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Home is where the hedge fund is (Allen J. Schaben/Getty Images)
There was a different kind of bull run last week: a literal bull was found on New Jersey Transit tracks, delaying trains and giving commuters a wild late-to-work excuse. The longhorn — which had escaped from a slaughterhouse — was sent to an animal sanctuary. Your move, Pixar.
The S&P 500 gained 2.5% last week as it enjoyed its longest win streak since 2017. November inflation ticked up from October, but kept cooling from last year. The Fed held interest rates steady for the third time in a row, and signaled good chances for rate cuts next year.
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Congress could get hedge funds disinvited from the neighborhood block party
Trimmin’ the hedge funds… Congressional Dems introduced two bills this month that could upend the US housing market. One would bar hedge funds from owning single-family homes, forcing them to sell off their huge portfolios within a decade. The other would place an annual fee of $10K/home on owners of 75+ single-family properties. If passed, the bills could help rein in prices by putting thousands of fund-owned homes on the market. FYI: most Americans believe that now is the worst time ever to buy a house.
Knock-knock: Deep-pocketed hedge funds have been busy scooping up more of the block, buying a quarter of the single-family homes that sold in June. Last year, investors bought 21% of Atlanta’s homes in all-cash deals. Buying is often done in majority Black and Latino neighborhoods, where properties are converted into rentals.
Pick your poison: Supporters say financial firms are driving up prices, boxing out ordinary folks. Critics say the bills would hurt home supply because they’d halt large investor-funded development projects.
Housewarming: Since 2019, median US home prices have popped 38% to $431K. Meanwhile, this fall, mortgage rates hit 8% — the highest in two decades.
Meet your new neighbor… Blackstone. The world’s largest alt-asset manager owns thousands of houses around the US, but corporate homeownership is still fairly new. In 2011, there weren’t any entities that owned more than 1K single-family homes. As of last summer, hedge funds owned 574K (MetLife estimates the # reached 700K in late 2022). At that pace, institutional investors could control 40% of the market by 2030. If the bills become law (unlikely atm with a divided Congress), it could throw a wrecking ball into firms’ sizable housing portfolios.
Relief isn’t just about rates… High mortgage rates are making white-picket dreams less attainable: the average new mortgage payment is 52% higher than the average apartment rent. But as the proposed bills suggest, lowering rates is just one part of the solution to the housing-affordability crisis. Over a third of home sales last year were done in cash, with lots of buyers easily outbid by corporations.
A quarter-century of curiosity
The MSOAT (Most Searched of All Time): This year, Google is celebrating the most searched figures and moments in 25 years of Google Search. From some of the world’s most iconic performances, to history-making breakthroughs, see the moments that have changed the world and inspired the next generation to come.
Search party: Look for 25 of the most searched people, places, and things of all time hidden in the Most Searched Playground — an interactive game powered by 25 years of curiosity.
Coming up this week
Just (hoping to) do it… AF1 hype isn’t what it used to be. Nike’s expected to step into lower earnings on Thursday. The swoosh icon missed sales estimates for the first time in two years in September as sneaker buying cooled in North America, Nike’s No. 1 market (sales grew everywhere else). Adidas is feelin’ the same slump: Q3 sales dropped 6% as US inventory piled up. Nike reentered wholesale deals with retailers like DSW to lift demand, but it could be a tough climb. In September, nearly half of Americans planned to curb their footwear spend.
Bye, #vanlife… we hardly knew ye. People bought so many RVs during the pandemic that dealers couldn’t keep them in stock. But the days of high discretionary income and limited vacay opps are over and air travel has snapped back. Winnebago, which rolls up with earnings Wednesday, reported a 35% sales drop in October. Airstream maker Thor saw similar declines as road trips lost steam. Not-so-fun fact: RV sales are seen as a leading economic indicator, often sliding in the years leading up to a recession.
Stories we’re watching
Add a little bit of crisp… The FDA approved the world’s first therapy using gene-editing Crispr technology. Exa-cel — a treatment for sickle-cell disease developed by Vertex Pharmaceuticals and Crispr Therapeutics — works by genetically manipulating patients’ cells. Unlike medicines that treat diseases, Crispr targets their root causes, creating a potential one-and-done cure for diseases like cancer and diabetes. It’s poised to transform medicine, though its exorbitant cost (Exa-cel rings up at $2.2M/patient) is a roadblock.
Can’t taste the rainbow… Meet “flavorflation,” shrinkflation’s annoying cousin, where food companies try to blunt inflation’s effect by switching to cheaper ingredients to save $$. Customers have complained about crumblier Ritz crackers, Breyers that’s more ice than cream, and Twix caramel that’s betwixt bland and nonexistent. Last year, a survey found that over 60% of food and bev brands had changed recipes since 2020. Meanwhile, snack giants like Pepsi, Campbell, and Oreo maker Mondelez have benefited from price hikes.
Lithium: the next oil boom?
Elemental: Lithium is essential for rechargeable batteries, including those in smartphones, laptops, and EVs — and nearly all forms of renewable energy. As demand for Lithium rapidly overtakes supply, one company is building the technology to make lithium cheaper to extract from hard-to-reach places. EnergyX is able to recover 90% more lithium than current techniques.
You can invest in EnergyX today.*
Fast: Under pressure from ecomm titan Shein (which now makes up half of all fast-fashion sales), retail rival H&M is trying to appeal to aspirational shoppers with designer collabs and Fashion Week parties.
FairValue: An accounting-rule tweak could benefit companies that hold crypto, including Tesla and MicroStrategy. One industry player called it a “holiday gift,” and bitcoin bulls said it could encourage corporates to HODL.
OpenAI’s media deal • Dec 15, 2023 Bitcoin “volcano bond” • Dec 14, 2023 Google’s Epic loss • Dec 13, 2023
Last quarter, Costco sold over $100M worth of gold bars
Monday: Homebuilder confidence
Tuesday: Housing starts. Earnings expected from Accenture, FactSet, FedEx, and Steelcase
Wednesday: Existing-home sales. Earnings expected from General Mills, Winnebago, and Micron
Thursday: Initial jobless claims. Earnings expected from Carnival, CarMax, and Nike
Friday: Core PCE, consumer sentiment, and new-home sales
Authors of this Snacks own bitcoin and shares of: Microsoft and Tesla
*EnergyX disclosure: This is a paid advertisement for EnergyX’s Regulation A+ Offering. Please read the offering circular and related risks at invest.energyx.com.
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