Market Update | 8.21

01  Amazon is planning to open large - 30,000sf - retail locations that resemble department stores, Amazon’s latest experiment with physical retail stores after gaining enormous market share and eyeballs in the retail landscape from incumbents. The company has opened brick-and-mortar book stores, grocery stores, and cashier-less convenience stores in recent years. Hmmmmm.....sounds like a familiar theme to me...... Amazon refers to many of its suppliers as their 'partners' too.... (WSJ)

02  Retirement account balances, which took a sharp nosedive in 2020 when the coronavirus outbreak caused economic shock waves, are now at new highs, according to the latest data from Fidelity Investments, the nation’s largest provider of 401(k) savings plans. The overall average 401(k) balance hit $129,300 as of June 30, up 24% from the same time last year, according to Fidelity. Individual retirement account balances were also higher — reaching $134,900, on average, in the second quarter, up 21% from a year ago. (CNBC)

 

03  Lumber is priced 27% lower than it was in May 2018.....hopefully, the pricing hysteria has subsided for now!  Lower lumber prices could bring down home building costs too....unless builders decide to hold onto those extra profits. It's all about supply and demand!

 

04   DELTA-VARIANT-DOWNER: The economies in the Southeast are being adversely affected by the new COVID Delta variant that has soared in recent weeks. Hopefully, we can unite and contain this quickly. Restaurants, concerts, tourism, etc will not be able to fully recover till COVID is substantially curtailed.

05  LUMBER UPDATE (it matters, as most homes in the US are built with lumber!): Prices are now about $482/1,000 board feet....almost HALF of what they were this time last year at $915 (20% tariffs on Canadian lumber did not help).....down about 71% from their artificially inflated high of $1,684 in May 2021. Do you remember in June when politicians were yelling that the inaction on skyrocketing lumber prices, was "declaring war" on blue-collar jobs....did you hear them yell when home builders' profits rose dramatically in Q2 fueled by rising home prices, regardless of the massive additional cost (average around $36,000)to build due to lumber prices?

06  Productivity growth, a key driver for higher living standards, averaged only 1.3% since 2006, less than half the rate of the previous decade. But on June 3, the US Bureau of Labor Statistics reported that US labor productivity increased by 5.4% in the first quarter of 2021. What’s better, there’s reason to believe that this is not just a blip, but rather a harbinger of better times ahead: a productivity surge that will match or surpass the boom times of the 1990s. Technology alone is rarely enough to create significant benefits. Instead, technology investments must be combined with even larger investments in new business processes, skills, and other types of intangible capital before breakthroughs as diverse as the steam engine or computers ultimately boost productivity.  (High tech AND High Touch?)(MIT)

07  The average rate for 30-year fixed-rate mortgages increased to 3.06% from 2.99% last week. Applications to refinance a home loan, which are highly rate-sensitive, fell 5% last week from the previous week. Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, fell 2% for the week and were 19% lower than a year ago during the refi frenzy. (CNBC)

08  While some argue that the full repeal of the SALT tax deduction cap gives 96% of the tax savings to the top 20% of earners, it should be noted that those top 20% of earners contribute over 80% of ALL federal taxes paid....and the SALT deduction is the ONLY real adjustment for cost-of-living differences between different parts of the US. Two high-cost states - New York and California - contribute almost 22% of all federal taxes collected (from 23% of total GDP) in 2019 with 18% of the total US population. 

09  Sentiment among single-family homebuilders dropped five points to 75 in August on the National Association of Home Builders/Wells Fargo Housing Market Index. Sales expectations in the next 6 months were unchanged at 81. Lumber is down 72.48% from its intraday peak of $1,711.2 on May 10. (CNBC)

 

10  Nationally, U.S. median home prices held steady from June to July at $385,000. That’s up 10.3% from last year at this time, according to the latest data from Realtor.com. It’s slower growth than the 12.7% increase in June 2021, and it marks the third month in a row in which the year-over-year gains have slowed. Is the market going from hot to normal? (NY TIMES)