Kelley, McKeefrey, Dockery (212) 829-5482
Despite the weak housing data homebuilders outperformed with MTH+2.99%, RYL+2.03% and LEN+1.415%, partially on the back of Citigroups comments that adding some exposure in the space was a good idea based on a 'how much worse can things get' thesis. This morning TOL reported a better top and bottom line number and a higher cancellation rate than Q1 (6.2% v. 5.3%). TOL has a backlog vauled at close to $1B and will have a conference call at 2pm today. BAC is seeking 1M sq feet of office space in New York City and may consider 1 World Trade Center. Some of the largest commercial property owners in the country inluding MAC, VNO and SPG have recently stopped making mortgage payments in order to bring lenders to the table to restructure debts. The RMZ turned in its lows immediately after the housing numbers and proceeded to rally for the rest of the day, closing 6 points below near term resistance of 675. On the desk we were selling some of the healthcare related reits and back buying lodging names and homebuilders.
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