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  • These are the most expensive ZIP Codes in the U.S. for house shoppers

    These are the most expensive ZIP Codes in the U.S. for house shoppers

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    Where are home buyers paying the most? Mostly on the coasts, according to a new report.

    Based on a ZIP Code–level analysis of closed home-sale prices, PropertyShark, a real-estate data site owned by Yardi Systems, found that, of the top 100 most expensive ZIP Codes in the U.S., 65% were in California. 

    On the East Coast, New York City had the highest concentration of pricey postal codes for home buyers, the report said.

    The analysis of ZIP Codes was based on the actual sale prices of homes, not their asking prices, PropertyShark noted. “Whereas asking prices reflect sellers’ wishes, calculating medians based on sale prices reflects the transactional reality on the ground,” PropertyShark said.

    The most expensive ZIP Code in the U.S., 94027, in Atherton, Calif., has been a longtime leader on the list, the report said. The median sale price of a home there was a cool $8.3 million. The Bay Area town, in San Mateo County, is home to some rich and famous people, including NBA star Steph Curry and his wife, Ayesha; tech billionaire Marc Andreessen and his wife, Laura; and others.

    Curry and Andreessen have opposed denser and more affordable housing developments in their neighborhoods, earning them criticism as “NIMBYs,” for Not In My Backyard. “Atherton is almost exclusively zoned for single-family homes, with a one-acre minimum lot requirement dating back to the 1920s,” the PropertyShark report stated.

    Across the country, New York City had the highest density of expensive ZIP Codes, with eight spread across Manhattan, Brooklyn and Queens.

    The Hamptons town of Sagaponack (11962), a Long Island enclave popular with celebrities, ranked No. 2 on the list, with a median home price of $8,075,000.

    Nationally, the median home price, meaning the price in the exact middle of the price range, was $394,400 as of September, according to the National Association of Realtors.

    These are the most expensive ZIP Codes in America as of 2023, according to PropertyShark:

    • Atherton, Calif. (94027) 

      • Median home-sale price in 2023: $8,300,000 

    • Sagaponack, N.Y. (11962) 

      • Median home-sale price in 2023: $8,075,000 

    • Miami Beach, Fla. (33109) 

      • Median home-sale price in 2023: $5,500,000 

    • Santa Barbara, Calif. (93108) 

      • Median home-sale price in 2023: $5,000,000 

    • Beverly Hills, Calif. (90210) 

      • Median home-sale price in 2023: $4,800,000 

    • Stinson Beach, Calif. (94970) 

      • Median home-sale price in 2023: $4,500,000 (tie) 

    • Water Mill, N.Y. (11976) 

      • Median home-sale price in 2023: $4,500,000 (tie) 

    • Newport Beach, Calif. (92661) 

      • Median home-sale price in 2023: $4,495,000 

    • Santa Monica, Calif. (90402) 

      • Median home-sale price in 2023: $4,489,000 

    • Medina, Wash. (98039) 

      • Median home-sale price in 2023: $4,388,000 

    • Rancho Santa Fe, Calif. (92067) 

      • Median home-sale price in 2023: $4,248,000

    Read on: This U.S. city has the highest share of superrich residents in the world — and it’s not New York, San Francisco or Seattle

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  • U.S. construction spending rises for the ninth month in a row in September

    U.S. construction spending rises for the ninth month in a row in September

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    Construction spending rose in September, as companies and the government continued to ramp up projects across the U.S.

    Spending on construction projects rose 0.4% in September to nearly $2 trillion, the Commerce Department reported Wednesday. 

    The…

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  • Here’s why Zillow, Redfin and other real-estate stocks tanked after a jury ruling

    Here’s why Zillow, Redfin and other real-estate stocks tanked after a jury ruling

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    Shares of real-estate names plunged Tuesday following a jury ruling that has the potential to shake up the way people purchase homes.

    A Missouri jury earlier Tuesday deemed that the National Association of Realtors, HomeServices of America and Keller Williams colluded to inflate or maintain high commission rates. Jefferies analyst John Conaltuoni said in a note to clients that a judge could issue an injunction preventing commission sharing on MLSs, or multiple listing services, which would hurt the buyer-agent business.

    See more: A Missouri jury goes after the real-estate industry’s commission structure. Here’s what that could mean for homeowners.

    Shares of Opendoor Technologies Inc.
    OPEN,
    -9.09%

    plunged 9% on Tuesday, while shares of Zillow Group Inc.
    ZG,
    -6.87%

    Z,
    -6.98%

    fell 7%, shares of Redfin Corp.
    RDFN,
    -5.67%

    dropped 6% and shares of RE/MAX Holdings Inc.
    RMAX,
    -4.36%

    declined 4%.

    Conaltuoni thinks the recent ruling could bring big changes to the Participation Rule, which is an NAR requirement for seller agents to disclose the compensation being offered to buyer agents when they list through an MLS. The Participation Rule could soon get banned or turn optional, in his view.

    Such a ban “would cause negotiations about buyer agent commissions to occur when an offer is presented, since there would no longer be an avenue to communicate splits up front,” he wrote. “This would eliminate the seller’s incentive to compensate buyer agents, which would force them to seek compensation directly. Shifting the burden of payment to buyers would likely meaningfully reduce their use of agents given most already struggle to cover closing costs.”

    Conaltuoni further commented that were the rule to become optional, the “status quo” likely would continue.

    Read: Why aren’t homeowners selling their homes? It’s not just the ‘lock-in effect’

    What would these developments mean for Zillow, which reports earnings Wednesday afternoon? He flagged that nearly two-thirds of the company’s revenue comes from its Premier Agent business, which itself is primarily made up of revenue from buyer agents. “[A] reduction in their usage would force [Zillow] to pivot to offering products for seller agents and create near-term headwinds to revenue,” he wrote, while cutting his price target on Zillow’s stock to $48 from $60.

    Bernstein’s Nikhil Devnani wrote that Zillow “is NOT part of this case and not directly impacted by the ruling,” but there’s the potential for repercussions down the line.

    “Premier Agent is built around buyer commissions,” Devnani said. “And a reduction to commission rates (which could happen if cooperative compensation were outright banned in the worst case scenario) would create challenges for industry revenue growth, in our view. Maintaining the current structure with more transparency would have less impact we believe. It would need a stronger decoupling of who pays for buyer and seller agents.”

    While Redfin shares dropped Tuesday along with other names, Chief Executive Glenn Kelman put out a blog post titled: “Change Comes to the Real Estate Industry.”

    “The judge may take days or weeks to decide what structural changes the jury’s verdict will entail,” he wrote, and appeals could take years.

    But traditional brokers “will undoubtedly now train their agents to welcome conversations about fees, just as Redfin has been doing for years, especially when advising a seller on what fee to offer to buyers’ agents,” he continued. “Rather than saying that a fee for the buyers’ agent of 2% or 3% is customary or recommended, agents will say that a buyers’ agent fee, if one is offered at all, is entirely up to the seller. This is as it should be.”

    RBC Capital Markets analyst Brad Erickson wrote after the ruling that just over half of Redfin transactions come from the buyside. Its stock and Zillow’s “partially reflected these risks coming in,” in his view.

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  • U.S. pending home sales stay near record low despite modest pickup in September

    U.S. pending home sales stay near record low despite modest pickup in September

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    The numbers: U.S. pending home sales rebounded in September but remain near a record low as high mortgage rates and low inventory continue to hurt the real-estate sector.

    Pending home sales rose 1.1% in September from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

    But pending home sales were still depressed on an annual basis due to the dearth of home listings. The September figure was the second-lowest reading since the NAR began tracking the data in 2001.

    Transactions were down 11% from last year.

    Nonetheless, the sales pace exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 1.5% in September.

    Pending home sales reflect transactions where the contract has been signed for the sale of an existing home, but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

    The NAR also released an updated forecast for existing-home sales on Thursday. The group expects sales to fall 17.5% in 2023 to a pace of 4.15 million, which will be the slowest pace since 2008. Yet due to low inventory, the median home price will increase by 0.1% in 2023, the NAR said, to $386,700.

    The group expects home sales to rebound in 2024, rising 13.5% to a rate of 4.71 million. Home prices are expected to rise 0.7% next year, to $389,500. 

    The NAR also expects the 30-year mortgage rate to fall to 6.9% in 2023 and 6.3% in 2024. The 30-year was averaging 7.98% as of Wednesday, according to Mortgage News Daily.

    Big picture: The U.S. housing market is dealing with problems on both the demand and supply sides, but the NAR seems confident that the sector will recover in the new year.

    At present, not only are rates high enough to discourage home buyers, the lack of inventory is also making homes more expensive, which further spooks buyers. The NAR expects the pace of existing-home sales to fall to the slowest in 15 years, when the U.S. was in the midst of a recession caused by the subprime-lending crisis.

    What the realtors said: “Because of home builders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates,” NAR Chief Economist Lawrence Yun said. “This underscores the importance of increased inventory in helping to get the overall housing market moving.”

    Market reaction: Stocks
    DJIA

    SPX
    were mixed in early trading on Thursday. The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    rose above 4.9%.

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  • WSJ News Exclusive | Xi Jinping Is Looking for Someone to Blame for China’s Property Bust

    WSJ News Exclusive | Xi Jinping Is Looking for Someone to Blame for China’s Property Bust

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    Updated Oct. 26, 2023 12:05 am ET

    With China’s property bust threatening to sink the country’s economic recovery, Xi Jinping is looking for someone to blame.

    After putting the billionaire founder of Evergrande, a heavily indebted property firm, under investigation for possible crimes, Beijing is expanding its probes to include bankers and financial institutions that facilitated developers’ risky behavior, people familiar with the matter say.

    Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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  • WeWork COO Anthony Yazbeck to leave

    WeWork COO Anthony Yazbeck to leave

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    Office-space provider WeWork Inc.
    WE,
    -8.41%

    on Thursday said that Anthony Yazbeck would leave his position of president and chief operating officer, a move that will take hold on Friday. WeWork said in a filing that the departure was “not due to any disagreement with respect to operations, strategy, or any accounting matters, financial statements, financial disclosures or related disclosure controls and procedures.” The decision was made on Oct. 13. Under the terms of the departure, Yazbeck will be entitled to a payment of 874,448 pounds, or around $1.1 million, as well as 360,000 pounds “as payment in lieu of the contractual notice period under Mr. Yazbeck’s employment agreement.” Both payments will be made in cash. Shares were up 2.4% after hours.

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  • Can the average American family be called millionaires? Yes, but …

    Can the average American family be called millionaires? Yes, but …

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    It seems hard to believe, and it’s one of those cases where definitions mean everything, but the average family in America has achieved millionaire status.

    That’s according to the Federal Reserve’s latest authoritative survey of consumer finances, and it comes with lots of asterisks attached.

    But first, the data: The mean net worth of the average American household, even adjusting for inflation, was $1.06 million last year. Compared with 2019, that figure was up 23%, boosted by rising house prices and a surging stock market
    SPX.

    OK, here comes the but: The median, as opposed to the mean, net worth of the typical American household is just $192,900. That figure still represents an impressive after-inflation gain of 37% over those three years, but it’s more in line with what everyday experience suggests.

    The median household refers to the grouping smack in the middle of rankings. The average, or mean, gets boosted by the likes of billionaires Elon Musk and Jeff Bezos. American households by income in the top 10% have a net worth, on average, of $6.63 million, according to the Fed.

    Showing the massive importance of home ownership to amassing wealth, those who own their residence have an average net worth of $1.53 million, compared with just $155,000 for renters.

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  • U.S. home sales fell in September to the lowest level since the Great Recession

    U.S. home sales fell in September to the lowest level since the Great Recession

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    The numbers: Home sales in September fell to the lowest level since 2010, as high mortgage rates continue to hammer the housing market.

    Aside from low inventory, rising rates are eroding buyers’ purchasing power, and drying up demand. Sales of previously owned homes fell by 2% to an annual rate of 3.96 million in September, the National Association of Realtors said Thursday.

    That’s the number of homes that would be sold over an entire year if sales took place at the same rate every month as they did in September. The numbers are seasonally adjusted.

    The drop in sales was slightly better than what Wall Street was expecting. They forecasted existing-home sales to total 3.9 million in September.

    Compared to September 2022, home sales are down by 15.4%. 

    Key details: The median price for an existing home in September rose for the third month in a row to $394,300. Prices are up 2.8% from a year ago. That was the highest price for the month of September since NAR began tracking the data.

    Home prices peaked in June 2022, when the median price of a resale home hit $413,800.

    Around 26% of properties are being sold above list price, the NAR noted.

    The total number of homes for sale in September fell by 8.1% from last year, to 1.13 million units. Housing inventory for the month of September was the lowest since 1999, when the NAR began tracking the data.

    Homes listed for sale remained on the market for 21 days on average, up from the previous month. Last September, homes were only on the market for 19 days.

    Sales of existing homes rose only in the Northeast in September, as compared with the previous month, by 4.2%. The median price of a home in the region was $439,900. 

    All-cash buyers made up 29% of sales, highest since January 2023. The share of individual investors or second-home buyers was 18%. About 27% of homes were sold to first-time home buyers.

    Big picture: The U.S. housing market is in the midst of a serious slowdown that is primarily driven by high mortgage rates. High rates spook home buyers, drying up demand, and high rates also deter homeowners from selling since they may have to purchase another home. For a homeowner with a 3% mortgage rate for the next few decades, there’s little incentive to move.  

    And the residential sector is likely to see sales fall further in October’s data, as the 30-year mortgage inches even higher. Demand for mortgages has collapsed, and some outlets like Mortgage News Daily are quoting a rate of 8% for the 30-year.

    Existing-home sales in 2023 could fall to the slowest pace since the housing bubble burst in 2008, real-estate brokerage Redfin said on Thursday, at a 4.1 million pace. 

    What the realtors said: “Mortgage rates and limited inventory has been the story throughout this year — no different this month, other than the fact that interest rates are moving higher,” said Lawrence Yun, chief economist at the National Association of Realtors. 

    “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains,” he added. “We don’t want the Fed to overdo it and cause great harm to real estate.” 

    Yun also questioned whether there will be a “fundamental change” or a temporary one to the “American way of life” due to the slowdown in sales.

    Market reaction: Stocks were down in early trading on Thursday. The yield on the 10-year note
    BX:TMUBMUSD10Y
    rose above 4.9%.

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  • The smiling face of Chinese interests in the Indo-Pacific: David Cameron

    The smiling face of Chinese interests in the Indo-Pacific: David Cameron

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    Press play to listen to this article

    Voiced by artificial intelligence.

    LONDON — It is a multi-billion-dollar plan to build a metropolis in the Indo-Pacific which critics fear may one day act as a Chinese military outpost.

    Now the vast Colombo Port City project has a new champion — former British Prime Minister David Cameron.

    Cameron has been enlisted to drum up foreign investment in the controversial Sri Lankan project, which is a major part of Xi Jinping’s Belt and Road Initiative — China’s global infrastructure strategy — and is billed as a Chinese-funded rival to Singapore and Dubai.

    Cameron flew to the Middle East in late September to speak at two glitzy investment events for Colombo Port City, having visited the waterside site in Sri Lanka in person earlier this year.  

    His spokesperson said the former PM had had no direct contact with either the Chinese government or the Chinese firm involved. But Cameron’s lobbying for the scheme has drawn severe backlash from critics, who say his activities will aid China in its geopolitical ambitions.

    Former Conservative Party leader Iain Duncan Smith, who was sanctioned by Beijing for criticizing its human rights record, said: “Cameron of all people must realize that China’s Belt and Road is not about help and support and development, it’s ultimately about gaining control — as they’ve already demonstrated in Sri Lanka.

    “I hope that he will reconsider the position he’s taken on this.”

    Tim Loughton, another Tory MP sanctioned by China, said: “The Sri Lankan project is a classic example of how China buys votes and influence in developing countries and then sends the bailiffs in when those countries can’t keep up the payments.”

    “Cameron should be working to help wean vulnerable countries off Chinese influence and debt rather than tying them in more tightly.”

    At the roadshow

    Dilum Amunugama, Sri Lanka’s investment minister who attended the investment events in the UAE last month, told POLITICO he believed Cameron was enlisted to convince Western investors to put their money into the project.

    Amunugama was at two events where Cameron spoke — one in Abu Dhabi with an audience of 100, and one in Dubai with an audience of 300.

    “The main point he [Cameron] was trying to stress is that it is not a purely Chinese project, it is a Sri Lankan-owned project — and that is the main point I think the Chinese also wanted him to iron out,” Amunugama said.

    Cameron is in charge of drumming up investment into the Chinese-funded Colombo Port City project | Ishara S. Kodikara/AFP via Getty Images

    The Sri Lankan minister said the decision to enlist Cameron “was taken by the Chinese company, not the government.”

    Cameron’s office said his involvement was organized by the Washington Speakers Bureau, a D.C.-based agency that books guest speakers for corporate events.

    His spokesperson said: “David Cameron spoke at two events in the UAE organized via Washington Speakers Bureau (WSB), in support of Port City Colombo, Sri Lanka.

    “The contracting party for the events was KPMG Sri Lanka and Mr Cameron’s engagement followed a meeting he had with Sri Lanka’s president, Ranil Wickremesinghe, earlier in the year.

    “Mr Cameron has not engaged in any way with China or any Chinese company about these speaking events. The Port City project is fully supported by the Sri Lankan government,” his spokesperson added.

    The spokesperson declined to say how much Cameron was paid for his time. Cameron traveled to Sri Lanka in January and visited the development, but his office said that he did so as a guest of the president and that there was no commercial aspect to that trip.

    Mired in controversy

    The Colombo Port City project has been controversial since its inception.

    It was unveiled in 2014 by China’s Xi and Sri Lanka’s then-president, Mahinda Rajapaksa. Three years later, Sri Lanka handed it over to Chinese control after struggling to pay off its debt to Chinese firms.

    Multiple concerns have been raised about the project, including its environmental impact; U.S. warnings it could be used for money laundering; and fears that it will ultimately be used as a Chinese military outpost.

    Analysts have warned repeatedly that China is using the project to extend its strategic influence in the region. Beijing has already used the nearby Hambantota port — also funded by Chinese loans — to dock military vessels.

    The main developer behind the Colombo Port City Project, CHEC Port City Colombo Ltd, has pumped in an initial $1.3 billion. Its ultimate owner is the China Communications Construction Company, a majority state-owned enterprise headquartered in Beijing.

    Golden era no more

    As prime minister, Cameron and his Chancellor George Osborne famously heralded a “golden era” of U.K. relations with China. Since leaving office in 2016, the ex-PM has come under heavy scrutiny over his lobbying activities, including for the now-collapsed finance company Greensill Capital.

    The ex-PM has come under scrutiny for his lobbying activities, including for the now-bankrupt company Greensill Capital | David Hecker/Getty Images

    For a period Cameron was also vice-chair of a £1 billion China-U.K. investment fund. The U.K. parliament’s intelligence and security committee said this year that Cameron’s appointment to that role could have been “in some part engineered by the Chinese state to lend credibility to Chinese investment.”

    Sam Hogg, a U.K.-China analyst who writes the “Beijing to Britain” briefing, said: “As the ISC pointed out, China has a habit of utilizing former senior-ranking politicians to give credibility to their companies and projects.

    “At a time when the Belt and Road Initiative is under intense scrutiny ahead of its 10th anniversary next week, Cameron’s involvement will raise a few eyebrows.”

    Luke de Pulford, executive director of the Inter-Parliamentary Alliance on China, added: “We can’t have a situation where the EU and U.S. are so concerned about the Belt and Road Initiative that they’re pumping billions into alternative projects, while our own former PM appears to be batting for Beijing.”

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    Eleni Courea

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  • Mortgage bankers expect the 30-year rate to drop to 6.1% by the end of 2024

    Mortgage bankers expect the 30-year rate to drop to 6.1% by the end of 2024

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    PHILADELPHIA — High mortgage rates are hammering home buyers, but expect rates to fall over the next year, one industry group says.

    Mortgage rates are over 7.5% as of mid-October, but expect rates to fall to 6.1% by the end of 2024, according to a forecast by the Mortgage Bankers Association. The group also expects the 30-year mortgage rate to fall to 5.5% by the end of 2025.

    A big driver pushing down rates will be a slowing U.S. economy, Mike Fratantoni, chief economist and senior vice president at the MBA, said during the group’s annual convention in Philadelphia on Sunday.

    Not only is the group expecting a recession in the first half of 2024, but the MBA also forecasts unemployment to rise and inflation to slow, which are signs of a weakening U.S. economy. That will, in turn, push rates down, as the market will expect the Fed to back off on hiking interest rates, they said.

     “The Fed’s hiking cycle is likely nearing an end, but while Fed officials have indicated that additional rate hikes might not be needed, rate cuts may not come as soon or proceed as rapidly as previously expected,” Fratantoni said.

    Consequently, mortgage lenders could see origination volume to increase 19% in 2024, to $1.95 trillion from the $1.64 trillion expected this year. Purchase originations are expected to rise by 11%, the MBA said. 

    The pandemic years were boom times for the mortgage industry. 2021 was a record year, when $4.4 trillion in mortgages were originated.

    But after the Fed began hiking interest rates in the middle of 2022, surging rates have put a damper on home-buying activity. Homes are far more expensive to purchase due to high rates, with the median principal and interest payment rising to $2,170 in August, compared to $1,284 in August 2021, according to MBA data.

    Fratantoni on Sunday said that he believed the “Fed is done” with rate hikes. There are two Fed meetings left this year. The MBA said it does not expect the Fed to hike interest rates in November, and to potentially hold off in December, depending on the data.

    But for now, lenders should brace for “a little bit more pain” for the next few months, which is generally a slower season for home sales, until a turnaround at the end of spring in 2024, Marina Walsh, vice president of industry analysis at the MBA, said during a presentation.

    Home prices will still continue to rise over the next three years, the MBA added, due to the persistence of tight inventory.

    Millennials are entering their prime home-buying years, said Joel Kan, deputy chief economist at the MBA, which will keep prices from falling.

    “The forecast is for low single-digit growth over the next few years supported by [low] inventory,” he said. “We’re not expecting national declines yet.”

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  • Homes are expensive right now, but these mortgage bonds look cheap

    Homes are expensive right now, but these mortgage bonds look cheap

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    U.S. homes may be wildly unaffordable for first-time buyers, but mortgage bonds backed by those same properties could be dirt cheap.

    Shocks from the Federal Reserve’s dramatic rate increases have walloped the $8.9 trillion agency mortgage-bond market, the main artery of U.S. housing finance for almost the past two decades.

    Spreads, or compensation for investors, have hit historically wide levels, even through the sector is underpinned by home loans that adhere to the stricter government standards set in the wake of the subprime-mortgage crisis.

    Bond prices also have tumbled, sinking from a peak above 106 cents on the dollar to below 98, despite guarantees that mean investors will be fully repaid at 100 cents on the dollar.

    From $106 to $98 cents, agency mortgage-bond prices are falling.


    Bloomberg, Goldman Sachs Global Investment Research

    “It’s really, really struggled,” Nick Childs, portfolio manager at Janus Henderson Investors, said of the agency mortgage-bond market during a Thursday talk on the firm’s fixed-income outlook.

    Yet Childs and other investors also see big opportunities brewing. While mortgage bonds have gotten cheaper with the sector’s two anchor investors on the sidelines, the stalled housing market should breed scarcity in the bonds, which could help lift the sector out of a roughly two-year slump.

    Prices have tumbled since rate shocks hit, but also since the Fed continued winding down its large footprint in the sector by letting bonds it accumulated to help shore up the economy roll off its balance sheet.

    Banks awash in underwater securities have pulled back too. The repricing of similar bonds helped hasten the collapse of Silicon Valley Bank in March.

    “Banks have been not only absent, but selling,” said Childs, who helps oversee the Janus Henderson Mortgage-Backed Securities exchange-traded fund
    JMBS,
    an actively managed $2 billion fund focused on highly rated securities with minimal credit risk.

    “But we’re moving into an environment where supply continues to dwindle,” he said, given anemic refinancing activity and the dearth of new home loans being originated since 30-year fixed mortgage rates topped 7%.

    The bulk of all U.S. mortgage bonds created in the past two decades have come from housing giants Freddie Mac
    FMCC,
    +0.66%
    ,
    Fannie Mae
    FNMA,
    +1.09%

    and Ginnie Mae, with government guarantees, making the sector akin to the $25 trillion Treasury market. But unlike investors in Treasurys, investors in mortgage bonds also earn a spread, or extra compensation above the risk-free rate, to help offset its biggest risk: early repayments.

    While homeowners typically take out 30-year loans, most also refinanced during the pandemic rush to lock in ultralow rates, instead of continuing to make three decades of payments on more expensive mortgages. If someone refinances, sells or defaults on a home, it leads to repayment uncertainty for bond investors.

    “To put this another way, the biggest risk to mortgages is now off the table, yet spreads are at or near historic wides,” said Sam Dunlap, chief investment officer, Angel Oak Capital Advisors, in a new client note.

    That spread is now far above the long-term average, topping levels offered by relatively low-risk investment-grade corporate bonds.

    Agency mortgage bonds are offering far more spread that investment-grade corporate bonds. But these mortgage bonds will fully repay if borrowers default.


    Janus Henderson Investors

    Agency mortgage bonds typically are included in low-risk bond funds and can be found in exchange-traded funds. While they have been hard hit by the sharp selloff in long-dated Treasury bonds
    BX:TMUBMUSD10Y

    BX:TMUBMUSD30Y,
    there has also been hope that the worst of the storm could be nearly over.

    Goldman Sachs credit analysts recently said they favored the sector but warned in a weekly client note that it still faces “high rate volatility and a dearth of institutional demand.”

    As evidence of the U.S. bond selloff, the popular iShares 20+ Year Treasury Bond ETF
    TLT
    recently sank to its lowest level in more than a decade. It also was on pace for a negative 10% total return on the year so far, according to FactSet. Janus Henderson’s JMBS ETF was on pace for a negative 2.7% total return on the year through Friday.

    “Frankly, why they fit portfolios so well is that because the government backs agency mortgages, there is no credit risk,” Childs said. “So if a borrower defaults, you get par back on that. It just comes through as a typical payment.”

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  • ‘Banks fail. It’s OK,’ says former FDIC chair Sheila Bair.

    ‘Banks fail. It’s OK,’ says former FDIC chair Sheila Bair.

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    Higher interest rates may be painful in the short term, but banks, savers and the financial ecosystem will be better off in the long run, said Sheila Bair, former chair of the Federal Deposit Insurance Corp.

    “When money is free, you squander it,” Bair said in an interview with MarketWatch. “It’s like anything. If it doesn’t cost you anything, you’re going to value it less. And we’ve had free money for quite some time now.”

    Bair, who led the FDIC from 2006 to 2011, caused a stir recently in criticizing “moonshots,” the crypto industry and “useless innovations” like Bored Ape NFTs, which proliferated because of speculation and near-zero interest rates.

    Her main message has been that the path to higher rates, while potentially “tricky,” ultimately will lead to a more stable financial system, where “truly promising innovations will attract capital” and where savers can actually save.

    Former FDIC Chair Sheila Bair was dubbed “the little guy’s protector in chief” by Time Magazine in the wake of the subprime mortgage crisis.

    Bair sat down for an interview with Barron’s Live, MarketWatch edition, to talk about the ripple effects of higher rates, what could trigger another financial crisis and why more regional banks sitting on unrealized losses could fail in the wake of Silicon Valley Bank’s collapse in March.

    “We probably will have more bank failures,” Bair said. “But you know what? Banks fail. It’s OK. The system goes on. It’s important for people to understand that households stay below the insured deposit caps.”

    The FDIC insures bank deposits up to $250,000 per account. It also has overseen 565 bank failures since 2001.

    “I know borrowing costs are going up, but your rewards for saving it are going up too,” she said. “I think that’s a very good thing.”

    However, Bair isn’t focused only on money traps and pitfalls for grown-ups. She also has two new picture books coming out that aim to explain big financial themes to young readers, including where easy-money ways, speculation and inflation come from.

    “One thing that I’ve learned from the kids is to not ask them what a loan is, because when I did that, a little hand when up, and she said: ‘That’s when you’re by yourself,’” Bair said.

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  • S&P 500 scores best day in 3 weeks as bond yields ease back

    S&P 500 scores best day in 3 weeks as bond yields ease back

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    U.S. stocks finished higher on Wednesday as yields on long government bonds retreated from 16-year highs, helping lift the S&P 500 to its best day in three weeks. The Dow Jones Industrial Index
    SPX,
    +0.81%

    gained about 125 points, or 0.4%, ending near 33,128, according to preliminary FactSet data. The boost, however, failed to push the blue-chip index back into the green for the year, a day after its gains for 2023 were erased. The S&P 500 index
    SPX,
    +0.81%

    rose 0.8%, marking its biggest daily climb since September 14, according to FactSet data. The Nasdaq Composite Index
    COMP,
    +1.35%

    shot up 1.4%. U.S. bond yields have surged since late September when the Federal Reserve indicated that rates likely will stay higher for longer than initially anticipated as it works to keep inflation in check. The sharp bond-market repricing has made buyers reluctant to step in, sending yields higher and creating ripples in financial markets. The 10-year Treasury
    TMUBMUSD10Y,
    4.739%

    fell 6.6 basis points Wednesday to 4.735%, while the 30-year Treasury yield
    TMUBMUSD30Y,
    4.868%

    shed 6 basis points to 4.876%, after briefly topping 5% late Tuesday. Investors remain focused on political upheaval in Washington and the prospect of a November government shutdown. Friday also brings the monthly jobs report for September, which is expected to show a cooling labor market, but still a low 3.7% unemployment rate.

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  • These 20 stocks in the S&P 500 are expected to soar after rising interest rates have pushed down valuations

    These 20 stocks in the S&P 500 are expected to soar after rising interest rates have pushed down valuations

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    Two things investors can be sure about: Nothing lasts forever and the stock market always overreacts. The spiking of yields on long-term U.S. Treasury securities has been breathtaking, and it has led to remarkable declines for some sectors and possible bargains for contrarian investors who can commit for the long term.

    First we will show how the sectors of the S&P 500

    have performed. Then we will look at price-to-earnings valuations for the sectors and compare them to long-term averages. Then we will screen the entire index for companies trading below their long-term forward P/E valuation averages and narrow the list to companies most favored by analysts.

    Here are total returns, with dividends reinvested, for the 11 sectors of the S&P 500, with broad indexes below. The sectors are sorted by ascending total returns this year through Monday.

    Sector or index

    2023 return

    2022 return

    Return since end of 2021

    1 week return

    1 month return

    Utilities

    -18.4%

    1.6%

    -17.2%

    -11.1%

    -9.6%

    Real Estate

    -7.1%

    -26.1%

    -31.4%

    -3.0%

    -8.8%

    Consumer Staples

    -5.4%

    -0.6%

    -6.0%

    -2.2%

    -4.4%

    Healthcare

    -4.2%

    -2.0%

    -6.1%

    -1.7%

    -3.3%

    Financials

    -2.5%

    -10.5%

    -12.7%

    -2.5%

    -4.7%

    Materials

    1.3%

    -12.3%

    -11.2%

    -1.9%

    -7.0%

    Industrials

    3.5%

    -5.5%

    -2.1%

    -1.8%

    -7.3%

    Energy

    4.0%

    65.7%

    72.4%

    -1.9%

    -1.4%

    Consumer Discretionary

    27.0%

    -37.0%

    -20.0%

    -0.6%

    -5.2%

    Information Technology

    36.5%

    -28.2%

    -2.0%

    0.8%

    -5.9%

    Communication Services

    42.5%

    -39.9%

    -14.3%

    1.1%

    -1.3%

    S&P 500
    13.1%

    -18.1%

    -7.4%

    -1.1%

    -4.9%

    DJ Industrial Average
    2.5%

    -6.9%

    -4.5%

    -1.7%

    -4.0%

    Nasdaq Composite Index
    COMP
    28.0%

    -32.5%

    -13.7%

    0.3%

    -5.1%

    Nasdaq-100 Index
    36.5%

    -32.4%

    -7.7%

    0.5%

    -4.2%

    Source: FactSet

    Returns for 2022 are also included, along with those since the end of 2021. Last year’s weakest sector, communications services, has been this year’s strongest performer. This sector includes Alphabet Inc.
    GOOGL
    and Meta Platforms Inc.
    META,
    which have returned 52% and 155% this year, respectively, but are still down since the end of 2021. To the right are returns for the past week and month through Monday.

    On Monday, the S&P 500 Utilities sector had its worst one-day performance since 2020, with a 4.7% decline. Investors were reacting to the jump in long-term interest rates.

    Here is a link to the U.S. Treasury Department’s summary of the daily yield curve across maturities for Treasury securities.

    The yield on 10-year U.S. Treasury notes

    jumped 10 basis points in only one day to 4.69% on Monday. A month earlier the 10-year yield was only 4.27%. Also on Monday, the yield on 20-year Treasury bonds

    rose to 5.00% from 4.92% on Friday. It was up from 4.56% a month earlier.

    Market Extra: Bond investors feel the heat as popular fixed-income ETF suffers lowest close since 2007

    The Treasury yield curve is still inverted, with 3-month T-bills

    yielding 5.62% on Monday, but that was up only slightly from a month earlier. An inverted yield curve has traditionally signaled that bond investors expect a recession within a year and a lowering of interest rates by the Federal Reserve. Demand for bonds pushes their prices down. But the reverse has happened over recent days, with the selling of longer-term Treasury securities pushing yields up rapidly.

    Another way to illustrate the phenomenon is to look at how the Federal Reserve has shifted the U.S. money supply. Odeon Capital analyst Dick Bove wrote in a note to clients on Friday that “the Federal Reserve has not deviated from its policy to defeat inflation by tightening monetary policy,” as it has shrunk its balance sheet (mostly Treasury securities) to $8.1 trillion from $9 trillion in March 2022. He added: “The M2 money supply was $21.8 trillion in March 2022; today it is $20.8 trillion. You cannot get tighter than these numbers indicate.”

    Then on Tuesday, Bove illustrated the Fed’s tightening and the movement of the 10-year yield with two charts:


    Odeon Capital Group, Bloomberg

    Bove said he believes the bond market has gotten it wrong, with the inverted yield curve reflecting expectations of rate cuts next year. If he is correct, investors can expect longer-term yields to keep shooting up and a normalization of the yield curve.

    This has set up a brutal environment for utility stocks, which are typically desired by investors who are seeking dividend income. In a market in which you can receive a yield of 5.5% with little risk over the short term, and in which you can lock in a long-term yield of about 5%, why take a risk in the stock market? And if you believe that the core inflation rate of 3.7% makes a 5% yield seem paltry, keep in mind that not all investors think the same way. Many worry less about the inflation rate because large components of official inflation calculations, such as home prices and car prices, don’t affect everyone every year.

    We cannot know when this current selloff of longer-term bonds will end, or how much of an effect it will have on the stock market. But sharp declines in the stock market can set up attractive price points for investors looking to go in for the long haul.

    Screening for lower valuations and high ratings

    A combination of rising earnings estimates and price declines could shed light on potential buying opportunities, based on forward price-to-earnings ratios.

    Let’s look at the sectors again, in the same order, this time to show their forward P/E ratios, based on weighted rolling 12-month consensus estimates for earnings per share among analysts polled by FactSet:

    Sector or index

    Current P/E to 5-year average

    Current P/E to 10-year average

    Current P/E to 15-year average

    Forward P/E

    5-year average P/E

    10-year average P/E

    15-year average P/E

    Utilities

    82%

    86%

    95%

    14.99

    18.30

    17.40

    15.82

    Real Estate

    76%

    80%

    81%

    15.19

    19.86

    18.89

    18.72

    Consumer Staples

    93%

    96%

    105%

    18.61

    19.92

    19.30

    17.64

    Healthcare

    103%

    104%

    115%

    16.99

    16.46

    16.34

    14.72

    Financials

    88%

    92%

    97%

    12.90

    14.65

    14.08

    13.26

    Materials

    100%

    103%

    111%

    16.91

    16.98

    16.42

    15.27

    Industrials

    88%

    96%

    105%

    17.38

    19.84

    18.16

    16.56

    Energy

    106%

    63%

    73%

    11.78

    11.17

    18.80

    16.23

    Consumer Discretionary

    79%

    95%

    109%

    24.09

    30.41

    25.39

    22.10

    Information Technology

    109%

    130%

    146%

    24.20

    22.17

    18.55

    16.54

    Communication Services

    86%

    86%

    94%

    16.41

    19.09

    19.00

    17.43

    S&P 500
    94%

    101%

    112%

    17.94

    19.01

    17.76

    16.04

    DJ Industrial Average
    93%

    98%

    107%

    16.25

    17.49

    16.54

    15.17

    Nasdaq Composite Index
    92%

    102%

    102%

    24.62

    26.71

    24.18

    24.18

    Nasdaq-100 Index
    97%

    110%

    126%

    24.40

    25.23

    22.14

    19.43

    There is a limit to how many columns we can show in the table. The S&P 500’s forward P/E ratio is now 17.94, compared with 16.79 at the end of 2022 and 21.53 at the end of 2021. The benchmark index’s P/E is above its 10- and 15-year average levels but below the five-year average.

    If we compare the current sector P/E numbers to 5-, 10- and 15-year averages, we can see that the current levels are below all three averages for four sectors: utilities, real estate, financials and communications services. The first three face obvious difficulties as they adjust to the rising-rate environment, while the real-estate sector reels from continuing low usage rates for office buildings, from the change in behavior brought about by the COVID-19 pandemic.

    Your own opinions, along with the pricing for some sectors, might drive some investment choices.

    A broader screen of the S&P 500 might point to companies for you to research further.

    We narrowed the S&P 500 as follows:

    • Current forward P/E below 5-, 10- and 15-year average valuations. For stocks with negative earnings-per-share estimates for the next 12 months, there is no forward P/E ratio so they were excluded. For stocks listed for less than 15 years, we required at least a 5-year average P/E for comparison. This brought the list down to 138 companies.

    • “Buy” or equivalent ratings from at least two-thirds of analysts: 41 companies.

    Here are the 20 companies that passed the screen, for which analysts’ price targets imply the highest upside potential over the next 12 months.

    There is too much data for one table, so first we will show the P/E information:

    Company

    Ticker

    Current P/E to 5-year average

    Current P/E to 10-year average

    Current P/E to 15-year average

    SolarEdge Technologies Inc.

    SEDG 89%

    N/A

    N/A

    AES Corp.

    AES 66%

    75%

    90%

    Insulet Corp.

    PODD 18%

    N/A

    N/A

    United Airlines Holdings Inc.

    UAL 42%

    50%

    N/A

    Alaska Air Group Inc.

    ALK 51%

    57%

    N/A

    Tapestry Inc.

    TPR 39%

    49%

    70%

    Albemarle Corp.

    ALB 39%

    50%

    73%

    Delta Air Lines Inc.

    DAL 60%

    63%

    21%

    Alexandria Real Estate Equities Inc.

    ARE 59%

    68%

    N/A

    Las Vegas Sands Corp.

    LVS 96%

    78%

    53%

    Paycom Software Inc.

    PAYC 61%

    N/A

    N/A

    PayPal Holdings Inc.

    PYPL 33%

    N/A

    N/A

    SBA Communications Corp. Class A

    SBAC 27%

    N/A

    N/A

    Advanced Micro Devices Inc.

    AMD 58%

    39%

    N/A

    LKQ Corp.

    LKQ 92%

    44%

    78%

    Charles Schwab Corp.

    SCHW 75%

    54%

    73%

    PulteGroup Inc.

    PHM 94%

    47%

    N/A

    Lamb Weston Holdings Inc.

    LW 71%

    N/A

    N/A

    News Corp Class A

    NWSA 93%

    73%

    N/A

    CVS Health Corp.

    CVS 75%

    61%

    67%

    Source: FactSet

    Click on the tickers for more about each company or index.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    News Corp
    NWSA
    is on the list. The company owns Dow Jones, which in turn owns MarketWatch.

    Here’s the list again, with ratings and consensus price-target information:

    Company

    Ticker

    Share “buy” ratings

    Oct. 2 price

    Consensus price target

    Implied 12-month upside potential

    SolarEdge Technologies Inc.

    SEDG 74%

    $122.56

    $268.77

    119%

    AES Corp.

    AES 79%

    $14.16

    $25.60

    81%

    Insulet Corp.

    PODD 68%

    $165.04

    $279.00

    69%

    United Airlines Holdings Inc.

    UAL 71%

    $41.62

    $69.52

    67%

    Alaska Air Group Inc.

    ALK 87%

    $36.83

    $61.31

    66%

    Tapestry Inc.

    TPR 75%

    $28.58

    $46.21

    62%

    Albemarle Corp.

    ALB 81%

    $162.41

    $259.95

    60%

    Delta Air Lines Inc.

    DAL 95%

    $36.45

    $58.11

    59%

    Alexandria Real Estate Equities Inc.

    ARE 100%

    $98.18

    $149.45

    52%

    Las Vegas Sands Corp.

    LVS 72%

    $45.70

    $68.15

    49%

    Paycom Software Inc.

    PAYC 77%

    $260.04

    $384.89

    48%

    PayPal Holdings Inc.

    PYPL 69%

    $58.56

    $86.38

    48%

    SBA Communications Corp. Class A

    SBAC 68%

    $198.24

    $276.69

    40%

    Advanced Micro Devices Inc.

    AMD 74%

    $103.27

    $143.07

    39%

    LKQ Corp.

    LKQ 82%

    $49.13

    $67.13

    37%

    Charles Schwab Corp.

    SCHW 77%

    $53.55

    $72.67

    36%

    PulteGroup Inc.

    PHM 81%

    $73.22

    $98.60

    35%

    Lamb Weston Holdings Inc.

    LW 100%

    $92.23

    $123.50

    34%

    News Corp Class A

    NWSA 78%

    $20.00

    $26.42

    32%

    CVS Health Corp.

    CVS 77%

    $69.69

    $90.88

    30%

    Source: FactSet

    A year may actually be a short period for a long-term investor, but 12-month price targets are the norm for analysts working for brokerage companies.

    Don’t miss: This fund shows that industry expertise can help you make a lot of money in the stock market

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  • How El Niño will impact this winter: a warmer north, wetter Florida, good skiing

    How El Niño will impact this winter: a warmer north, wetter Florida, good skiing

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    Much of the northern half of the U.S. could see a milder winter in coming months thanks to a combination of the latest El Niño and ongoing patterns of above-average heat owed to human-made climate change.

    That’s especially true of forecasts for Maine and parts of Washington and Oregon.

    The recurring weather phenomenon known as El Niño could mean greater rain amounts in Florida’s typical wet season, and still doesn’t preclude a freeze that could put citrus crops at risk. The western Carolinas, too, could see greater-than-usual snow.

    The latest predictions from the National Oceanic and Atmospheric Administration could mean short-term relief for Americans who struggled through summer’s heat extremes, but also pose a downside for retailers banking on a flurry of winter-clothing and supplies purchases. The added precipitation, however, points to plenty of snowpack for skiing and snowboarding at popular sites.

    According to NOAA’s models, there is a 95% chance El Niño continues through the winter. Generally, whenever there is an El Niño pattern in place, the Northern U.S. has warmer winters, NOAA said. 


    NOAA

    Meanwhile, across the South and for much of the Atlantic coast into southern New England, the forecast calls for greater chances of a wetter-than-normal winter, said NOAA’s Climate Prediction Center.

    Parts of the Northwest, Mountain West and Great Lakes could see greater chances of below-normal precipitation and while a less-snowy winter can mean safer travel, it can hurt the precipitation build relied upon for a healthy crop-growing season later in 2024.

    What’s an El Niño and what does it mean for climate change?

    Because an El Niño, packing the opposite effect of a cooling La Niña, happens every few years, people often wonder what the relationship is between these weather events and long-running atmospheric warming known as climate change.

    “Climate change will likely strengthen any ‘normal’ El Niño effects,” Dr. Stefan Schnitzer, professor of biological sciences Marquette University, told MarketWatch. “The increased global temperatures will add to the El Niño event, especially where rainfall increases.”

    Human-made climate change — caused by the greenhouse gas emissions put off by burning coal, oil
    CL00,
    -0.02%

     and gas and blamed for accelerating historical climates shifts — has been warming the Earth’s temperature.

    An El Niño is the somewhat regular pattern in the tropical Pacific that brings warmer-than-average sea-surface temperatures and influences weather. It emerged earlier-than-expected in 2023. 

    NOAA in earlier reporting said that the continental U.S. had its ninth-warmest August on record. It also was the 15th-warmest summer on record for the continental U.S. alone. Globally, August 2023 was the hottest on record. Through August, 2023 has been the second-warmest year on record across the world, NOAA said. 

    Don’t miss: It’s official: This summer was the hottest on record

    “Not only was last month the warmest August on record by quite a lot, it was also the globe’s 45th-consecutive August and the 534th-consecutive month with temperatures above the 20th-century average,” said Dr. Sarah Kapnick, NOAA’s chief scientist.

    “Global marine heat waves and a growing El Niño are driving additional warming this year, but as long as emissions continue driving a steady march of background warming, we expect further records to be broken in the years to come,” she said.

    Read: Already roasting in extreme heat? 2024 could be even hotter, NASA scientists warn.

    What about El Niño and winter weather in the U.S. South and Midwest?

    El Niño tends to bring wetter conditions to the Southeast. Florida, in particular, experiences higher-than-average rainfall during El Niño winters. This can lead to localized flooding, especially in low-lying areas and regions prone to heavy downpours.

    According to the National Weather Service in Tallahassee, Central Florida averages between 8 to 10 inches of rainfall during a typical winter. But during El Niño winters, that rainfall total rises to between 10 and 13 inches.

    As for other parts of the South, El Niño typically means more precipitation, which in mountain areas, can mean snow.

    Because the jet stream is displaced farther south, El Niño brings frequent storms across these areas, leading to above-average precipitation and below-average temperatures. This combination typically means more snow in Western North Carolina. In fact, some of the biggest seasonal snow totals have come during El Niño winters. Most notably, in the winter of 1968-69, more than 48 inches of snow fell in Asheville, N.C. And more recently, the winter of 2009-10 was unusually snowy with a whopping 39 inches accumulating.

    In the Midwest, El Niño normally results in warmer and drier winters, meaning less snow.

    “During an El Niño winter, the polar jet stream shifts northward, reducing the extremely low temperatures that normally swing down into the Midwest, including Wisconsin, Illinois, Michigan, and so on,” said Marquette’s Schnitzer.

    Schnitzer reminds that weather variability is always unpredictable. Forecasts use models and historical patterns to try to offer an educated guess about the coming months.

    “Occasionally we can get very cold temperatures and snow during an El Niño. It depends on what other weather systems blow through the area,” he said.


    NOAA

     

    What is El Niño’s impact on skiing and snowboarding?

    Of course the amount of precipitation can impact how much snowfall is expected at higher elevations and what kind of season major skiing and snowboarding destinations can expect.

    During the early parts of the winter season, through the rest of 2023, data suggests a normal- to drier-than-normal period for most of the western U.S. As for the eastern U.S., predictions look wetter than normal, says meteorologist Chris Tomer, in an outlook for the On the Snow website, with a prediction closely aligning with other experts looking at NOAA’s data.


    Chris Tomer/On the Snow

    By January, says Tomer, the bulk of the El Niño-driven snowfall typically occurs across parts of the West with a strong subtropical jet. 

    “The pattern suggests a higher likelihood of atmospheric river (AR) events. In the Northeast, normal- to above-normal snowfall appears possible. Be warned, though. “The pattern suggests that NorEaster storm systems are more likely,” Tomer said.

    To him, that means New England ski areas could see a particularly advantageous snowy winter, which would be a welcome snapback from last season’s winter on the East Coast.

    Many Colorado ski areas, including Summit County resorts, Loveland, Telluride and Arapahoe Basin, also stand to be among the biggest snow “winners,” says Tomer. He’s also upbeat for accumulation for New Mexico ski areas and California ski areas in the Sierras.

    “El Niño historically doesn’t favor any particular outcome for Wasatch, Aspen Snowmass and Vail [in Colorado],” he added. “However, if the Modoki contribution [when the warming is generated in a different part of the Pacific Ocean] to this El Niño increases, then all of these resorts could tilt a little higher to 105% to 110% of normal winter snowfall.”

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  • Here’s how the Republican presidential candidates say they’ll whip inflation

    Here’s how the Republican presidential candidates say they’ll whip inflation

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    Inflation remains a top concern among Americans, so what do the Republicans seeking President Joe Biden’s job say they’ll do about it?

    MarketWatch asked the 2024 GOP White House hopefuls to give at least three ways that they would address the elevated prices that have blown up many household budgets.

    Most campaigns provided responses, while some didn’t but have offered proposals in other venues. See what they’re all planning below.

    The economy is the No. 1 issue for Republican voters, according to a recent Wall Street Journal poll, which found 36% citing the economy generally and an additional 10% citing inflation.

    MarketWatch contacted the eight contenders who took part in their primary’s first debate, along with former President Donald Trump, who skipped the debate, and two relatively well-known contenders who failed to qualify for the first debate, Larry Elder and former Congressman Will Hurd. They are listed below in order of their ranking in the latest polls, based on a RealClearPolitics moving average.

    Inflation was low when Trump became president, with prices rising less than 2% a year. That was even considered a problem before the COVID-19 pandemic, with inflation often characterized as stubbornly or persistently low. Inflation began to spike in 2021, shortly after Biden took office, due to a global shortage of goods and a huge rebound in consumer demand following the pandemic’s early stages. Economists say massive stimulus by both the Trump and Biden administrations as well as low interest rates fostered by the Federal Reserve helped to push inflation to a 40-year high.

    Biden has stressed that inflation, as measured by the consumer-price index, has “fallen by around two-thirds,” and he and his team have talked up their efforts to lower costs for prescription drugs and insulin, to crack down on junk fees for a range of services, and to use the Strategic Petroleum Reserve to lower gasoline prices. Biden’s re-election campaign didn’t respond to MarketWatch’s request for comment.

    Donald Trump

    “I would get inflation down,” Trump said in a recent interview with NBC’s “Meet the Press,” while saying that “we did a great job with inflation.” His campaign pointed MarketWatch to a number of policy proposals in which Trump himself is quoted.

    Former President Donald Trump walks over to speak with reporters before departing from Atlanta’s airport last month.


    AP

    • The former president says he’ll rein in what he calls Biden’s “wasteful spending,” which Trump says is key to stopping inflation. Trump is proposing to use what’s known as impoundment authority to reduce federal spending. That term refers to the ability of a president to withhold congressionally appropriated funds from their intended use, according to the Committee for a Responsible Federal Budget.

    • Trump also calls for boosting energy output. “When I’m back in the White House, I will immediately unleash energy production, slash regulations, like I did just three years ago, and repeal Biden’s tax hikes to get inflation down as fast as possible, and it will go quickly, so that interest rates can get back under control,” Trump says on his campaign website. “I would get inflation down, because drill we must,” he told “Meet the Press.”

    • A Trump spokesman did not respond when asked for specifics about which Biden-approved tax increases Trump would repeal. The former president and his advisers, meanwhile, have reportedly discussed deeper cuts to both individual and corporate rates that would build on the 2017 Tax Cuts and Jobs Act.

    Ron DeSantis

    Florida Gov. Ron DeSantis, says a spokesman, “will reduce inflation by, among other measures, tackling government spending, unleashing domestic energy and removing burdensome Biden administration regulations.”

    Florida Gov. Ron DeSantis speaks in July during a press conference in West Columbia, S.C.


    AP Photo/Sean Rayford

    • In his economic plan, DeSantis leans heavily into energy policy for addressing inflation. “DeSantis will unleash our domestic energy sector, modernize and protect our grid and advance American energy independence. This will not only increase our economic and national security while reducing inflation, [but] it will also help fuel a manufacturing renaissance that will create jobs, revitalize our communities and improve our standard of living,” says his plan.

    • He told “CBS Evening News with Norah O’Donnell” that, as president, he would “stop spending so much money. We need a president that’s going to be a force for spending restraint, because that’s one of the root causes, with Congress spending so much.” He criticized both Democrats and Republicans for government spending.

    Vivek Ramaswamy

    Republican presidential candidate Vivek Ramaswamy speaks in April at an event in Iowa.


    AP

    “This isn’t complicated,” entrepreneur and author Vivek Ramaswamy said in a recent post on X. “Fight inflation, unleash growth by taking the handcuffs [off] the U.S. energy sector & dismantling the regulatory state.” His campaign didn’t respond to MarketWatch’s request for comment, but his campaign website offers the following proposals:

    • “Drill, frack & burn coal : abandon the climate cult & unshackle nuclear energy.”

    • “Launch deregulatory ‘Reagan 2.0’ revolution: cut > 75% headcount amongst U.S. regulators.”

    • Ramaswamy is also calling for dramatically changing the Federal Reserve, by ending the central bank’s dual mandate of keeping inflation low and maintaining full employment. “Limit the U.S. Fed’s scope: stabilize the dollar
      DXY
      & nothing more,” his campaign site says.

    Nikki Haley

    A spokesman for Nikki Haley’s campaign pointed to a Fox Business interview on Wednesday in which she called for ending the federal gas tax and cutting spending, as well as to her speech Friday in New Hampshire on her economic plan.

    Republican presidential candidate Nikki Haley is a former U.S. ambassador to the United Nations and former South Carolina governor.


    Getty Images

    • “We want to eliminate the federal gas tax completely,” Haley told Fox Business. “We have to get more money in our taxpayers’ pockets.” That tax helps pay for highways, but she said the system isn’t working, echoing a point that some policy analysts have previously made. Biden pushed for temporarily suspending the federal gas tax in 2022, but Congress didn’t provide sufficient support for his proposal. In her economic speech, Haley also promised to cut income taxes for working families and make permanent the tax cuts that small businesses scored in 2017’s GOP tax overhaul.

    • The former U.S. ambassador to the United Nations said members of Congress are “spending like drunken sailors,” as she promised to reduce the federal government’s outlays. “I will veto any spending bill that doesn’t take us back to pre-COVID levels,” she told Fox Business, referring to budgets that date to before the onset of the coronavirus pandemic in March 2020.

    • Haley in her speech Friday pledged to support the U.S. energy industry, as she suggested that Washington has been “stifling it.” She said: “We’ll drill so much oil and gas, families will save big on their utility bills.”

    Mike Pence

    A spokesman for Pence’s campaign pointed to the former vice president’s plan for “ending inflation,” which calls for actions such as reducing the federal government’s spending and changing the Federal Reserve’s job description.

    Former Vice President Mike Pence served as governor of Indiana and as a congressman before becoming Donald Trump’s running mate in 2016.


    AP

    • A Pence administration would “end runaway deficits by freezing non-defense spending, eliminating unnecessary government programs, repealing over $3 trillion in new spending under Biden, and reforming mandatory programs that drive our debt,” the plan says. Earlier this year, he urged “commonsense and compassionate” reforms for programs such as Social Security and Medicaid.

    • Pence wants to end the Fed’s dual mandate, which calls for the U.S. central bank to focus on full employment and stable prices. “Trying to serve two, often contradictory goals has led to wild fluctuation in rates,” his plan says, adding that it’s better to “leave employment policy to the president and Congress.”

    • The former vice president’s plan said he aims to bring supply chains and production “back home,” and that would happen by “removing regulatory burdens, enacting pro-growth tax policies, and ensuring access to abundant American energy.” In other words: “We will fight inflation by making America the best place to do business again.”

    • Similar to his 2024 GOP rivals, Pence blasts Biden’s energy policies, though some of the Democratic incumbent’s stances, such as his approval of the Willow drilling project in Alaska, have also been criticized by environmental groups. Pence’s plan says: “It is time to reverse Biden’s attack on American energy by restarting oil and gas leasing on federal lands, opening the Arctic and offshore regions for exploration
      XOP,
      approving safe transportation of oil and gas, mining rare earth minerals, and rejecting climate change hysteria that is causing U.S. energy
      XLE
      production to fall.”

    Chris Christie

    Former New Jersey Gov. Chris Christie addresses a New Hampshire audience in April.


    AP Photo/Charles Krupa

    Chris Christie’s White House campaign didn’t respond to MarketWatch’s requests for comment, but the former New Jersey governor has emphasized that reducing government spending will help tame inflation.

    “The out-of-control government spending has created this inflation,” Christie said in June during a CNN town hall. “I mean, even Larry Summers, who I don’t agree with much on, former Democratic Treasury secretary, warned Joe Biden, ‘Don’t do this spending. It’s going to cause the inflation.’ So, first, we need to bring spending down, and we’ve talked about that before.”

    Related: Larry Summers has a new inflation warning

    Tim Scott

    U.S. Sen. Tim Scott pointed to reducing the federal government’s spending and repealing one of Biden’s signature legislative packages, when asked about how he would address inflation.

    Tim Scott, a U.S. senator from South Carolina, speaks last month during the presidential debate in Milwaukee.


    Getty Images

    • Scott, from South Carolina, said in a statement that he would aim to “snap non-defense discretionary spending back to the pre-COVID 2019 baseline.” He described that as stopping Democrats from “turning the temporary pandemic into permanent socialism.”

    • Scott said he would rescind the Inflation Reduction Act, which is Democrats’ big economic package aimed at addressing climate change, capping drug costs and raising hundreds of billions of dollars through taxes on corporations. “The Inflation Reduction Act actually increased inflation and the only thing it reduced was money in our pockets,” he said in his statement. “Cutting that off and restoring tax cuts and eliminating the tax increases would go a long way to having the kind of stimulative impact in our economy and controlling spending.”

    • Scott called for stronger economic growth. “We have to also grow our economy somewhere near 5% consistently,” he said, adding that could create 10 million jobs. The U.S. economy grew by nearly 6% in 2021 after contracting in 2020 as COVID hit, then it expanded by about 2% in 2022.

    Related: Republican presidential candidate Tim Scott says he wants to put the focus on tax cuts

    Asa Hutchinson

    Former Arkansas Gov. Asa Hutchinson blames “excessive federal spending” for leading to inflation when giving speeches, and outlines a plan for “fiscal responsibility” on his campaign site.

    Asa Hutchinson, governor of Arkansas from 2015 until this year, speaks at an Iowa event in April.


    Scott Olson/Getty Images

    • “Restore discipline by reducing federal government size, cutting spending, balancing the budget, and lowering the deficit to tame inflation,” it states.

    • When Hutchinson was governor, he signed a $500 million tax-cut package, saying “it could not come at a better time with the continued challenge of high food and gas prices.” That was in August 2022. On his campaign website, he repeats a call to cut taxes and “reduce regulations to boost the private sector and enhance wages for American workers.”

    Hutchinson’s campaign did not respond to a request for comment from MarketWatch.  

    Doug Burgum

    North Dakota Gov. Doug Burgum, a GOP presidential hopeful, speaks at the Iowa State Fair in August.


    Brandon Bell/Getty Images

    North Dakota Gov. Doug Burgum’s website says that as president he would “get inflation under control, cut taxes, lower gas prices
    RB00,
    +0.31%
    ,
    reduce the cost of living and help people realize their fullest potential.” It doesn’t provide specifics.

    A spokesman for Burgum’s White House campaign didn’t respond to MarketWatch’s requests for comment. A spokesman reportedly told the New York Times that the campaign will roll out its vision and plans on its own timeline.

    Larry Elder

    Larry Elder, a conservative radio host and a gubernatorial candidate in California in the failed 2021 recall of Democratic incumbent Gavin Newsom, said he views energy and tax policy and a constitutional amendment as ways to whip inflation.

    Larry Elder is a conservative radio host and former gubernatorial candidate in California.


    AP

    • “Reverse the war on oil
      CL00,
      +0.93%

      and gas
      NG00,
      -2.65%

      ; permit drilling in Anwar [Arctic National Wildlife Refuge]; authorize the Keystone Pipeline; reverse the Biden restrictions on drilling on federal lands; and encourage nuclear energy
      NLR,
      ” Elder said in a statement.

    • “Encourage an amendment to the Constitution to set spending to a fixed percent of the GDP,” he also said.

    • Elder said the reduction in spending forced by that constitutional amendment would “coincide with a steep reduction in personal and corporate income taxes,” offering further help to Americans with stretched budgets.

    Will Hurd

    2024 Republican presidential hopeful Will Hurd, a former Texas congressman, speaks in Iowa in July.


    AFP via Getty Images

    Former U.S. Rep. Will Hurd of Texas announced his candidacy in June but so far hasn’t made it to the debate stage. In his campaign-launch video, he labeled inflation “still out of control.”

    • In a post on X in June, Hurd called for reining in spending. “You cannot be putting government funds into, at a time where you’re seeing the rising inflation,” he said.

    • And he said tax hikes are a nonstarter when inflation is high. “The worst time to talk about increasing taxes is when everybody’s hurting from inflation.”

    • Hurd also said the deficit should be addressed, to “start bending the curve back on the debt.”

    Hurd’s campaign did not respond to a request for comment from MarketWatch.

    Now read: Republican presidential debate: Candidates could win with a clear economic message about the ‘crisis among working people’

    And see: As Biden joins UAW picket line, poll shows Democrats’ edge over GOP on ‘caring about people like me’ has vanished

    Jeffry Bartash contributed.

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  • Xponance Inc. Cuts Holdings in Weyerhaeuser (NYSE:WY)

    Xponance Inc. Cuts Holdings in Weyerhaeuser (NYSE:WY)

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    Xponance Inc. lowered its stake in Weyerhaeuser (NYSE:WYFree Report) by 3.9% during the second quarter, Holdings Channel.com reports. The firm owned 90,721 shares of the real estate investment trust’s stock after selling 3,728 shares during the quarter. Xponance Inc.’s holdings in Weyerhaeuser were worth $3,040,000 as of its most recent SEC filing.

    Other institutional investors and hedge funds have also made changes to their positions in the company. Atria Wealth Solutions Inc. raised its stake in Weyerhaeuser by 2.6% in the fourth quarter. Atria Wealth Solutions Inc. now owns 11,587 shares of the real estate investment trust’s stock valued at $359,000 after buying an additional 297 shares in the last quarter. Integrated Wealth Concepts LLC lifted its stake in Weyerhaeuser by 3.1% during the fourth quarter. Integrated Wealth Concepts LLC now owns 9,907 shares of the real estate investment trust’s stock worth $307,000 after purchasing an additional 299 shares during the last quarter. Home Federal Bank of Tennessee boosted its holdings in Weyerhaeuser by 0.9% in the first quarter. Home Federal Bank of Tennessee now owns 36,377 shares of the real estate investment trust’s stock valued at $1,096,000 after purchasing an additional 340 shares in the last quarter. Ascent Group LLC increased its stake in Weyerhaeuser by 3.8% in the third quarter. Ascent Group LLC now owns 9,608 shares of the real estate investment trust’s stock valued at $297,000 after purchasing an additional 348 shares during the last quarter. Finally, Stelac Advisory Services LLC raised its holdings in Weyerhaeuser by 2.3% during the first quarter. Stelac Advisory Services LLC now owns 16,005 shares of the real estate investment trust’s stock worth $482,000 after purchasing an additional 365 shares in the last quarter. 79.54% of the stock is owned by institutional investors and hedge funds.

    Weyerhaeuser Stock Performance

    NYSE:WY opened at $31.28 on Monday. The firm has a market cap of $22.86 billion, a price-to-earnings ratio of 32.58 and a beta of 1.52. The company has a debt-to-equity ratio of 0.48, a current ratio of 1.74 and a quick ratio of 1.42. Weyerhaeuser has a 1-year low of $27.36 and a 1-year high of $36.00. The firm’s fifty day moving average price is $32.97 and its 200 day moving average price is $31.27.

    Weyerhaeuser (NYSE:WYGet Free Report) last issued its earnings results on Thursday, July 27th. The real estate investment trust reported $0.32 EPS for the quarter, topping the consensus estimate of $0.21 by $0.11. The company had revenue of $1.88 billion for the quarter, compared to analyst estimates of $2.01 billion. Weyerhaeuser had a net margin of 8.80% and a return on equity of 8.32%. The business’s revenue was down 36.7% on a year-over-year basis. During the same period in the previous year, the firm earned $1.06 EPS. On average, sell-side analysts expect that Weyerhaeuser will post 1.19 EPS for the current year.

    Weyerhaeuser Announces Dividend

    The firm also recently disclosed a quarterly dividend, which was paid on Friday, September 15th. Investors of record on Friday, September 1st were paid a $0.19 dividend. The ex-dividend date was Thursday, August 31st. This represents a $0.76 dividend on an annualized basis and a yield of 2.43%. Weyerhaeuser’s payout ratio is 79.17%.

    Wall Street Analysts Forecast Growth

    A number of research firms recently commented on WY. Royal Bank of Canada reaffirmed an “outperform” rating and issued a $40.00 target price on shares of Weyerhaeuser in a research report on Monday, July 31st. Truist Financial lifted their target price on Weyerhaeuser from $35.00 to $36.00 and gave the stock a “hold” rating in a research report on Monday, July 31st. SpectralCast reissued a “maintains” rating on shares of Weyerhaeuser in a research report on Wednesday, June 28th. StockNews.com began coverage on Weyerhaeuser in a research report on Thursday, August 17th. They set a “hold” rating on the stock. Finally, DA Davidson raised their target price on shares of Weyerhaeuser from $35.00 to $40.00 in a research report on Friday, July 7th. Three equities research analysts have rated the stock with a hold rating, four have assigned a buy rating and one has issued a strong buy rating to the company. According to data from MarketBeat.com, the company currently has a consensus rating of “Moderate Buy” and an average price target of $38.29.

    Check Out Our Latest Research Report on Weyerhaeuser

    Insider Buying and Selling at Weyerhaeuser

    In other news, SVP Denise M. Merle sold 7,500 shares of the stock in a transaction that occurred on Wednesday, September 13th. The shares were sold at an average price of $32.29, for a total value of $242,175.00. Following the sale, the senior vice president now directly owns 147,601 shares in the company, valued at $4,766,036.29. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. 0.27% of the stock is currently owned by insiders.

    Weyerhaeuser Company Profile

    (Free Report)

    Weyerhaeuser Company, one of the world’s largest private owners of timberlands, began operations in 1900. We own or control approximately 11 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards.

    Featured Stories

    Want to see what other hedge funds are holding WY? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Weyerhaeuser (NYSE:WYFree Report).

    Institutional Ownership by Quarter for Weyerhaeuser (NYSE:WY)

    Receive News & Ratings for Weyerhaeuser Daily – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings for Weyerhaeuser and related companies with MarketBeat.com’s FREE daily email newsletter.

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  • FedEx, Klaviyo, KB Home, CrowdStrike, and More Stock Market Movers

    FedEx, Klaviyo, KB Home, CrowdStrike, and More Stock Market Movers

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  • KB Home stock slips despite earnings beat, raised forecast and ‘steady’ demand

    KB Home stock slips despite earnings beat, raised forecast and ‘steady’ demand

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    KB Home shares declined in the extended session Wednesday even after the home builder reported results that topped Wall Street estimates, hiked its revenue forecast for the year and reported steady demand amid rising mortgage rates.

    KB Home KBH shares slid more than 2% after hours, following a 0.7% decline in the regular session to close at $48.06.

    The…

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