The Housing Market Appears To Be In The Midst Of A Hard Landing

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In his podcast addressing the markets today, Louis Navellier offered the following commentary.

If you wish to listen to this commentary, please click here. 

Every Stock For Itself

Apple (NASDAQ:AAPL) this week joined Google (NASDAQ:GOOGL) and other companies in winding down its hiring plans.  Apple is also scaling back some of its spending plans due to the current economic environment.  This news from Apple caused the stock market to have an abrupt reversal on Monday.  The bottom line is the second quarter announcement season is now underway, so it will be every stock for itself in the upcoming weeks.

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Nevertheless, people are getting more optimistic because things are starting to recover. Gas prices are moderating at the pump and inflation has definitely peaked. We are in better shape here in America. The world may have slowed down, but America remains the oasis. That's why we have a strong dollar. That's why we have good consumer and employment growth.

Housing's Hard Landing?

The Commerce Department on Tuesday announced that housing starts declined 2% in June to an annual pace of 1.559 million, which is the slowest pace in nine months (since September 2021). Also notable is that building permits in June declined by 0.6% to a 1.685 million annual pace.

According to the National Association of Home Builders, sentiment declined by 12 points in July to 55, which is the largest monthly drop since the pandemic in April 2020.  As a result, the housing market appears to be in the midst of a soft to possibly hard landing due to the fact that mortgage rates have almost doubled this year. But since mid-June, the mortgage rates are starting to come back down because bond yields have peaked. Hopefully, that helps the housing sector.


The other thing I should add is that the US government can't get anything done at least in Washington, DC. They never raised taxes and they can't get anything passed that is significant. But this is what wall street wants – they want gridlock. And we are expected to have more gridlock come November because of the change in leadership in the house.

The Financial Times reported on Tuesday that the European Commission in Brussels is planning to tell its EU members to cut natural gas consumption “immediately,” since the EU runs the risk of running out of natural gas to heat homes this winter.  Specifically, the European Commission document says “Acting jointly now will be less disruptive and costly, facilitating solidarity and avoiding the need for unplanned and uncoordinated actions later in a possible crisis situation with gas reserves running low.”

On July 21st, the European Central Bank (ECB) is meeting, so if Gazprom does not restore natural gas deliveries to Germany and other countries, then the ECB may not change key interest rates.  The ECB is anticipated to raise its key interest rate to -0.25%, up from -0.5% currently. I think we can conclude that Europe remains a mess and at high risk for recession due to a weak euro that is exasperating inflationary pressures.

Here in the US, we are energy independent again with the drop in demand recently. The energy stocks are roaring back and they are going to have great earnings which will dropkick stocks higher. 

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A server at a Pennsylvania restaurant was surprised with a $3,000 tip on a $13 bill from an out-of-town customer. The customer, Eric Smith, explained he had left the generous gratuity as part of the "Tips for Jesus" social media trend. Source: UPI. See the full story here.