The Long Term Investor

Recession? No....dont think so.

A ‘pleasant’ surprise: Strong job numbers, low layoffs show no ‘major indicators’ of a recession, economists say

https://www.cnbc.com/2023/05/31/april-jolts-report-shows-job-openings-up-layoffs-down.html

(BOLD is my opinion OR what I consider important content)

"Job openings were up and layoffs were down in April, shutting down fears that a recent rise in job cuts could be the start of a growing trend.

Openings increased to 10.1 million last month, up from 9.6 million in March, according to the Department of Labor’s latest Job Openings and Labor Turnover report. Opportunities are growing across retail trade; health care and social assistance; and transportation, warehousing and utilities. And 6.1 million people were hired into new jobs, on par with the previous month.

Meanwhile, though layoffs from major tech, finance and media companies continue to command headlines, cuts across the job market dipped to 1.6 million for the month of April, down from 1.8 million in March, and made up just about 1% of the workforce.

Experts worried a rise in layoffs could signal the start of a continuing trend, “so we were pleasantly surprised layoffs fell down closer to February levels after rising in March,” Elise Gould, senior economist at the Economic Policy Institute tells CNBC Make It.

It’s still a favorable job market to applicants and workers, she says, with “very little to indicate the labor market is cooling off.”

People are worried about job security and staying put

Even so, layoff news is having a chilling effect and more people are staying put in their current jobs. Some 3.8 million people left their jobs last month, or 2.4% of the labor force, which is the lowest level since February 2021, but on par with pre-pandemic numbers.

Churn is coming down from record numbers through the last few years, when some 4 million people were quitting every month during the Great Resignation.

But there are still opportunities in some pockets of the labor market, particularly in leisure and hospitality roles. Across the job market and as of April, there were 4.4 million more jobs than people to fill them. However, the gap has closed by 24% in the last year, and cooling wage growth also means there aren’t any major talent shortages across the board, Gould says.

Workers have less power than they did a year ago

Despite surprisingly resilient April numbers, workers have less bargaining power today compared with a year ago, says ZipRecruiter chief economist Julia Pollak. Worker leverage fell by 28.4% in the last year, measured by the ratio between quits and layoffs.

“It quantifies the degree to which the balance of power has shifted back from job seekers and workers to employers as the economy has recovered from the pandemic and staffing shortages have become less widespread an issue,” she wrote for ZipRecruiter.

In the last year, job openings have fallen 14.1%, quits have fallen 15.7%, and layoffs have risen 17.8%.

Overall job openings are down by 16% from a peak in March 2022 but more sharply — by 36% — for online job postings, according to ZipRecruiter. The largest drops in online job postings are in technology, business, transportation and storage, and finance and insurance jobs with openings down by at least 50% — several sectors that have resorted to layoffs after over-hiring during the pandemic.

Meanwhile, job openings in education, agriculture, health care, and sports and recreation remain steady.

‘No major indicators of an oncoming recession’

Some experts say the latest numbers are signs of a job market that’s still revving up instead of slowing down, and should be good news to people worried about a downturn.

“There are no major indicators of an oncoming recession in this data,” said Rachel Sederberg, a senior economist with Lightcast, during a press briefing. “The labor market is still hot, and while it’s cooled some, it’s still quite warm.”

Gould says there isn’t enough data to prompt the Fed to be worried about an “overheated” job market or to tamp down on unchecked wage inflation. However, she says, “I have concerns that if the Fed keeps raising rates, that could lead to a recession.”"

MY COMMENT

YES.......we have no recession......or bananas (an obscure reference circa 1922).

 

As a person that focused on "MARKETING" in my undergrad and grad business classes....I am totally fascinated by the BUD LIGHT disaster. This has got to be the GREATEST case study for Business School for the next 200 years. This is a TOTAL FAILURE of marketing and "know your customer". It ranks right up there with the Dixie Chicks. I dont care at all about discussing the sociological issues......but.....the business and marketing side of this is fascinating.

Bud Light sales down nearly 30% compared to 2022 after partnership with transgender influencer
Sales volume of Bud Light dropped 29.5% in week ending May 20

https://www.foxbusiness.com/politic...pared-2022-partnership-transgender-influencer

"Bud Light sales are down nearly 30% compared to last year after a boycott in response to its partnership with a transgender influencer, according to a report.

The sales volume of Bud Light dropped 29.5% in the week ending May 20 as compared to the same period last year, according to data provided to Newsweek by Bump Williams Consulting and Nielsen IQ. This data showed the sales revenue drop 25.7% in the same period.

Bud Light sales dropped nearly 30% from last year after a boycott in response to its partnership with transgender influencer Dylan Mulvaney, according to a report.

Anheuser-Busch, Bud Light's parent company, has struggled financially amid boycotts after it partnered with Dylan Mulvaney, a transgender influencer, to celebrate "365 days of girlhood." Bud Light sent customized Bud Light cans to Mulvaney that portrayed the influencer's face.

The nearly 30% drop marks another increase in losses week to week since the boycott gained traction in April. Bud Light sales dropped 28.4% from last year for the week ending May 13.

Bud Light lost 24% of its sales and Budweiser fell 10.5% in the four weeks ending May 20, according to the data.

Anheuser-Busch has struggled with losses from its other products as well, such as Michelob Ultra, which fell 6.8% for the week ending May 13. Its competitors, such as Coors Light and Miller Lite, have seen sales increases of 16.9% and 15.1% over the same period.

Bud Light attempted to boost sales ahead of Memorial Day weekend as it launched a promotional rebate that included an amount "equivalent to the purchase price of one (1) 15-pack or larger, up to $15" of Bud Light or other products, essentially making them free.

Bud Light lost 24% of its sales and Budweiser 10.5% in the four weeks ending May 20. (Roberto Machado Noa/LightRocket via Getty Images / Getty Images)

Brendan Whitworth, CEO of Anheuser-Busch, released a statement in April to address the boycott but did not take a hard stance on whether it's partnership with Mulvaney was a mistake.

etc, etc, etc."

MY COMMENT

I hate to tell Anheuser......but this is NOT a boycott. This represents an instantaneous mass abandonment of the brand by a massive percentage of it's consumer base. We dont see this sort of consumer action very often but.......obviously.......it is possible and in this case that is what happened. I believe from a marketing standpoint that this is not going to change back....it is going to be a long term change in the beer market and with beer consumers. This represents instant brand destruction.

I feel sorry for owners of the stock and all the local level distributors and workers that are going to suffer the brunt of this happening. Unfortunately for BUD they have now waited too long to undo the damage.

In the modern era of social media and 24/7 instant communication.....this is a HUGE issue for any company. One false step and you are deep in it.

 

Here is what Zukodany mentioned.

C3.ai stock plummets after Q1 earnings beat expectations

https://finance.yahoo.com/news/c3ai...-q1-earnings-beat-expectations-210159080.html

(BOLD is my opinion OR what I consider important content)

"Artificial intelligence software developer C3.ai (AI) reported its fourth quarter earnings after the bell on Wednesday, beating expectations on the top and bottom lines as the AI wave continues to shake up Wall Street and the tech industry. Despite that, shares of the company plummeted more than 12% after hours.

C3.ai expects to see Q1 revenue of between $70 million and $72.5 million, a hair more than Wall Street's expectation of $72.1 million.

C3.ai's full-year revenue outlook, however, appeared to come in shy of Wall Street expectations. The company said it expects revenue for its fiscal year 2024 to be between $295-$320 million; data from S&P Global Market Intelligence showed analysts were looking for revenues closer to $321 million for the full year.

And after AI plays like Nvidia (NVDA) and Marvell Technology (MRVL) last week significantly raised their forecasts on a surge in demand, investors are harshly judging C3.ai on Wednesday.

Here are the most important numbers from the report compared to what analysts’ were looking for, based on data compiled by Bloomberg.

• Revenue: $72.4 million versus $71 million expected
  
  
• Adj. loss per share: $0.13 versus $0.17 expected.

"We believe it is generally agreed today that the market for enterprise AI applications is substantially larger and growing at a much greater growth rate than experts predicted," the company said in a statement.

"C3 AI has been at the vanguard of the enterprise AI market for over a decade as that market has developed from its roots in IoT, to unsupervised learning, supervised learning, NLP, deep learning, reinforcement learning, and now generative AI."

Despite those assurances, though, investors were't impressed with C3.ai's outlook.

AI is the hottest trend on Wall Street, as companies ranging from Nvidia (NVDA) and Marvell (MRVL) to Microsoft (MSFT) and Google (GOOG, GOOGL) ride the hype wave that kicked off with the launch of ChatGPT in 2022.

And while shares of AI darling Nvidia are up 162% since the start of 2023, C3.ai's stock is up a whopping 252%.

C3.ai produces enterprise AI software used by a wide range of industries including transportation, healthcare, and manufacturing. On Tuesday, the firm announced that its own C3 Generative AI product is available via Amazon's AWS marketplace. It is already available via Google's Cloud Marketplace.

Unlike generative AI platforms like ChatGPT, C3.ai's offering is specifically designed for enterprise settings. To that end it allows users to access corporate data via a natural language interface, while preventing users from accidentally sharing that information with the outside world."

MY COMMENT

Fail to meet expectations in earnings or forward looking statements and the markets continue to punish you.

I know NOTHING about this company or what they do....so this is totally off the top of my head.

First......they look like a really small company based on revenue of only $72MIL. Second.....with all the GIANTS of the tech world now jumping on the AI.....HARD.....I would think they are at risk of being outgunned by all the big boys. Third.......if they have dominant tech.....are they a take-over target? Forth....this looks like a short selling frenzy. Fifth....too much HYPE....now the fundamentals have to be there to support the HUGE gains this year and over just the past few days...it appears that the market does not think this is going to happen.

As I said I know NOTHING about this company....so the above is just my general speculation. I dont see this as having any significant impact on the BIG BOYS of the tech world....although it could have some....few days impact. Who knows.

 

RING THE BELLS....REJOICE......the Debt Ceiling bill has passed the house. Who would have ever thought.

House passes debt-ceiling bill, shifting focus to Senate

https://finance.yahoo.com/news/hous...-bill-shifting-focus-to-senate-015440568.html

BUT WAIT......OH NO.......OMG......I forgot about the Senate. We are doomed.....doomed I tell you. What if they dont pass it?

Never-mind.

 

A good start to the day....a POSITIVE economic article.

America’s Households Are Healthier Than Feared

https://www.fisherinvestments.com/e...americas-households-are-healthier-than-feared

(BOLD is my opinion OR what I consider important content)

"Consumers’ balance sheets still seem plenty healthy to support consumption.

Faced with better-than-expected April consumer spending growth in a widely watched Bureau of Economic Analysis (BEA) report released Friday, some coverage gravitated to storm clouds supposedly gathering. Their worry is, unsurprisingly, inflation and how it has challenged many households’ finances over the last year and a half. Overall and on average, aggregate consumer spending has held up despite price pressures, suggesting to some that consumers must be heaping on debt, setting up trouble later. But a look at spending, income and household finance data argues otherwise. For investors, the negative attitude toward fine data underscores the prevailing pessimism of disbelief, which fosters young bull markets.

Following a slight -0.2% m/m February dip and flat March, inflation-adjusted or “real” personal consumption expenditures (PCE, the broadest measure of US consumer spending and 71% of GDP) rose 0.5% in April, adding to evidence the economy is off to a good start in Q2. (Exhibit 1) Consumer spending was strong across the board. Services (62% of PCE) not only accelerated to 0.3% m/m growth, but goods expenditures jumped 0.8% after detracting for two months. While backward looking, broad-based expansion in GDP’s main driver suggests recession was likely not at hand in early Q2.

Exhibit 1: PCE Continues Expanding




Source: Federal Reserve Bank of St. Louis, as of 5/26/2023.

That said, April’s personal income rose 0.4% m/m, half the rate of nominal spending. If outlays exceed income for an extended period, that implies consumers are drawing on savings and, some fear, adding debt. This, plus the New York Fed’s Q1 household credit report last week—which showed an uptick in 90-day delinquencies—implies to some observers consumer spending’s growth is on borrowed time.

That may sound intuitive—and, potentially, alarming. But we see little evidence to back the narrative consumer debt is crippling demand. For one, households’ financial obligations ratio remains historically low. Americans’ debt service, including rent, property tax and homeowners’ insurance, as a percentage of disposable personal income was just 14.4% in Q4—the latest available data point. (Exhibit 2) This could change in the coming quarters, but for now it remains below any level prepandemic. While aggregate data like this don’t mean individual households aren’t struggling, little here suggests consumers’ nondiscretionary financial obligations are broadly overwhelming their ability to make payments on them—with room to spare.

Exhibit 2: Households’ Financial Load Historically Light




Source: Federal Reserve, as of 5/23/2023. Financial Obligations Ratio, Q1 1980 – Q4 2022.

With incomes more than covering financial obligations, it is little wonder household delinquency rates in aggregate are historically low, too. While they did inch up in Q1, they also remain below any point prepandemic, even excluding student loan delinquencies skewed lower by March 2020’s payment moratorium. (Exhibit 3) Now, student loan delinquency rates might rise if the moratorium ends in August, consistent with the draft debt-ceiling deal. But an increase—from effectively zero—wouldn’t be surprising, and outside student lending there is little sign of problems.

Exhibit 3: Household Delinquency Rate Low




Source: Federal Reserve Bank of New York, as of 5/15/2023. Quarterly Report on Household Debt and Credit: Percent of Balance 90+ Days Delinquent by Loan Type, Q1 2003 – Q1 2023. *The US Department of Education has waived federal student loan payments since March 2020.

For the record, the debt-ceiling deal has no bearing on the Biden administration’s plan to forgive $10,000 in student debt for most borrowers, which is being adjudicated in the court system. It may also be worth noting that since 2012, student loan 90-day delinquency rates hovered over 10% until the payment moratorium without triggering a financial crisis—partly because almost 79% of those borrowers owe less than $50,000 and banks have little exposure in any event.[ii] So we aren’t so sure delinquency would spike dramatically whenever the moratorium ends, and even something in the neighborhood of prepandemic rates plus a little bit likely isn’t an enormous macroeconomic headwind.

Of course, households’ health could worsen. But for one, markets would likely signal that way in advance. And two, American household finances seem to be in fine shape now. That many still see otherwise illustrates the wide—and bullish—gap between expectations and reality present today."

MY COMMENT

The relentless drum beat of negativity in the financial and other media is a daily occurrence. FORTUNATELY....this is NOT the truth. The economy continues to be stronger than reported. Consumers continue to be doing better than reported. The markets are DEFINITELY doing better than the constant negative opinion that is out there day after day.

We have been CLEARLY in a new BULL MARKET......for the past 11 months. Investors have a choice to make.....live in the world of reality.....of live in the negative world of sensationalism.

I know which one I live in......what about you?

 

To continue with this little theme.

They’re Just Trying to Scare You

https://wealthfoundme.com/theyre-just-trying-to-scare-you/

(BOLD is my opinion OR what I consider important content)

"For anyone who has visited New York in the past few months, you’ll understand.

If you walk on the streets of NYC on any given day, they are packed! Subways are overflowing. Restaurants are overworked and understaffed. Even the candy-coated peanut guy is moving units.

On the surface, there is no worry or care on the thousands of faces that cross my path every day.

Of course, that’s not entirely true. I’m sure they all have a million things to worry about … like directions to take Instagram pictures in front of a certain landmark.

Yet it doesn’t seem like the state of the economy is one of those worries.

So why is everything I read these days trying to convince me that consumers are so hopelessly bearish right now?

• • Because AI is going to take your job?

• • Because, after 74 previous incidences, each ending the same way, the US could finally be on the brink of defaulting on its debts.

• • Or, because we’re all on the edge of our seats waiting for the next rate-hike-induced shoe to drop. Waiting for jobless claims to ramp up, while everyone working from home is on drugs, and commercial real estate falls through the floor?

Maybe that last one is a little far-fetched, but of course, these issues are no slouch. Unemployment can be destructive to an entire family and can leave kids with traumas for a very long time. I know people who are still struggling to cope with what happened to their parents in ‘08.

Hell, cryptocurrencies aren’t even out of their infancy yet. Now, the AI space is growing rapidly, and we haven’t even begun to truly understand the good and bad ramifications of this tool.

And most importantly, the US government is one week out from running out of reserves to pay our bills.

All signs point to a crisis on our hands.

But what if things aren’t as bad as they say they are?

As the great Sam Ro put it:

“The economy is actually in good shape but the news is giving consumers the perception that things are bad… the economy consumers are actually experiencing is much stronger than the economy they are perceiving.”

Almost every bit of financial media I read is trying to convince me that you all—we—are scared shitless for the future. Quoting “experts” and top executives who are all but too sure a recession is only imminent. For months now, they’ve been pushing the potential for a recession from Q1 to Q2 to Q3 to 2024.

Here are four charts to change your mind on why things aren’t as bad as they want you to believe.

Most People Have Confidence the Debt Ceiling Will Be Solved

Although this political Game of Chicken has dragged on for too long, most people still believe we will ultimately raise the debt ceiling and pay our bills. Unlike everyday people like you and I, the U.S. government has a power that we don’t possess. They can raise their own credit limit and print more money anytime they spend too much. Oversimplified, maybe. But there really is only one way to see this situation through or risk a technical default that would stun an otherwise healthy economy.

The Soft Landing Is No Longer a Pipe Dream

A soft landing is “where inflation cools to manageable levels without the economy having to sink into a recession.”

My initial reaction to the month-over-month data being released has been that—inflation, the supply chain issues, the tight labor market—are all showing signs of slowing down or improving slowly but surely. And isn’t that the outcome we would much rather have? If the sweet spot is for inflation to reach 2% but unemployment has to be 4.5%? 5%? 5.3%? wouldn’t we want that to happen bit by bit rather than overnight? ZipRecruiter is suggesting 79% of laid-off tech workers found a job shortly after their separation.

Powell mentioned at the early onset of the inflation battle that there would be pain. If that means a choppy stock market and a slip-n-slide out of tech when AI is chasing down jobs like DK Metcalf, I’ll take my bruises.




The Market Can Shrug Off an Earnings Recession

An earnings recession is said to be two-quarters of negative year-over-year quarterly earnings. One of the other latest fears is that stocks are still overvalued and a battered, inflation-hungover consumer would depress earnings for businesses. Although 62% of companies beat their earnings estimates last quarter, y/y first quarter numbers still came in negative at -0.1. However, BofA and BMO did studies on both the economy and US equities following an earnings recession. Bank of America found that four of the last seven earnings recessions did not coincide with an economic recession. In fact, the S&P 500 was on average positive three, six, and twelve months after an earnings recession.

There Is Always a Reason to Sell, Doesn’t Mean You Should
Ro leaves us with the following:

“In my years of working in financial news, itʼs been my experience that bad news clicks far better than good news. Generally speaking, news companies are out there to answer readersʼ questions and address their interests. And the data suggests people are interested in bad news.”


Lastly and biasedly, I’ll end with one of my favorite charts. I don’t need to be the one to tell you that this game is hard. You know that. This chart is so powerful because each event is terrifying in the moment. It’s hard to see beyond the horizon when you’re fanning through the smoke. It’s also hard to see the progress a few months out when it feels like you haven’t really gone anywhere. But if you’re an investor, not a trader, you know it takes time. And thanks, Mr. Powell, but we already knew there was going to be pain ahead. We signed the waivers. We know the risks. "

MY COMMENT

The chart just above is a KILLER view of all the negative market events of the past 14 years......a litany of horrible and disastrous events impacting the markets. YET......look at the line of the chart....steadily rising from left to right. That represents long term investors making money.

The primary requirement for any long term investor is the ability to be your own person.....ignore the whining of the crowd.....just plod ahead year after year......and......MAKE MONEY.

 

Looks like the big tech world is doing ok today....all the usual names are in the green at the moment except for MSFT.

As to the general markets.....the SP500 is now positive as is the NASDAQ. NICELY.....the ten year treasury yield is down at 3.586%.

We are ALSO on the verge of the Debt Ceiling being over with as an issue. Well it never really was an issue.....IN REALITY.

 

I have been scanning the news headlines and articles since before the open.......I see NOTHING that is substantive or critical. BUT.....here is the market take so far.

Stocks slip as House passes debt deal

https://finance.yahoo.com/news/stock-market-news-today-live-updates-june-1-2023-115051823.html

(BOLD is my opinion OR what I consider important content)

"Stocks slipped on Thursday after the House passed a bill to raise the debt ceiling late Wednesday evening.

The S&P 500 (^GSPC) slid 0.08%, while the Dow Jones Industrial Average (^DJI) fell 0.36%, or 118 points and the technology-heavy Nasdaq Composite (^IXIC) dropped 0.21%.

A looming U.S. debt default, which Treasury Secretary Janet Yellen warned could come as soon as Monday, had begun to weigh on markets over the last week. But with the House passing the bill in a resounding 314-117 vote, investors will now await action in the Senate.

“The deadline to raise the debt ceiling is rapidly approaching, and the likelihood of triggering a negative market reaction with severe economic consequences will only increase as we approach the precipice,” Business Roundtable CEO Joshua Bolten said in a statement after the House vote.

“We call on the Senate to eliminate the threat of a default by passing this bipartisan bill as soon as possible," he added.

The artificial intelligence hype train that has been driving a rally in the Nasdaq since Nvidia's (NVDA) blowout earnings report last week hit a speed bump after the close on Wednesday. C3.ai (AI) tumbled more than 20% on Thursday after the company reported weaker-than-expected full-year revenue guidance. The AI software developer expects revenue in a range of $295-$320 million. Wall Street had hoped for $321 million, per S&P Global Market Intelligence.

Shares of Salesforce (CRM) and CrowdStrike (CRWD) also stumbled. Salesforce fell more than 6% as investors harped on capital expenditure growth of 36% in the quarter. CrowdStrike stock dropped nearly 10% as its full-year profit forecast came in on the low end of analyst expectations.

Meanwhile retail earnings continued to provide a mixed picture on consumer spending. After the bell on Wednesday, Nordstrom (JWN) topped analyst expectations propelling shares up more than 6% during Thursday's trading session. But on Thursday morning, Macy's (M) cast a different tone. The retailer's stock slumped 5% after lowering its full-year sales and earnings-per-share guidance.

"We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories,"Macy's chairman and CEO Jeff Gennette said in the company's earnings release.

On the economic front, 235,000 jobless claims were filed in the week ending May 27. Economists had expected 235,000 claims."

MY COMMENT

Of course....the opening comment about the markets being down is NOW no longer relevant since the SP500 and NASDAQ are green. As to the other information above......very little happening for the rest of this week.

Some time over the next 1-3 days we will see the Senate pass the Debt Ceiling bill......so the opinions on default above are irrelevant.

It is truly a NOTHING day for the markets today.

 

A slow developing day today for my stocks....but at least they are going in the right direction....UP. I have a nice moderate gain at this moment. Six of my ten stocks are UP....so far. My losers at this moment.....TSLA, MSFT, NKE, and COST.

I dont have much of a "feel" for today....but based on what we are seeing so far.......it looks like a day where the markets are being driven simply by recent positive momentum....in the absence of any news or other market impacting events this week.

 

I was able to put together a very nice PAINTING buy a day ago. Now on Sunday I have to do a little 12 hour drive to see it in person and make sure it is authentic. I have my trusty BLACK LIGHT ready to go. I am willing to do the drive since I am about 98% sure it is authentic......but I have to see it in person to be sure. I also intend to bring the painting back with me in the car to avoid the DANGERS of shipping.

It was a very strange deal. The seller sent me some photos of the signature that had some sort of strange digital overlay that gave me doubts about the signature. But...magnifying photos of the entire painting and looking at the signature.....it looked just fine.

Than.....the seller backed out of a price that he had given me...so I called off the deal. He thought the painting was worth more than he originally asked....... so wanted to put it back on the market. The seller has little to no experience with art or paintings. That makes it difficult dealing with someone that is not educated on the painting. It was also a little bit of a case of greed.

The next day I got a message from the seller that he had decided to sell to me at the original price, after all. I guess he ran into some REALITY.

I have been doing a lot of text message hand holding with the seller. It is hard because he has no idea what he is doing. Originally I was concerned about fraud....but than I realized he was just ignorant about art and this particular painting......on top of being elderly.

I have done enough of a background check to know that he is who he says he is and that he is legit.

So.....I will do a show on Friday and another on Saturday......than off I go on Sunday for a nice little drive.

 

I strongly think C3.AI dropping is probably a short seller attack. Not that I know anything about this company.

 

The markets have developed very nicely today.....as the day moved on from the open. Market direction is definately to the positive right now. Lets.....HOLD THOSE GAINS.....to the close.

 

I pity the poor home-buyers.

Homebuyers can't get a break as mortgage rates march back toward 7%

https://finance.yahoo.com/news/home...gage-rates-march-back-toward-7-160050653.html

(BOLD is my opinion OR what I consider important content)

Mortgage rates surged closer to 7% this week, further worsening housing conditions for buyers.

The rate on the 30-year fixed mortgage increased to 6.79% from 6.57% the week prior, according to Freddie Mac, on expectations the Federal Reserve will hike interest rates again. For the past eight months, rates have stayed between 6% and 7% with few signs of significantly softening anytime soon.

Elevated rates — along with still-high home prices — have been a blow for homebuyer affordability and have convinced many homeowners to delay listing — worsening inventory conditions in a supply-starved market.

“Both buyers and sellers have backed off from the market because mortgage rates are so high,” Daryl Fairweather, chief economist at Redfin, told Yahoo Finance. “They’ve made homebuying more expensive. Homeowners who were able to lock in 3% mortgage rates a little over a year ago don’t want to give up those rates and are not selling.”

“So we’re seeing way fewer transactions this time of the year,” she added.

The dearth of deals was evident in other data this week.

For instance, the share of applications to purchase a home slid 3% last week from a week earlier, according to the Mortgage Bankers Association’s survey. Overall, buyer demand is 45% lower than the same week one year ago.

“Although there has been a steady flow of purchase demand around rates in the low to mid 6% range, that demand is likely to weaken as rates approach 7%," Freddie Mac Chief Economist Sam Khater said in a statement. Khater noted that a "buoyant economy" has convinced many market watchers that more Fed hikes are on the way.

A separate study by real estate analytics company Altos Research found the number of pending sales that should complete in June and July sat at 398,000 last week, unchanged from the week prior. That’s even as inventory rose 2% or the week ending May 29.

“That could be a signal that some buyers froze as rates jumped,” Mike Simonsen, founder of Altos Research wrote in a blog post.

Higher rates have also left a growing share of homeowners reluctant to list this spring. Those who have put their homes on the market may find they have the upper hand against buyers.

“We had a house on the market for only a couple of days and right off the bat we had four buyers through its first day listed,” Monte Miner, real estate agent at Ironwood Fine Properties, told Yahoo Finance. “That’s a good sign that the place is going to sell at or even above expectations, but buyers won’t get the opportunity to negotiate when competition is high.”

That's if buyers can even find a house to purchase.

For instance, an index measuring the volume of signed contracts was unchanged in April from March, even though the spring is the busiest time to list and sell a home, according to the National Association of Realtors last week.

Similarly, the number of homes that went into contract this week was down almost 5% from the previous week and down 14% from the same time a year earlier, according to Altos Research.

"We know that demand for housing has outpaced supply all year. But mortgage rates really jumped this week ... There are signals that some buyers put their actions on hold," Simonsen wrote. "If rates stay ... do the little green shoots of market strength quickly wither away?""

MY COMMENT

Even at the upper 6% range.....this is just NORMAL mortgage rates by modern historic norms. the rates in the 2-4% range were EXTREME and ABNORMAL. They are NOT going to happen again. buyers are just going to have to understand that rates are going to be in the 5.4% to 7% range and that is NORMAL.

 

I talked about BUD LIGHT a few posts back. I agree completely with this analysis by an analyst:

-"HSBC analyst Carlos Laboy, downgrading (BUD) shares to a hold, May 10, 2023.

"It is unclear how ABI will reverse eroding US volume and brand relevance, and fix distributors’ trust, without leadership changes," the team wrote in a research note to clients, adding what is needed to restore investor confidence.

"Stabilization of volume and brand relevance erosion. A long-term plan to recover lost brand relevance for its mainstream brands. Evidence that the marketing department is hiring people with a keen sensibility for understanding the core consumer and for bringing new consumers into their base" they wrote."

https://www.foxbusiness.com/markets...-sees-27-billion-gone-shares-near-bear-market