gordonscottcmt

Lumber as Supply or Speculation 2

Short
NYSE:LOW   Lowe's Companies, Inc
Lumber prices are likely responding to increased supply. We can tell because not only is Lowe's (LOW) moving lower, but also Whirlpool ( WHR ) is moving lower in the same dynamic. Both of these stocks are components of State Street's Homebuilder ETF ( XHB ) and all of them are related to the price movement in Lumber futures ( LBS ). Since Whirlpool's appliances aren't made of wood, it is safe to say that newly added supply (of both appliances and new homes) is being generated, driving profit margins lower.

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