Not Gonna Budge | The Daily Peel | 11/21/22

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• It’s only getting worse for Masa—he’ll now have to fork over nearly $5 billion for side deals he made as chair of Softbank
• Qatar is throwing a wet blanket on its World Cup and banning beer sales after initially saying they’d allow it
• So many Twitter employees rejected the “extremely hardcore” culture Elon’s implementing that critical ops could be at risk
• Mortgage rates have plummeted to 6.6%, marking a swift decline from their recent high of 7.8%

Frigid Winter Ahead for Housing

Kinda wild that something as allegedly stable as housing has been such a seesaw in the U.S. We went from widespread foreclosures in ‘08 to a buying frenzy about a decade later, and now home sales are down for a 9th straight month.

It’s easy to point to individual culprits:

• Mortgage-backed securities made lending way too easy and set people up for predictable foreclosures. Alright, lesson learned!
• Rock-bottom mortgage rates and the aftermath of C-19 sparked a buying frenzy that got way outta hand. Got it, we need higher long-run rates, and way more houses built
• Now it’s 2022, and still-sky-high prices mixed with 7% mortgages have made the monthly payment exorbitant for the actual house you get
• Home sales have fallen off a cliff, and builders don’t want to break ground until demand comes back.

F*ck it, I give up.

Maybe the endgame is that. Unless you have millions in assets, you’re a renter for life. JPMorgan is betting on an outcome that looks something like that after its recent investment in built-to-rent homes.

Is this the best we can do? A whipsawing market that’s so hard to get your head around that we all just end up renting forever?

Perhaps cratering demand will push some sellers to give in and lower prices. Many listings haven’t budged on their asking price, despite a doubling of mortgage rates. That basically means you’re paying significantly more each month for the same amount of house.

If sellers are content to kick back and wait for a rebound in demand, the housing winter could stay cold and dark for a while. It’s not like we’re building homes left and right to fill in the gaps.

Fingers crossed that we can get some kind of long-run balance here. Otherwise, might want to lock in some long-term renters insurance.

Source

Foot Locker ($FL) ↑ 8.73% ↑

• Hypebeast resellers have taken hold of the upper echelon of the sneaker market, but $FL is happy to play at the lower levels
• The company is dependent on Nike for 60% of its sales, and no amount of inflation can prevent buyers from wanting to Be Like Mike

Gap ($GPS) ↑ 7.55% ↑

• Gap is doing just fine after its breakup with Ye, and it’s the latest retailer to show it was able to dump huge amounts of inventory in the quarter
• It’s pumping the brakes ahead of the holiday season, but the Q3 beat is a welcome respite after weeks of chaos