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🍋 Housing Market Recession

🍋 Housing Market Recession

Short Squeez
August 19, 2022

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"If one changes their investment approach in response to under-performance then they are doomed to mediocrity." — Jake Rosser

Good Morning! Whoever's getting ready for football, watch out. In college sports, the Big Ten just made a record $1 billion a year deal. While people are cleaning that deal up, Mayor Eric Adams of New York, has vowed to "clean up" NYC's dining scene. LeBron James became NBA's highest-earning star with his two-year $97.1 million contract, Aside from LeBron, the hobbits have the rings... Swedish, Embracer group has decided to purchase Middle-earth Enterprises from Saul Zaentz.

As promised, please find the list of Excel and PowerPoint shortcuts here.

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1. Story of the Day: Housing Market Recession

Housing market is cooling. Sales of previously owned homes fell nearly 6% in July compared with June, according to a monthly report from the National Association of Realtors.

The sales count declined to a seasonally adjusted annualized rate of 4.81 million units. It is the slowest sales pace since November 2015

Sales dropped about 20% from the same month a year ago.

“In terms of economic impact, we are surely in a housing recession because builders are not building. However, are homeowners in a recession? Absolutely not. Homeowners are still very comfortable financially," said Lawrence Yun, chief economist for the Realtors.

While demand is falling off due to weaker affordability, prices remain stubbornly high. The median price of a home sold in July was $403,800, an increase of 10.8% year over year. Price gains are now moderating, though, as this is the smallest annual rise since July 2020.

Short Squeez Takeaway: Looks like Millennials still can’t afford a house. First-time buyers represented just 29% of buyers in July. Historically they usually make up about 40% of sales, but they are clearly struggling the most with affordability. High rents are also making it harder for them to save for a down payment. Maybe we can all buy house by 2050?

2. Markets Rundown

Stocks struggled for direction Thursday, as investors assessed data showing a decline in weekly jobless claims, but ended with modest gains.

Movers & Shakers

(+) Cisco ($CSCO) +6% after reporting earnings that beat estimates.
(+) BJ’s Wholesale ($BJ) +7% after the company reported better-than-expected results for the second quarter.
(–) Kohl's ($KSS) -8% after the retailer slashed its financial forecast for the year.

Private Dealmaking

Senda Biosciences, a biotech company, raised $123 million
Incredible Health, a nurse job-matching platform, raised $80 million
Modulate, an AI voice chat monitor startup, raised $30 million
Agora, a management platform for real estate firms, raised $20 million
BigPanda, an AI platform focused on IT auditing, raised $20 million
Tessera, a fractional NFT ownership startup, raised $20 million

3. Top Reads

The $3.8 billion hedge fund with a revolutionary pay-for-performance model (CNBC)
Consumer confidence hits record low as prices soar (BBC)
Minnesota Fed President says inflation must come down urgently (Reuters)
Why junk food stocks are soaring (CNN)
Pizza Hut adds rice bases to menu as wheat costs soar in Japan (BB)
Fed sees interest rate hikes continuing until inflation eases substantially (CNBC)
Activist investor Ryan Cohen completes planned sale of Bed Bath & Beyond stake (CNBC)
Climate change is a secret driver of inflation (Axios)
Hedge funds sitting on record amount of bearish stock market bets (CNBC)

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4. Book of the Day: Understandable Economics

Incomes are stagnating, middle-class jobs are disappearing, economic growth is slowing, and the meager gains are mostly going to those who are already wealthy. More Americans than ever are frustrated by the direction in which we are headed.

Understandable Economics aims to replace this frustration with a practical understanding of our economy and empower readers to identify and advocate for a better approach to the problems we face.

In this entertaining and informative guide, author Howard Yaruss breaks down our economic system in a straightforward way, avoiding jargon, formulas, graphs, and other technical material so common in books on this subject.

Instead, he creates a compelling and comprehensive picture of our economy using accessible analogies, real-world observations, and entertaining anecdotes.

Understandable Economics will enable readers to answer questions such as:

Why is inequality soaring and what can we do about it?

Do tax cuts for the wealthy create jobs or just create more inequality?

Where does money come from, why does it have value, and who controls it?

What does the Fed do and how does it affect our lives?

Could alternative currencies like Bitcoin replace the dollar?

Is our national debt a threat?

Why do so many people believe free trade is good if it causes some people to lose jobs?

Why does the economy regularly turn down and how can we get it back on track?

... and many more.

Understandable Economics provides the context, tools and foundational knowledge readers need to thoroughly understand our economy, determine which policies would work best, and champion those policies effectively.

“Facts do not cease to exist because they are ignored.”

5. Short Squeez Picks

What we gain from a good-enough life
Why founders are afraid to talk about exit strategies
The secrets to a super organized inbox
What the new ‘quiet quitting’ trend really means

6. Daily Visual: Streaming Surpasses Cable as Top Way to Consume TV

Share of total TV consumption, by type

Source: Axios

7. Daily Acumen: Quitting While You're Ahead

“Commenting on how he lived to 97, John D. Rockefeller’s doctor said the oil tycoon “gets up from the table while still a little hungry.” It’s another rare skill, and one that applies beyond eating.

The temptation to exploit every drop of opportunity leads many people to push relentlessly for more, more, more. They only discover the limits of what’s possible when they’ve gone too far, when the momentum of decline is often unstoppable.

Young workers eager for promotion push themselves until they’ve hit burnout, when they physically can’t continue in their positions and quit, which often marks the end of compounding their skills and work relationships.

People on social media push relentlessly for more likes and retweets until their audience is sick of them.

In each case there’s value in saying, “I could have more and do more, but this is good enough.”

But it’s such a rare skill. People don’t like leaving opportunities on the table, and it’s counterintuitive to realize that you’ll likely end up with more than those whose appetite for more is insatiable.”