MARKET MOVERS
- Homebuilders say the U.S. is in a ‘housing recession’ as sentiment turns negative. The National Association of Home Builders/Wells Fargo Housing Market Index dropped 6 points in August to 49. Anything below 50 is considered negative. This marks the eighth straight decline in the index. NAHB Chief Economist Robert Dietz says tighter monetary policy from the Fed and persistently elevated construction costs have brought on a housing recession.
- Saudi Aramco posts a 90% jump in profit. Aramco said its net income amounted to $48.4 billion in the three months ending in June, up from $25.5 billion in the same period a year earlier, because of higher crude-oil prices and stronger refining profit. It is the highest quarterly net income Aramco has posted since it started trading its shares.
- Hedge fund manager Dan Loeb buys a new stake in Disney and pushes for an ESPN spinoff. In a letter to Disney CEO Bob Chapek, Dan Loeb said there is a strong case that the ESPN business should be spun off, especially for things such as sports betting. Loeb also urged the entertainment company to integrate streamer Hulu directly into the Disney+ direct-to-consumer platform. Read more here.
- Tesla’s China production reaches a milestone. Chief Executive Elon Musk said the electric-vehicle maker has now produced 3 million vehicles, with about one-third coming from its gigafactory in Shanghai. On Sunday, Musk wrote on Twitter: “Congrats Giga Shanghai on making the millionth car! Total Tesla s made now over 3M.”
- U.S. freight shipping rates have likely peaked. U.S. freight rates increased 28% year over year but declined nearly 2% month over month in July. Similar to other recent inflation indicators which have shown easing, the data is a sign that freight rates have likely peaked. Supply is up while demand is stable, but truck prices that have doubled since 2019 and a shortage of truck drivers will keep pressuring freight capacity.
- Oil futures drop by more than 4% as China's growth worries dominate. A batch of data out of China at the start of the week suggested fading growth in the world’s second-biggest economy. Industrial production and retail sales came in lower than the previous month and shy of analysts’ forecasts. It's the ongoing impact of COVID-19 lockdowns and an escalating property crisis.
- Real estate has the largest lag out of all the markets. If you run some quick math, you can see that the price increase in real estate from 2020 to today is equivalent to the 2001-2007 bubble/housing crisis. The prices have gone up so much the percentage gain is similar to the entire 2001-2007 run up. This is abnormal as the percentage move is larger than a historical bubble (2008) that built up over six years versus two years. Read more here.
WHAT TO WATCH
- Apple reportedly plans to put ads in more apps on your iPhone. The company is considering ways to add advertising to Apple Maps in an effort to boost revenue, for example, which so far has stood out from its competitor, Google Maps, by not showing ads. It also recently announced plans to expand ads in the App Store. It's likely that Apple also inserts ads into the stores for Podcasts and Books, too. Read more here.
- Unity Software’s board rejects AppLovin’s proposal. Unity's management released a statement saying it officially intends to merge with ironSource. Unity CEO John Riccitiello said, "The Board continues to believe that the ironSource transaction is compelling and will deliver an opportunity to generate long-term value." By merging with ironSource, the top game-creation platform is merging with the top monetization platform.
- The supply gap will continue to widen in entry-level homes. Rent CEO Jon Ziglar says that if you look at most of the inventory coming into the market, it's really in the higher-end. There are not nearly as many incentives coming forward for apartment builders to be building lower-end properties and so we will probably see a crunch in demand in the lower-end when all the supplies are coming into the higher-end. Source(9:32)
