This pair trade is levered to the swings in residential construction compared to residential investment. Right now, the former is significantly outpacing the latter, suggesting that relative share prices have ample room to run…
While we reiterate our recent overweight call on the S&P homebuilding index1 and the high-conviction underweight call on the S&P home improvement retail (HIR) group,2 it also makes sense to initiate a market neutral…
Highlights Portfolio Strategy Vibrant and broad-based bank credit growth, pristine credit quality, pent up bank buyback demand and a V-shaped recovery in bank ROE more than offset the risk of 10/2 yield curve inversion, and suggest…
Overweight After reaching their post-GFC highs in the middle of 2017, the S&P homebuilders index put in a seven-year bottom in October, though has since recovered to roughly the level where we upgraded to overweight.1 The…
The outlook for housing and residential investment remains an important part of the growth outlook for the U.S. economy, even if our U.S. strategists think its impact on growth has diminished (see next Insight). More important…
Highlights Investors are worrying too much about the things that caused the global financial crisis, and not enough about those that could cause the next downturn. Despite the recent patch of soft data, the U.S. housing market is in…
With the labor market at full employment and unemployment insurance claims on the verge of breaking below the 200,000 level, housing starts should regain their footing and propel homebuilding profits. In addition, the latest…
On the demand side, first-time home buyers still make only a third of total home sales and the homeownership rate is near generational lows, underscoring that pent up housing demand exists. In fact, the percentage of 18-34 year-…
Overweight While housing-related data releases have been slightly weaker than anticipated lately, we deem that this softness is transitory as housing market fundamentals rest on solid foundations. True, affordability has taken a hit…