Macrosynthesis
TLDR
- U.S. Housing Market in Limbo
- Africa CDC Says Mpox Spiraling Out of Control
- Renewed Interest in the Trump Trade
- Utilities, Gold Miners Outperform
- Netflix Crushes Earnings
- Chip Stocks Rally
- Amazon Goes Nuclear
U.S. Housing Market in Limbo
In September 2024, U.S. housing starts and new home purchase applications both experienced declines, highlighting a complex and shifting housing market. Housing starts dropped 0.5% from the previous month to an annualized rate of 1.354 million units, following a strong 7.8% surge in August. The decrease was mainly driven by a 4.5% decline in multi-family starts, while single-family home construction increased modestly by 2.7%. Regionally, significant declines occurred in the South, West, and Midwest, with the Northeast seeing a sharp 57.9% increase. These declines coincide with growing concerns over Florida's housing market slowdown, where 69% of homebuilders reported market conditions worse than expected due to rising inventories, high mortgage rates, and surging insurance premiums. Coupled with the impact of climate change and recent hurricanes, the southeastern real estate market may face rapid price declines due to weaker demand and growing supply.
Similarly, new home purchase applications fell 6% month-over-month, consistent with seasonal trends. However, year-over-year data showed a 10.8% increase, reflecting ongoing demand, especially among first-time buyers who frequently use FHA loans, which made up 29% of total applications. Although new home sales decreased by 12.4% from August, demand remains strong, which should be supported by slightly lower mortgage rates given the Federal Reserve has begun lowering rates.
However, despite the Federal Reserve's recent rate cuts, mortgage rates have unexpectedly risen. This increase is tied to the rise in 10-year Treasury bond yields, driven by investor caution. Mortgage rates now average 6.4%, up from earlier this year, impacting potential homebuyers hoping for lower rates and adding complexity to the housing market.
Housing: Where Do the Candidates Stand?
The Harris campaign has made housing affordability a central focus as homelessness and housing prices reach record highs. Her plan seeks to build three million new housing units over four years by expanding federal tax credits for builders and buyers. While the plan may boost supply, critics argue it could inflate demand without effectively overcoming zoning challenges in regions like Phoenix.
In contrast, Trump’s next-term plans focus on reducing regulations in the permitting and zoning process to lower housing costs by accelerating construction. He also proposes a 10% tariff on all imports and a 60% tariff on Chinese goods, which could raise building material costs and potentially increase home prices. Additionally, his campaign promises mass deportations, which he claims will reduce housing demand. However, critics caution that deporting immigrants—who make up 30% of construction workers—could significantly impact housing supply.
Mpox Virus Cases Identified in the U.S., Sweden
Two new cases of the mpox virus were identified in Hawaii last week, bringing the total this year to seven cases. One case was found in Sweden last week as well as in Zambia and Zimbabwe for the first time.
In Africa - the origin of the virus - the Africa Centre for Disease Control and Prevention has announced a concerning rise in Mpox virus cases across the continent, with the Director General warning that the situation is getting out of control. "I have to say it clearly and loudly that Mpox is getting out of control if we do not act," he said. Since January, a total of 42,000 monkeypox cases have been confirmed through testing in Africa.
In an important step in combatting the pandemic, the U.S. NIH announced the results of a clinical trial which found the Bavarian Nordic vaccine safe and effective for adolescents. The WHO and European Union have already authorized use of the vaccine for children aged 12-17.
Last month BVNRY signed an agreement to send 1 million doses to the United Nations Children Fund (UNICEF). Similarly, the U.S. government ordered $63 million of the vaccine last month. BVNRY increased its revenue and earnings guidance in step.
Is The Trump Trade Back On?
Markets have increasingly begun pricing in a potential Trump victory in the 2024 election, according to multiple financial firms. Both JPMorgan and Piper Sandler noted growing investor sentiment favoring Trump, with shifts in the betting odds (Trump Winning 6-4) and market behavior, including higher Treasury yields, a stronger U.S. dollar, and rising equities. JPMorgan emphasized that a Republican sweep could lead to further gains, but the current market pricing still suggests there's room for more significant shifts. Meanwhile, stocks tied to Trump, such as DJT and GEO Group, have outperformed those linked to Kamala Harris.
Sector Recap: Utilities Lead S&P Sectors With Biggest Gains
Over the past week, the S&P 500 sectors experienced mixed performance, with notable gains in some areas. Utilities led the way with a strong 3.4% increase, closely followed by Real Estate, which rose by 3%. Financials also posted a solid gain of 2.4%, while Materials were up by 1.9%. Consumer Discretionary and Information Technology sectors saw more modest growth, rising by 1.2% and 0.8% respectively. Consumer Staples and Industrials each edged up by 0.6%, and Telecom recorded a slight 0.4% increase. On the downside, Energy struggled with a significant 2.6% decline, while Healthcare dipped by 0.6%. Overall, defensive sectors like Utilities and Real Estate performed well, while Energy lagged. Across industries, gold miners (GDX) and homebuilder stocks (XHB) outperformed all others.
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Gasoline
+7% (1W Chg)
-2.67% (YoY Chg)
Crude Oil
+3.85% (1M Chg)
+28.82% (YoY Chg)
Cocoa
+9.83% (1W Chg)
+2.85% (1M Chg)
Silver
+1.12% (1D Chg)
+5.38% (1M Chg)
Company News
LevelFields AI Alert Highlights This Week
This week, LevelFields alerts delivered impressive returns. Nexalin's positive Alzheimers treatment results spurred a 32% gain in one day. HIMS quick sprints alert led to a 11.2% gain. BEATW announced a new CEO, resulting in a 10.17% daily gain. FCCO announced a stock buyback, leading to an 8.38% one day return.
Amazon Joins Nuclear Race
Amazon Web Services is investing over $500 million to develop small modular nuclear reactors (SMRs) to support its growing energy demands, particularly for AI-driven data centers. AWS has partnered with Dominion Energy in Virginia and Energy Northwest in Washington. SMRs offer quicker construction, a smaller footprint, and produce no carbon emissions. This move aligns with Amazon's goal of achieving net-zero carbon emissions. As more tech companies like Google and Microsoft adopt nuclear energy, nuclear stocks such as OKLO, CEG, and VST saw gains of 104%, 5.64%, and 9%, respectively, last week. The Uranium miners ETF also rose 10% last week.
Netflix Stock Jumps On Great Earnings
Netflix shares surged 11% after the company reported third-quarter earnings that exceeded expectations. Earnings per share reached $5.40, above the $5.12 estimate, and revenue was $9.83 billion, beating the anticipated $9.77 billion. Netflix’s ad-supported tier saw significant growth, rising 35% quarter over quarter. The company expects fourth-quarter revenue to increase by 14.7% to $10.13 billion, and projects 2025 revenue of $43-44 billion, reflecting growth of 11% to 13%. Analysts praised Netflix’s outlook, citing its continued content investments.
Chip Stocks Rally on TSMC Earnings, Ignoring Warnings from ASML
Chip stocks rallied following Taiwan Semiconductor Manufacturing Company's strong third-quarter earnings report. TSMC’s profits surged 54% year-over-year, driven by robust AI-related demand. TSMC’s positive AI outlook boosted investor sentiment, with the company expecting AI revenue to triple in 2024. Despite recent concerns over AI infrastructure spending created by poor guidance from semiconductor making ASML, TSMC’s strong results reassured investors about the future of AI-driven demand for semiconductors.
Ready for Takeoff
United Airlines shares surged nearly 13% after the company reported strong third-quarter earnings, surpassing Wall Street estimates, and announced a $1.5 billion share buyback, its first since the pandemic. United forecast higher airfares into 2025 and provided optimistic fourth-quarter earnings guidance. The company’s revenue hit $14.84 billion, up 2.5% year-over-year, while corporate and premium revenues saw solid gains.
40% Profit in 40 Days
UPST - The AI loan enabler stock surged over 20% last week.
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Upcoming Earnings:
Monday: Nucor (NUE), Zions Bancorp (ZION)
Tuesday: GE Aerospace (GE), Verizon (VZ), 3M (MMM), General Motors (GM), Philip Morris (PM), RTX (RTX), Quest Diagnostics (DGX), PulteGroup (PHM), Texas Instruments (TXN)
Wednesday: AT&T (T), Boeing (BA), CME Group (CME), Coca-Cola (KO), Evercore (EVR), General Dynamics (GD), Tesla (TSLA), CACI (CACI), Lam Research (LRCX)
Thursday: America Airlines (AAL), Brunswick (BC), Northrop Grumman (NOC), Capital One (COF), L3Harris (LHX)
Friday: Booz Allen Hamilton (BAH)