Editor's Note: Below is a chart and excerpt from today's Early Look written by U.S. Macro analyst Christian Drake.
You do not want to be long Housing related equities during rate shock periods, period. When the magnitude of short-term changes in rates pushes above 2 Standard Deviations the inverse correlation between rates and housing equities pushes towards 1 and housing investing devolves into a single factor model (i.e. the trade is singularly about rates and broader fundamental considerations get sidelined). Builder Performance during historical Rate Shock periods is illustrated in the Chart of the