Inflation is not cooling quick sufficient to loosen up Fed fears, housing could also be stirring from its droop, and OPEN’s dramatic inventory reversal reminds us this cycle is constructed for volatility.
Inflation Barely Hotter… Reducing Charges Is not Debated, It is Quantified
August’s CPI report confirmed inflation climbing to 2.9% YoY, up from 2.7% in July, with core inflation regular at 3.1% . Month-to-month inflation additionally rose round +0.4% seasonally adjusted… sufficient to stoke the embers of rate-cut warning, however not pull the emergency brake.
100% likelihood of a Fed Lower subsequent week… however 7.5% likelihood of 50bps vs 25bps.
What this implies: the Fed has primarily advised the market {that a} minimize in September is nearly baked in… the query now not is if, however how a lot and how assured they’re going ahead. With inflation sticky in sure sectors like meals and shelter, there’s sufficient discomfort that the Fed cannot fireplace off aggressive cuts, however the easing undercurrent is clearly gaining momentum. FOMC is subsequent week!
With that being stated, there are some notable gainers this 12 months. PLTR is up 117% YTD, however extra importantly… GraniteShares 2x Lengthy PLTR ETF is up an INSANE 205% YTD.
Is Housing Coming Again? Did We Backside?
There are indicators that housing could also be waking up. The 30-year mounted mortgage charge dropped to 6.27%, the bottom in almost a 12 months, down from 7.25% simply months in the past, as Treasury yields eased and Fed dovish expectations firmed up. As borrowing prices ease, affordability ticks up, and mortgage software exercise, particularly refinancing, has seen a noticeable bump… one of many first responses from patrons who’ve been sitting on the sidelines.
Mortgage charges are falling!
That stated, this feels just like the market is front-running the housing comeback. Stock stays tight in lots of key metros, costs are nonetheless excessive, and patrons stay cautious. The drop in charges provides hope, however an actual backside might require sustained enchancment in employment, incomes, and maybe just a few extra weeks of favorable charge headlines.
Opendoor Insanity… A Shot of Hope or Simply Hype?
OPEN inventory exploded after the corporate appointed Kaz Nejatian, previously Shopify COO, as CEO, whereas reinstating co-founders Keith Rabois and Eric Wu to the board. Shares soared 80% in a day, with the “Open Military” of retail traders fueling a lot of the momentum.
The corporate stays loss-making, and its housing mannequin nonetheless faces challenges from macro headwinds, stock constraints, and charge sensitivity. However this transfer is bullish in that it demonstrates investor urge for food for narrative, turnaround, and management with product/AI bent. On this bull cycle, tales like Opendoor work… they will rally onerous on momentum and expectation. Simply bear in mind: with excessive reward comes excessive danger.
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Benzinga Disclaimer: This text is from an unpaid exterior contributor. It doesn’t characterize Benzinga’s reporting and has not been edited for content material or accuracy.
