This week's housing data has told a story of increased activity in existing homes and wider financing availability; both are at their highest levels since emerging from the financial crisis (second panel). Importantly, mortgage…
Highlights The U.K. and EU may get a technical divorce, but the underlying economic and financial relationship may not end up changing dramatically - which is good news for the pound in the long term. Our 6-12 month preference for…
While homebuilders are discounting selling prices in order to move new product, underscoring that high lumber prices represent a drag on profit margins. The opposite is true for home improvement retailers. Industry sales are running at…
Highlights Portfolio Strategy Any advance in Treasury yields should be gradual and more reflective of an improving global economy than it would be restrictive for equities. Book profits in homebuilders and downgrade to neutral.…
The S&P home improvement retailing (HIR) index has a concrete foundation and should benefit from the firming housing backdrop highlighted in the previous Insight. Higher lumber prices flow straight to the bottom line, because HIR…
Highlights Portfolio Strategy Add the S&P asset manager & custody banks index to the high-conviction overweight list. Prospects for higher interest rates bode well for a catch up phase with the rest of the financials sector.…
Highlights The uptrend in consumer confidence has the potential to be lasting, and therefore lead to an acceleration in real consumption over the next several quarters. In contrast, the rise in business optimism is thus far built on…
Highlights Portfolio Strategy A battle between tighter monetary conditions and the anticipation of fiscal largesse will be a dominant market theme this year. Our high-conviction equity allocation calls do not require making a major…
Housing activity dipped this year. In response, building supply store sales cooled and analysts have been quick to slash both sales and earnings growth estimates for home improvement retailers. However, an overreaction appears to be…
Highlights Portfolio Strategy The rise in Treasury yields is approaching a threshold that has often caused equity market indigestion. Stay focused on current monetary conditions rather than fiscal unknowns. The bear market in lodging…