Kansas City Federal Reserve Economic Policy Symposium Kicks Off Today in Jackson Hole, WY… Central bankers from around the world gathered this week to discuss policy. Fed Chair Jay Powell delivered the keynote address mid-morning Friday.
What it means— U.S. GDP grew at a stronger-than-expected 2.4% annualized rate in the second quarter, and data so far suggests that pace may have accelerated. The Atlanta Fed’s GDPNow tool is currently showing 5.9% growth in the current quarter. While the final data may be lower, unwinding inflation will take longer. Inflation is still too high, and the Fed isn’t considering 3% as an acceptable inflation rate.
July Existing Home Sales Eased 2.2%, Are Down 16.6% Over Last Year … Even though sales slowed, the median existing home sale price was above $400,000 for the fourth time on record, at $406,700.
What it means— The median existing home sale price dipped a bit from $410,000 but remained above the psychologically important $400,000 level. The only other two times the price has been that high were in May and June of 2022.
These prices show one thing: no supply. While inventory rose to 1.11 million units, it’s still just 3.3 months of supply at the current, slow sales pace. It’s interesting (not good, but interesting) that home buyers are in the market. Mortgage rates, which have been climbing but settled around 7.1% over the past month, are supposed to squeeze the market. That might be happening, but buyers are still out there. Buyers appear to be thinking that if rates roll over, they can refinance, and if rates don’t roll over, at least they’re in the real estate game.
July New Home Sales Increased 4.4% for the Month, Are Up 31.5% Over Last Year… New-home sales increased to an annualized rate of 714,000 last month.
What it means— Last month marked the least number of existing home sales since the dark days of July 2010, but not due to a lack of buyers. Existing homeowners see little advantage in moving to another home with a much higher mortgage rate. Unless rates fall quickly, this stalemate in the existing home market will take years to unwind, pushing buyers toward new units. This explains why homebuilders offered fewer enticements to buyers in July. The average new-home sale price increased from $415,400 in June to $436,700 in July, but that likely has more to do with builders focusing on the low end of the market, where buyers are plentiful.
Nvidia Blows Past Earnings Estimate, Reporting $13.41 Billion in Revenue on $11.19 Forecast… The generally accepted accounting principles (GAAP) earnings per share were $2.48, well ahead of the estimate of $1.74.
What it means— The stock has tripled so far this year, as investors see Nvidia as the only chipmaker in the AI game. But the stock is trading at roughly 40 times earnings, which raises a couple of questions. Aren’t competitors likely to catch up? Also, where else will Nvidia sell them after this, Mars? They’ve got a good thing going, but the valuation seems a bit stretched. We’re not betting against them, because people can remain irrational longer than we would hold a short position. We’re not jumping in at these levels. We do have exposure to NVDA when we own technology exchange traded funds.
Tampa Woman Fulfills Dream of Following in Mom’s Footsteps, Becomes a Stripper… When she was 14, Sebrena Verlice’s mom let her try on some of her costumes from her stripping days. Sebrena was hooked and knew what she wanted to do. At 20, the younger Verlice bought a pole and pair of pleaser heels, and then practiced for two whole days. She auditioned in Clearwater, FL, went to work that night, and cleared $300. Before you snicker at the young Ms. Verlice and her chosen profession, understand that at age 23, she works a mere 10-25 hours per week and can earn up to $10,000 per night. And, she has no college debt. Hmmm.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
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