Happy New Year to each of you!
I hope everyone had an awesome time with family and friends this last week — it’s so nice to have Christmas and New Years fall on a weekend.
Lucky for us, the markets have been relatively slow — as described here.
This Week in Review will look a bit different as a lot of the main subject matters we report on (IPOs, earnings results, investor events) simply didn’t occur this week. Because of this, I’ll be only sharing my thoughts on the week’s Major Economic Updates.
Also — to our Founding Members, we will be having a livestream tonight at 9:30p ET.
ICYMI - posts from this week:
The Investing Week Ahead — what we’ll be referencing back to in this post
2022 Portfolio: Mid Caps Part 1 — walking through my investment theses
My Favorite Heavily Discounted Stocks — a few names I like most right now
Year in Review: 2021 — inflation, shorts squeezes, big tech, EVs, and NFTs
Livestream with Katie Stockton — predicting 2022 stock prices
2022 Portfolio: Mid Caps Part 2 — coming later today
As a reminder: the Defiance Investments NFT ETF giveaway ends this Wednesday. If you haven’t entered yet, no harm in shooting your shot. This is a 1 of 23 NFT with an average price tag of $29K shown here.
Week in Review - Too Long; Didn’t Read:
Home prices continued their double digit increase throughout the month of October, and we’re officially back to pre-COVID levels as it relates to the number of people on unemployment benefits.
Major Economic Updates:
Real estate remains red hot and the week prior’s jobless claims are showing us the Omicron variant might not have as much control over our economy as initially feared.
Existing Home Price Index for October as reported by CoreLogic
Home prices continued to climb at double-digit rates in October according to a popular measure of home price appreciation released this Tuesday. According to the S&P CoreLogic Case-Shiller Home Price Index, national home prices rose +19.1% year-over-year on an unadjusted basis.
The S&P CoreLogic Case-Shiller Home Price Indices gauge home-price changes nationally and in 20 of the nation’s largest metropolitan areas.
This +19.1% increase, however, is a decrease from the increase we experienced in September (+19.7%) — showing that the acceleration in home prices may be slowing. The home prices in Phoenix, Arizona rose +32.3% year-over-year.
The price of homes nationwide have been increasing by double digits for 11 straight months now — much higher than the +4.7% annual average. This comes to no one’s surprise as for the last 24 months we’ve seen increased demand (record-low interest rates) paired with a higher cost in materials and labor.
I welcome the higher home prices for 3 reasons:
As explained here, one of my largest stock positions heading into 2022 is in Builders FirstSource (BLDR) - already up +13% in a few weeks. This hot market is padding their bottom line, and therefore mine.
I’m a real estate investor through Fundrise — where anyone can invest in real estate with as little as $10. Here’s a TikTok video I posted the other week sharing the performance of an experiment I’ve been conducting since August — long story short, Fundrise outperformed the stock market. This is my go-to investment platform for real estate and I’ll likely be using it for the rest of my life. They’ve also helped me learn a lot about the real estate market — through both their email updates and online resources that have data like what’s shown below.
I own a home myself — I know this point isn’t as actionable as the others, but it’s true.
US Initial Jobless Claims for the Week Ending December 25
Initial unemployment claims totaled 198,000 in the week ended December 25, down -8,000 from the prior period’s revised level. Economists were expecting ~208,000 applications.
Continuing claims for state benefits fell (from a pandemic high of 6.15 million) to 1.72 million in the week ended December 18, the lowest since March of 2020. Intense labor shortages across the entire economy has driven new unemployment claims to new their lowest level since 1969 as firms work to retain as many employees as possible.
Claims figures have been choppy in recent weeks, reflecting challenges around adjusting for seasonal effects during the holiday period. Still, initial weekly applications are broadly in line with pre-pandemic levels.
In my opinion, this was a major step toward separating COVID-19 variants from stock market performance. The stock market is driven higher (and lower) by the economy. More jobs means more money to spend, which results in more profits for the companies in which we invest.
Despite Omicron being the most contagious COVID-19 variant, it failed to trip up a tight job market.
Another great thing to consider is that the total number of folks on unemployment benefits has fallen to 1.72 million — the lowest since before the pandemic rocked our world. We are officially back to pre-COVID levels.
I’m feeling good — now we just need to keep an eye on how interest rates will impact these numbers in 2022.
Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.