>> karen? >> yes, xle. i feel like nice today to have it outperform but still got ways to go to make up for tomorrow. >> first time ever in cnbc the two smith fans in the united states. >> shoutout to the smiths. >> palo alto. pan america silver. paas. >> you always make it fun. thanks for having a visitor, jeff, guy, tim, karen. thanks for watching "fast money."

all which gave you upside surprises. let me give you the three cases apart from this morning. these are all household names. mccormick, the spice company, walgreens, the giant drugstore chain and pvh which you know as calvin klein and tommy hilfiger. there is only one head scratching thing about all three. of course, they're all good. i could actually argue that they were disappointed. not versus what they expected but what we've been expecting for for the last year or two years or three years but they

were not disappointed when you consider the analysts who control what we call the consensus measurements that change every single day leading up to the quarter. first pvh guided for 3% to 4% revenue growth. but the earnings growth is looking like 10%. that's that double-digit gain everybody wants and above the 8.9 consensus number. some things were worse. margins shrank by basis points and hilfiger shares were only up 3% and currency fluctuation would have been 9.9. that is better than expected but think of it. down 3.9. wow, that would -- it's not that hard. it's a low bar. calvin klein posted 2.9% growth. market expected a 1% decline. low bar. again, this was a good quarter but only versus lowered expectations. they weren't usually better and i could argue at one time they would have been considered to be

plain old ho-hum, at best. they were comfortably better than the recently cut numbers but they were not by any means blow-outs. get what happened. they sent the stock soaring 20%. that was a truly staggering gain. takeover bid for heaven's sake. that's what being beaten down estimates will do. i'm calling this totally baffling. $1.2 billion missed consensus estimates. the u.s. retail pharmacy business was a clear and confusing miss. store sales were down 1%. yet the stock took off. 2.7%. that's because there were plenty of whisperers that walgreens wouldn't even miss those incredibly low numbers. when they didn't it counted as a beat. that's the stock, that's just a

sign of how low the stock had fallen going into the quarter. not exactly. they didn't get there the way you want to get that 5%. they got it from pricing actions. in other words, they raised prices and sales took a hit but not enough to offset the price increase. yep, they made their money the old-fashioned way selling less but not so much less they didn't do well. on the strength of this quarter which i regard as not really strong, the stock jumped 10%. again, because short sellers thought mccormick which was missing numbers would miss again. it didn't so the stock flew. now, all three companies had upbeat stories through conference calls. that's the way business is done. they made you feel like business hasn't skipped a beat like it's up, up and away. that's not the case. pvh missing quarters left to right in both calvin and tommy

have done just okay. the stock has been left for time. ten years ago stood at 106. now 88. trading at nine times earnings. talk about cheap. mccormick in the last four years this growth story is unchanged with its stock stuck at 80 bucks even as it sells for more than 30 times earnings. walgreens was at $48 ten years ago and now it's at 33 and change. 7.5 times forward earnings. these are called cheap. see a pattern here? three really big brand names, household names, gave the appearance of putting up terrific numbers. did they fool people, no. it's the way the game is played. now, when i did that i knew each one was going up. the expectations have gotten cut so long, so many times that we'd be thrilled they finally aren't getting their butts kicked and butts were unscathed per share. is that a reason to buy stocks? do they deserve to go up?

this business is like the movie "unforgiven." deserves got nothing to do with it. and that's why this market just doesn't do what the bears want them to do. we have so many iconic stocks so low versus historical ranges and prices are up and it's easy for them to give us a pleasant surprise. >> that was easy. >> now perhaps they're going up because there are machines that say beating sales, beating earnings by but there's something else going on here, i think. i think they're representative of the broader market with the exception of the peg ga cap tech. companies that haven't been able to do all that well in recent years because there's endless inflation across the whole supply chain. now, though, they've finally managed to change. moving to the direct provision of health care or pvh getting its final numbers together or mccormick raising prices because its brands are good enough to get away wit. meanwhile they have all learned to live with inflation in some ways tame it for you, the

shareholder. so now let's step back and analyze what's happen ago head of the earnings season we're about to lookñi atok what's happening okhere. we keep hearing from the top down strategists that tell us that they will miss their numbers and the stocks will gox lower in response. t whaanemic that they're wrong? what if it turns out to be easy for them to clear a low bar. whatok if they figured out how subdue inflation. this is a business about making money. it's an enterprise where we're supposed to try to make money. not thumb sucke1q and debate an happen. blabbing about the fed or making up stuff about yield curve.

that's not what we do here on "mad money." to put it another way, the people that usee1 top down analysis simply don't understand how this business ñiworks. the analysts aren't idiots. they know how to cutçó numbers ahead of earnings.lpok they recognize what needs to be done and they do it. we're going to move around. tonight trading response to çóe1 numbers. did deliver avp nice bottom lin. was it a great number? no. but it was a killer number against a rock bottom expectation theçó company was facing because it missed last quarter's numbers and people were worried and scared. we also heard from the commodity chip maker. this was l)je walgreens. they expect thev numbers. it's dropping after hours,5a■ b it wasn't crushed. why? because we already knew it would be a rough quarter.

i think they have simply had enough and moved on. no one left to sell. bottom line, maybe the c q,pect down enough ahead of this quarter that stocks can rally in response to less thanñi stellar numbers? that's what we saw today. sp e1 more earnings seag when youe1 consider the entire analyst community. brad÷dw3 from illinois. brad? >> okay, jim. i'm 60, retired. i inherited 200 shares of general electric and 70 shares of ge health care. do i do a booçó yeah hold or a sell, sell, sell? >> you do a hold because the health care will grow mid-single digits, and the aircraft business is just on fire. i want you to stay there. how about ben inxdçó north caro? ben? >> hey, how are you, jim? thanks for qqr'g me on.

>> quite welcome. >> i have been looking at netflix closely here. i understand they've got stiff competition with other players in the streaming space, but ahead of earnings, i'm curiousx opinion is. >>t( there was a survey that ca out that in canada you got rid of the passport sharing and numbers dipped. now they're canceling, and they are coming gddk. because they're coming back,c that's why the stock is going i think you continue to do so. &háhp &hc% >> hello, mr. kramer. p% >>e1 i'm doing well. how about yourself? >> pretty well.çó feels like spring out there. >> exactly. i'm a first-time caller. and boo-yeah to you, sir. calling in to get some direction in the march, april time frame of 2020,çó nbc at the bottom abt

$40 a share. it's gone up. trying to decide ife1çó i ho it or aj;1■ off and go shopping for some other stuff. >> they're in the sweet-spot. they're making a fortune and their multiples are +■incredibl well. in this particular case, i do not think that's going to happen. i will say yes to earning that. what we sawñre1 today is it is finally coming down so much that companies can beat those numbers. that bodes very well for the earnings season and poorly for the topdown strategists who may be completely wrong. what sets the standard apart from others? and what stocks continue to win? and what semiconductor stocks would be the next big name in tech? you will find out when we go off the e1charts. and we know one of the pain points to tame inflation. could we see a decline in home prices, or is it ae1 rede1 herr? stay with cramer!

don't miss a second of "mad money." followe1 @jimcramer. send jim an e-mail to madmoney@cnbc.com. or give us a call at 743-cnbc. head to madmoney.cnbc.com. [office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo.

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you know us. what's going to work? even when we're in a bear market like we were most of last year or in a scared market like we are right now, courtesy of the manufacturing crisis. sometimes there is no rhyme or jt)j lead us higher. we found a new leadership group that makes a ton of sense. that's for companiesçó best balance sheeting.tx#

between rate hikes and the fear of more bank runs, you better believe they tighten. that's onúuvp of all the aggressive rate hikes last year. the fastest we've ever had. it is more expensive for companies to borrow especially when treasury yields are more than they were a year ago. lot harder to directly borrow from banks. that's part of thexd crisis. )z morexd aggressive bank lending. it makes sensee,kñ that the companies with the best balancey sheets, the ones that need the leastok credit would therefore 1 outperform here. we will show you tonight that's exactly what's happening. we needed a true empirical sorting system, kind of like a schematic. so what do wejf do?i] the s&p e1 currency issuerçó credit rating for every single component in the s&p 500. calculate all the stocks done year to date and since the banking crisisjf began on march

8th to see how important credit is to determine the stock. when you break dowi] the performance by credit rating, the results are astonishing. as of lastçó night, of the 20 stocks in the s&p with double a minus to aaa ratings, it is very hard to get a aaa rating, they're up u■4.8% for the year ( 1.9% sincexd march. byi] comparison, it is."■ down. that's right, down 1.3% for the yeare1 andfáfá down 5% because banks got jammed up. that's true outperformance versus underperformance. 1 out ofe1 20eo a minus to a plus. they're slightlyforming year to date. they're 3.9%fá since march 9th. that is broader. then we have ok99 companies wit triple b plus credit ratings. their stocks are down 4.8% for the year and 4.8 since march

8th. impact on stock performance in the last two weeks, which is wh1 we're focused on okthem. we're trying to help you sort stocks you shouldn't be in. this is a surprise. the triple b minus to triple b stocks 100.9 of them, they have they're up 3% for thet( year an only down 3.9% since the banking crisis 'c■started. f o doing better. they're down 8.4%. finally there is this catch-all group for companies that either have no rating or for some reason didn't return a rating during or screen. this is the best year to date performance, up ok5%. it is not that terrible since march 8th.xd why has it held up better? because not having a credit rating can often be a good thing. it can mean you have nofá publically traded xddebt, which usually implies an ironclad

balance sheet or it could mean with the other two rating agencies, which is nor e1bad. in the w3end, this is what matters. look at this. we're trying to figure out how to weed out the bade1 and find e good as a field of endeavor to work. it is clear the stocks of companies with the best credit from outperformed since the banking crisis got started. compare and contrast. as you move down fromxd ae1 rato b rated, things get moree1 complicated. the group with the worst credit rating in the s&p e1500, the double b plus to b minus cohort has done the worst since we started worrying about the bank runs. remember, the stocks with the best balance sheeting are up 1.ertr(t&háhp &hc% w5me the ones with the worse balance sheets are down. you call all5a■ the time and as about balance t(sheets. it is so important.e1 that's why i have to emphasize it seems to matter less for companies in the middlefá of th packet.

of course, when you're trying to identify a new theme like this, one day is not enough. you need to look at situations from multiple angles. so we put another key data point for every component. net debt. meaning total debt minus cash. if you have got enough cash,fáqu re well-healedokq companies in thep 500. you know what? they are outperforming much index. since march 8thfá, their stocks are down 2.2 on average compared to down 4.5% in the other stocks withe1 positive net debt balanc. another criteria that ist( helpg us find good stocks. now let's take this a step further. forlp the 420xd names with moret than cash, we calculated their net debt to ebita ratings. debt to ebita is a common shorthand to figure out how many years of operating earnings it

up the balance sheet. of that group 394 have ebita estimates. we found the one$u■ with better balance sheets are putting up stronger performances.u■ the net duv is below one. lower is better with this number, have outperformed relative to the rest. another boxxd checked about howr can find good stocks in this tough environment. we also searched through the nine worst names with sevene1 o above. they're doing awfully. they were down 6.5% for the year and down r a bad balance sheet has become the real liability in the market. these are all ways for you to double check before you pull the trigger and buy a stock. you don't want to be in this cohort, do you? ever since wee1 started worryin about bank runs, the stocks with the best balance sheets have been crushing e1it. know what a balance sheet is. i expect that to continue until

there is a resolution. stick around after the break. 4rñ weçó will highlight one of y favorite games, using this whole schematic that iñi told you abo tcñ■ lets you ride out this period and then produce good resultsw3 later on. balance. more of the best balance sheets in business when we return. asking the right question can greatly impact your future. - are, are you qualified to do this? - what? - especially when it comes to your finances. - are you a certified financial planner™? - i'm a cfp® professional. - cfp® professionals are committed

to acting in your best interest. that's why it's gotta be a cfp®.

when you have a banking crisis, you should stick with the companies with the best balanceçó sheets and the least need tou■e1 geté@■ money. i already showed you how that happened. but which ones should you bet on

specifically? tonight i want to pick up on the most ironclad balance sheets using all the ways we just of stocks that can tell us if this theme is still working. i want you to consider an etf for companies with credit. i gotçóe1 it. call to "mad money" best balance sheet etf. watch someone make a half millionok dollars off it. weñr will start with the s&pe1 d long-term local currency issue and credit rating because those are a select group ofe1 games. 20 stocks with double a minus to aaa ratings onfá their debt. now, you could do a lot worse but i still want to do some trimming around the edges to come up with a more focused group of stocks for our best balance sheet etf. let's start at thew3 top with j and microsoft. there is the only two american companies with aaaq cá■%q■ ratings. meaning the s&p is more e1reliae

than the u.s. jfgovernment, whi was downgraded to aa plus a dozen years ago in a mistake. we were conscious5a■ that theres another one coming. there is a reason we own microsoft and j&j, which you can

next up, there are t■ with a, a plus creditçó rating, meaning the s&p thinks they're equivalent to the u.s. government in terms of being qro able to pay back the money they borrow. those are two household names i'm talking about. i'm talking about apple and lp alphabet. then we have another three with double a 5a■ratings. walmart, berkshire hathaway and amazon, all a bit worse than apple sam. apple is a no brainer. own it, don't trade it. nothing has changed there. alphabet has end market issues right nowr gnd some government issues. this company is powered by advertising. right now they have more this weekhá meanwhile, their other big business is experiencing a slowdown. although, it is doing better than the others. still, you have to include alphabet. as for the three double a ratinq names, if you joinq the list, they give us some e1 diversification. components with double a minus

credit ratings. with these, i think we've got to be a little more select. i will talk the two oil companies exxon and chevron. i am a big believer in oil here given that production slowed dramatically. the charts have told you the bottom is putok in. we will also add procter & gamble that i spoke about .-1=■ conferencefá today. wait a second. the balance sheet already feelc■ way too tech heavy. next abbott labs upgraded. nice piece tonight on ubsçó dealing with a post covid ñr hangover, along with unwanted attention from the government baby formula factouh; issues. no qneed. no need for ñrpalmolive xdeithe. i will definitely take nike, though. they just reported a great

quarter. they are terrific. asset light, tech consulting e1 play. all about enterprise tech spending. you got a slew of financials with double a minus credit ratings. i think cme group, that's ai] tn tech, has a good thing going with individual investors becoming addicted to options. but i also worry about the longevity of this business, so we will takeú5ñpass on this one. but i will happily add blackrock, the world's largesto asset manager with $8.5 trillion of assets. this is a fine business, but it might get hurt if there is a5a■ major pullback in consumer spending. so you know what i'm going to do the stocks are on fire. up more than 65% for the year. mark zuckerberg finally has religion. performance reviews? that's a good thing.e1

we're left with 13 stocks from this group of 20 s&p components with the best credit rating. i want a few more, though, as they need more exposure to health care, industrials, materials, real estate and the utilities if it will be truly diversified. soeó.s let's drop down another credit rating. for health care, we like eli lily, which we like their fáe1 antiobesity. maybe they'ree1 a plus credit rating. i like itw, the best industrial you have never heard of. trucke1 maker, reported the strongest quarter in the whole sector. if you want to fill more holes, we want to drop down with more credit ratings. here we have lindy. remember, we keep focus of this. this is really important for us. balance sheet, balance sheet, balance shemt= and we could getu■ materialsó[■

exposure with newcore.jfñr coming up with a real estate component is tricky. there are two with a credit ratings. there is publice1 storage. while we're here, we're looking at these, though, there are a lot of worries about commercial real estate in general, so i'm willing to stick with prologis. i likee1 them. utilities very difficult. few with a minwa■ credit rating and nothing too impressive. when you measure the balance sheets, remember i told you to drop down with that, energy looks like a winner. this is the nuclearlp power utilitye1 and the only in the s 500 with a net debt to çóebida below two. that brings us to 21 components. let me roundiááhings out aok lie bit. even though they might not have credit ratingse1 from theok s&p

there is that drug company known for -- i don't talk about it nearly enough. it hasxd the best known cystic fibrosis enterprise ']s!■ zero debt. axd bullet#of balance sheet. then there is another one i don't talk about that much, jack henry and associates which makes digital banking e1technology. minimal debt and loss of earnings. a good way to play the bankiuh sector without owning a bank. no credit risk. then we will include caterpillar. downgraded yesterday,fá i think mistakenly. also a low net tolp e1ebida. don't forget, they benefit from the ira. finally, how about ae1 more eney name? i was with ben who was really behind this. he is saying, jim, he's right. they bought royal dutch shells for a sales scenario. they just got approved from the

biden administration, of all things, for a huge drilling company in alaska. the stock is down nearly 30% from its highs late last e1year. bottom line, if you believe, as balance sheets will beú .ayace tog'u■uoxf■ be in this k please consider some of these names in this menu, keeping an eye5 alance sheet. and i hope you didn't mind the teaching lesson about how to find good stocks in a troubling environment. let's go to stackwell. >> how are you doing today? >> i am doing well. how about you? i got to thank you, man, forw3 l youre1 work. you have been like a mentor to me at a distance, man. >> oh, iñr gotw3 to come up wit new book. what's going on? tea.

we got a lot of turbulence up and down. the guys around here have been wondering with china and all the things, can we respectfully exxx#ct a rally out of boeing? >> the answer is yes. now, we sold boeing for the travel t'm we got discouraged. i talked in our meeting about not letting your discouraging át action. i think boeing is a good stock. we chose to be involved with it through honeywell. if you believe as i do that companies with strong balance sheets willlp be a smart place be in a tricky period, please consider some n very extensive menu. and maybe more important, please, follow a methodology. much more "mad money."e1 and good sum conductor stocks. one name that's really leading the charts and i like it.

then the housing situation has gotten increasingly complicated. where do we substantiate? i will give you my take. of course all our callsfá rapid fire in fátonight's edition of e lightening round. so stay with cramer!

how do we get our bearings in an unpredictable market? everybody has going nuts since we started toxd worry about the bankxd failures of a few weeks á ago. and we're still waiting on afá resolution from the u.s. government. we know they tend to have a which is a positive side effect1

what's been working in this situation? i went off the charts with a show, dan fitzpatrick. he's the founder of stock market mentor and a regular he nailedok the rally in the homebuilders in january 10th. he said they go up despite theñ &#d tightening it. it was a tremendous call.w3 right now fitzpatrick saysw3 what's working is tech. how does he getko■ there? tech has the best breadth out there. like it's shug edchicagoed a gav listerine. when you zoom ine1 on the tech that's almost half. makes sense. the semiconductor stocks spent last year in the dog house because we had a horrific chip

glut. but now that seems to be diminishing at the same time tech has come back from the wal1 street fashion know.lébr(t&ho if you think we're entering the end, that's good news for tech, too. sook let's start with the daily chart of the broader index. that's the semiconductor index. this made a textbook inverse head and shoulders, okay? that's a very positive andwo/■ consistent pattern. it looks like the head and shoulders of a person upside down. this is a very reliable pattern. they broke out above the neckline. he tells fitzpatrick that the semiindex could have a lot more room to run. at the same !u+gkuy he likes th the 50 day and u■200-day moving average are bothr in lock step basically. the 200-day, that's really important. when youi] see that. that's a clear sign.

this ise1 called afáe1 golden c. get to see it, but it is one of the most positive thingse1 you n see on the chart. fitzpatrick is adamant that semi is the best place to be right now. that's not enough for him, though. he says what'se1 workingñi in t are the large caps. if you are going to bet on something, he says you bet on the biggest chip maker with the chart that is the best, y happens toe1 be analog devices, adi. it is the 31st largest company in the nasdaq with a relatively balancexd business making mostly industrial chips. they're a terrific company. they have been on the çóshow. let's start with the weekly chart.ñie1 fitzpatrick says this should control the analysis right now because of the extreme volatility in the market. what mattersu■ and what big institutions are doing. you can see the footprints all

ox%.■ this weekly chart. what's going on here? he points out that thenujt)hráh% still in thet( longer-term tradg range. you can see that. until ai devices breaks out to a uñ190, up about 6 to $7 from here, he says it has only potential. you can't predict a breakout. you can only watch for it. tough to make qpredictions, especially about the future.lplp that's whyi] fitz patrick wantso watch this chart. the weekly volume bars aree1 in green,xd okay?q that's good news because it tells the truth. the fact it is being boughtw3 aa high volume tells you money managers are continuing to buy it. $8e1 from here and break out of the current consolidation

pattern, now they're 60ñr point going all the way up to 250. that would be like an iot renaissance, believe me. it is based on the height of the consolidation pattern. of course, evenñr that run won' happen overnight. i really believe in this company. i think if things get better in the economy, it will do it. what happens when we zoom in? the market has gotten choppier as of late. however, fitzpatrick says there for lpexample, you can see the stock's 50-day moving average, that's in red, has consistently acted as a floore1 support. in other words, thisçó doesn't below that. recent months and every time it's helped.e1 ■ support line at $180. support there. again, that's where the stock is

tending to bottom in the last couple months. the $180 level happens to coincide with the average which makes it firmer. it breaks down below 180, fitzpatrick says you should throw out the towel. the pattern doesn't work, you have to ban the stock. right nowñi fitzpatrick recommes waiting for a cleart( break-out above 190. he doesn't want to go with a break-out that might never happen because he thinks the stock will be less riskyxd abovu that's how techniciansq operate. how does this operate? i like adi. i think business is very strongá bottom line, he says the semiconductors are becoming a new leadership group fore1 this market. he wants to bet on adi as the next winner. you havefá me intrigued. it's on a tremendous amount of work on the industrial internet, and this is the best semito

play. "mad money" is back right after the break. w3 coming up, what's on your mind? give us a call. the lightening round isr the nyse next. did you ever stress about us having three kids? no, that was always part of the plan. three kids?! this was never part of the plan! these kids order the lobster mac 'n cheese! what if she wants to play golf? we're going to have to outlaw golf. absolutely no golf in this house! not under my roof! since we started working with empower, all of our financial questions have been answered, so we don't have to worry. so you never- nope. always part of the plan. join 17 million people and take control of your financial future to empower what's next. start today at empower.com ♪♪ ♪ a bunch of dead guys made up work, way back when. ♪ ♪ it's our turn now we'll make it up again. ♪ ♪ we'll build freelance teams with more agility. ♪

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lightening round sp'@sored by td e1e1ameritrade. round! and then the lightening round is over. are youok ready? john in illinois. john? >> how are you doing,w3 e1sir?

how are you? >> i called ine1 about thisok m incorporated. >> what are theye1 doing? it also does military work. i say we -- buy, buy, buy! >> next is brendan in new jersey. >> long-time listener. thanks for taking my call. >> i have been chilling. what's happening? >> i appreciate your long-term opinion on western alliance. >> why do i needt( to be a o i'm saying that guy might be ail

ill-advised in his choices. >> a big boo-yeah on the pga investments group in washington, d.c. >> i like this guy. what's up? >> commercial real estate is taking a huge hit over the past year. home trend.tes, the work from it's really commercial reupdates. the stock is down nearly two-thirds from its peak, and it's5a■ trading around 14. is it a buy now and wait fori] it -- >> you actually say it right. my worry about this onet( is i i management that the world has gone away from their buildings xd about the yield. i reach for yield. i don't do that. i have to say, don't buy.w3 how aboutlp michael in pennsylvania? >> i feel very tenured. what's happeningi] with fáyou?

>> to be honest, i'm getting af little seasick. >>e1 what's the matter? >> the stock i'm calling about is]kk going over biggeri] swailn the sea itself. >> what stock? >> e1beautiful.qiq) jjuutt)p'. >> i likee1 norwegian at $12, b we need to see a rising tide. the problem in here is we just don't know. that's going to putq a lidñr on norwegian. go to tanir in texas. >> hi, jim. boo-yeah. >> boo-yeah. >> all right. thank you for all the things you do. >> oh, quite welcome. thank you. >> all right. i haveñr a question on ñralibab

>> they will probably give you another ten points. they chartok like mou. this is unbelievable they pull this up again. every time think they we will be a cold warrior, they come in and say, all they care about in america is money.q unfortunately, they're e1right. that is the conclusion of the lightening round. >> the lightening round is sponsored by tdameritrade. >> inflation is a hungry beast. don't get eaten. stick with cramer. the internet e a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise

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right now on cnbc pro, a megacap tech stock with 50% upside takes for5a■ ° plus, growth stocks with fund managers. scan thisóom code and get cnbc today. >> we keep hoping that housing prices can come down becauseñi they're a huge component of inflation. the fed will not stop tightening until we get it under control. maybe that's why we alle1+■ stao rejoice when we see a headline this very morning saying s&p shortened declining trend continued in january. yeah, baby. here comes the big pullback. except it isn't. not at alljdxd it's almost funny how long that takeaway is. why? according to the managing director of theq index, it seem like 2023e1 began the way 2022 ended. u.s. home prices have fallen for

the second consecutive month and the index is 5% below its peak ■ like a win against its peak inflation. wrong. youxd got to remember, home pris were split just before the pandemic. it went from $275,000 to $363,000 since 2019. so e15% down from the top, that nothing. while prices are started coming down, the only meaningful year over year declines are in san ® portland whi the persistence of remote work. miami up 13.8%. tampa i]10.5%. atlanta q8.4%. why aren't homebuilders meeting that demand? i like kp homes' answer from last week. delays and availability in?;■ transformers, electricalfáçó equipmente1 contributed in dela. let's parse that. it is difficult to get mufánicil

issue. t(pú prevents hundreds of thousands ofçó homes to be buil. it started after 2009. and it gets tougher and tougher to get space every year. they have zoning problems all over the country. as for the transformers, a classic supply chain problem. you canq substitute garage door openers, the supply issues haven't gone away becausee1 we e still semiconductor constrained. lowe1 levels of immigration, residentialxc workforce is much more than it could be. that's a political issue. plus, the homebuilders aren't like they were in theok old day. they're a lot more disciplined they would rather spend that money buying back their stock. kp homes repurchased nearly two million shares.u■ a co/9úuz bucks below where it s currently trading. what? to put up homes. no, to keep buying back stock. what about mortgage rates?

it is true there was a slight5a buyer strike when rates went up. as soon asy1 mortgage rates wen back down, thee1 buyers cameñi t back. think about this. .t(srgtt in housing prices during a period where we have experiencedñi the fastest rate hikes in modern history. they aren't as much of ae1 gaing factory as they used to be because the home buyer is so flushed with cash. loan rates are way too low because people fear we're going into a recession. the ñr20-year treasurye1 isn'tq high hurdleok rate for açó buye. it's just producing fewer b+á%5ñ because there is a shortage of homes to peruse. nobody budges on the sell sideeo because there is a shortage. they are so confident theire1 homes will hold value. if they do lose, they will lose anok attractive mortgage they m have taken because they just bought a home in the last few

years. don't feel defeated when youçóqá these prices drop. the fed wants to regain much more of their gains since 2019. be ages be that, though, if ever. still one more reason inflation is proving so