back reasonably quickly. It’s not 2006 where NINJA loans have been written, where FICO scores are terrible.
Rather, it’s just good old interest rates doing their job to curb activity, and housing is one of the ways in which the transmission mechanism works.
In the interim, however, it’s hard to go and buy 500bps of the S&P 500 (as in, to move overweight) and it is likewise hard to see why one would be buying Hardies (JHX) or Reliance (RWC) in any meaningful way, just now.
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