Friday Fast Five - 9/23/2022
by Hodges Investment Team, on Sep 23, 2022 7:00:00 AM
Five interesting things that Hodges Capital research analysts discovered this week...
#1 FIXER UPPER? Higher mortgage rates may push homeowners to repair and remodel existing homes rather than buy another home. According to data published by Truist, there are roughly 128 million existing houses in the U.S., with about 5 million turning over in a typical year. Higher rates should slow turnover in existing homes. Furthermore, approximately 37% of homes in the U.S. are owned outright, having no mortgage, and 90% of existing mortgages are fixed, which could insulate existing homeowners from higher mortgage rates.
#2 ORGANIZED RETAIL CRIME: According to the 2022 National Retail Security Survey, issued by NRF, the total loss of stolen goods hit $94.5 billion by the end of 2021, up from losses of $90.8 billion in 2020.
#3 GOODWILL: Deutsche Bank pointed out that after years of record-setting deals, nearly 25% of all companies in the S&P 500 have goodwill greater than shareholder’s equity.
#4 WEALTH: Credit Suisse predicts there will be over 87.5 million people with $1 million or more in wealth by 2026, up from 62.5 million in 2021. China alone will nearly double its millionaire population, from 6.2 million to 12.2 million, despite regulatory crackdowns on tech and strict pandemic restrictions.
#5 GOLD: Per Strategas, Gold & 10-Year Real Rates have a -0.90 correlation going back to 2003 on a weekly basis. Higher real interest rates create a higher opportunity cost to hold non-interest-bearing assets like gold, given its negative carry profile being that it pays no dividends nor interest. Gold is currently down over -17% from its 52-week high reached on 3/8/2022, while 10 Year Real Rates are up +170 bps during that same time period.
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