New-Home Sales Slipped 0.3% in February to an Annualized Rate of 662,000… The sales rate fell 31.5% in the Northeast.
What it means— The median sales price of a new home fell from $414,900 to $400,500, but that likely reflects the big drop in sales in the Northeast, where homes are more expensive, more than anything else. Inventory jumped to 85,000 homes, which shows that builders either got a jump on the spring season, given little available existing inventory, or overestimated demand and will offer discounts and other goodies to move units in April and May. We do not know which view is right, but the builders have played this one pretty good so far. Expect mortgage rates of close to 7% to keep the industry stuck in the mud, which is good for builders as existing homes are not likely to add to supply.
Third Estimate of Fourth-Quarter 2023 Increased 0.2% to 3.4%… Consumer spending and non-residential fixed investment (business spending) gave GDP a jump at the end of the year.
What it means— With GDP, there is an advanced estimate, a second revision, and third revision. By the time we get to the third revision, the current quarter is just days from ending (Sunday, March 31). Normally, a third revision wouldn’t rate a mention, but this for this one, GDP was up from 3.2% to 3.4%, and that is adjusted for inflation.
This should make bond investors skittish about how many rate cuts we get this year, which could keep mortgage rates well above 6.50% through the summer. The Fed might have eased financial conditions enough to avoid dislocations this spring. We will have to see what happens in April, but so far, March closed with no big issues. This brings us back to the Fed. Last week Chair Powell affirmed there is no need to hurry into rate cuts while Mr. Market still expects cuts to start in June.
The Federal Reserve did not create the inflation but assumes it can bring it to an end. With persistent inflation, it is a question of what or who do you want to believe.
Hertz is unloading its EV fleet… Government bureaucrats operate with power to pressure consumers and businesses to certain behaviors especially associated with green energy.
What it means… In recent years, corporate executives have sought favor with the Administration adapting business plans following the Environmental Protection Agency “guidelines.” Recently fired Hertz CEO Stephen Scherr was no exception authorizing the purchase of a large EV rental fleet. Mr. Scherr was recognized by the Administration for its foresight and “cooperation.”
Unfortunately, Hertz customers did not want to spend limited time looking for an available and working charger and waiting for a charge. Filling a gas tank was a more reliable and less time consuming activity. Hertz is selling about 20,000 EVs (including Teslas) at a discount in a market that has become skeptical about EV benefits beyond the urban center.
China is increasing EV production and dropping prices pressuring even Tesla to cut production on weakening demand. Seemingly never afraid to do the unexpected, Musk raised the cost of the Model Y in China and today in the USA while competitors are offering incentives to attract buyers.
Will You Vote for Trump, Biden, or “Literally Anybody Else” … Dustin Ebey, a 35-year-old, seventh-grade math teacher in Dallas, Texas, is frustrated. He is not enthusiastic about the choice between the King of Debt, in Trump’s own words, and an 81-year-old. So Ebey started a campaign for “Literally Anybody Else,” and then changed his name. Mr. “Else” needed to put a valid name on the applications for the presidential ballots, which is where he got the moniker. It is highly unlikely he will appear on the ballot, but many people can sympathize.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
Our plan is “the plan will change.”
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