Home Inventory In The U.S. Is At Lowest Level In A Decade, Plus Odds You’ll Become A Millionaire

by 2 years ago

morning-brew

“Your attempt to subvert my constitutional right to the 5th Amendment are disgusting & insulting to all Americans @OversightDems @RepCummings” — Martin Shkreli, former CEO of Turing Pharmaceuticals, in a recent tweet. Shkreli, who infamously raised the price of a life-saving drug by over 5,000%, may refuse to testify in Congress next week.

MARKET SNAPSHOT
Big Picture

  • With a strong close to the week, U.S. stocks notched their first positive week of the year, supported by a swift recovery in oil and stimulus expectations from Europe
  • European markets performed just as well, with mining stocks leading the way as a result of strengthened commodity prices

Alternatives to Watch

  • No one has been struggling more in 2016 than run-of-the-mill equity funds, which investors have already pulled over $24 billion from as they funnel their money into the safety of government bonds

Market Movers

  • Shares of what Wall Street terms “blizzard stocks,” or stocks that benefit from blizzards, steadily increased last week in anticipation of Winter Storm Jonas that struck the east coast with authority over the weekend

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U.S. MACRO

Buy ‘Em While You Can

It was a blowout December for sales of existing homes, which jumped 14.7%, bringing 2015’s year-end total to 5.26 million—the highest annual number since 2006. Lots of homes are being bought, and there’s not a whole lot left—inventories for existing homes for sale fell 12% to 1.79 million, the lowest level in nearly a decade. It’s also partly responsible for 2015’s 7.6% rise in the median home price, making the American Dream less and less affordable.

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CORPORATE PRIMER

 

GE Does OK, Given the Circumstances

General Electric topped fourth quarter earnings estimates on Friday, but only by a smidge, in what has been a very tough quarter for the U.S. conglomerate that’s refocusing its core businesses. The energy industry has been plagued with volatility, but luckily oil drilling and servicing only accounts for 15% of GE’s oil and gas division. Along with its movement back to manufacturing and technology, and GE execs remain optimistic about 2016 despite the company’s decrease in sales.

Google Pays More Taxes

Over the weekend, Google agreed to pay 130 million euros in back taxes on money owed to Britain dating back to 2005. Wait, what? Let’s put it this way: something about a multinational paying only 0.5% on sales in the UK just didn’t sit right with the public or the tax authorities. Google has agreed to untangle its complex tax structure in response to the criticism, and now gets to pay more taxes…hooray.

10 Strikes…

After a tenth death connected to defective Takata airbags was revealed over the weekend, the company announced it’s recalling an additional five million vehicles, adding to the 19 million recall count the auto supplier has tallied up already. If you own a Volkswagen, Audi, Ford or Mazda, do yourself a favor and check what airbags your car has; there’s a decent shot your car could be affected.

 

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: McDonald’s, Ferrari, Halliburton, Peabody Earnings
  • Tuesday: Apple, AT&T, 3M, Coach, DuPont, Johnson & Johnson, Procter & Gamble, Sprint, Lockheed Martin, Corning Earnings; Consumer Confidence)
  • Wednesday: Facebook, eBay, Fiat Chrysler, Las Vegas Sands, PayPal, Qualcomm, Texas Instruments, Biogen, Boeing, United Technologies Earnings; New Home Sales; FOMC Meeting Announcement
  • Thursday: Amazon, Microsoft, Alibaba, Ford, Altria, Caterpillar, Celgene, Electronic Arts, JetBlue, Time Warner Cable, Under Armour, Visa Earnings; Weekly Jobless Claims; Durable Goods Orders
  • Friday: U.S. Q4 GDP; MasterCard, Chevron, Phillips 66, Siemens, Xerox Earnings

IRAN ENJOYING THE WORLD ECONOMY

As of last week, Iran is back in the game. That’s right, economic and financial sanctions were officially lifted as part of the nuclear deal reached by the U.S., the EU and Iran last year. What does this mean for Iran economically? Even though it’s only been a bit over a week, plenty has already happened:

  • Iran has agreed to purchase eight A-380 superjumbo planes and 16 A-350 jets from Europe’s Airbus—with further plans to buy 100 aircraft from Boeing—aka a shopping spree with a national budget.
  • The market for insurance premiums in Iran is worth around $7.4 billion, though American insurers are still banned in Iran. This just means more for European companies, such as London-based UIB, which was active in reinsurance before the sanctions.
  • And then there’s oil, of course: Greece refinery Hellenic Petroleum already owed Iran $650 million before the sanctions that it hasn’t been able to repay. So the company has inked a “long-term” agreement with Iran to purchase crude oil from the newly un-embargoed country. Welcome back to the world economy, Iran.

 

INTERVIEW QUESTION OF THE DAY

Company A has $100 of assets while company B has $200 of assets. Which company should have a higher value? (Answer)

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BUSINESS TERM OF THE DAY

Tactical Trading — A style of investing for the relatively short term based on anticipated market trends. Tactical trading involves taking long or short positions in a range of markets, from equities and fixed income to commodities and currencies.

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FOOD FOR THOUGHT
21.5%: the probability that a white, middle-aged, college-educated American is a millionaire. Compare that to 6.8% among middle-aged, college-educated Hispanics and 6.4% among middle-aged, college-educated African-Americans.

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