Let's get to the big story breakdown.
US housing starts rising while building permits missing estimates in the latest month.
No doubt builders are feeling the pressure, and even with price cuts and incentives, new home sales rose less than 1% in June, while the median price fell to just over 401,000.
That's down almost 5% year by year.
But we did get some good news, at least for now.
US mortgage rates coming down.
The average 30 year fixed is now 6.5%.
Dropping from nearly 8% last fall.
And joining me as we count down the Fed minutes as well as Powell's Jackson Hole symposium is Patrick Healy, president and CEO of Caliber Financial Partners.
Patrick, great to have you here.
Thank you so much for joining me.
Well, here we are as we count down to the Jackson Hole symposium, and all eyes are on commentary from Thatcher Powell, but we'll have to see what happens.
What did you make of the housing figures out this morning though?
So the numbers are trending in the right direction, still well below historical standards, and I think that will persist as long as rates remain elevated, but there is a sort of a silver lining on the horizon and you know the permitting takes place in advance of the actual starts and so I think some developers are maybe be anticipating rates coming down in the next several months, maybe the next 3 to 6 months and being able to finance projects a lot more you know economically.
And since you've last been here, we did get those on-farm payroll figures for the latest month and those downward revisions for the prior two months as well.
And on top of that, we got CPI, PPI figures.
So what does this mean long term for the central bank, the Federal Reserve, and what does that mean for investors out there?
Yeah, so the data is certainly mixed.
It makes their job more difficult.
I think they were a little bit surprised. at how steep the revisions were on the jobs data, and they'll get another reading before the September meeting and so they're going to be analyzing that very closely, but I do think we're going to get a cut in September.
We'll find out what Fed Chair Powell says on Friday, Jackson Hole, there'll be a lot of people hanging on every word of that speech, but I do think we're looking at a cut in September and maybe one more for the remainder of the year.
And of course the stock market, we've seen the Nasdaq S&P 500 hit consecutive record highs and the Dow also hit an intraday high last week.
So where do we go from here, given the rate outlook and also what can we expect from bonds?
Yes, so in terms of the stock market, you know, the earnings season has been very strong, almost across the board, I think more than 3/4 of reports so far are beating expectations and guiding higher, and that's really encouraging for equities as we head into the end of the year.
I think the rate cuts will help and really signaling how many we'll get in the first half of next year, but there's a lot of tailwinds once we get past some of the noise, but the Fed has a tough job.
The politics are starting to Lean on them.
I think if they were to not cut in September, the political pressure is going to be enormous.
I think you mentioned that Scott Besson is looking at, you know, interviewing Fed replacement candidates that noise will ramp up if they don't cut in September.
So I expect to cut, and of course since we're talking a little bit about politics, we saw plenty of volatility at the beginning of Q2 in not just the equity markets but all asset. as well.
So the big question mark being how will tariffs end up affecting the US economy.
The goalposts keep on moving.
So what are you telling your clients?
Well, I'm actually taking advantage of sell-offs.
There haven't really been steep sell offs since April, right?
That was the dramatic, you know, rock the market type of environment.
But you know, any kind of noise or backtracking has been shrugged off by market participants.
I think that people are very bullish in looking forward.
I think we can get a deal resolved with China and maybe get the tariffs weighed down with Canada.
I think that puts us in a good spot on the global stage.
And of course AI, we can't have a conversation about the markets without talking about AI.
So when it comes to themes surrounding AI that are investments right now, where are the opportunities?
Yeah, so the AI trade has dominated the headlines clearly, and there's so much money being allocated to that space.
I think, you know, you don't want to chase valuations that end up in the stratosphere, but I do think that trade remains strong, but I'm looking at adjacent sectors, power, which is going to be incredibly important to fueling data centers and being able to keep those online.
Uh, the grid infrastructure, our power grid in our country is Decades beyond its useful life, and that could be an issue if we start having blackouts and cybersecurity is another sector that I think is really critical to the AI space.
These have to be fail-safe institutions and if they go offline for any period of time or there's a cyber attack, it could really impact the brand and User experience, yeah, and unfortunately that is a reality out there for all of us given that we're so connected by technology.
And finally, before I let you go zooming out here at the New York Stock Exchange, we've recently seen many IPOs taking place here, but when we look at other factors here, whether we're talking about IPOs, M&A, growth versus value, what themes are you paying attention to?
Yes, so rates will solve that problem tremendously as rates start to come down, the capital markets activity increases.
You're seeing a lot of crypto issuances rush to market to take advantage of the craze in that space.
I hope that continues, but as rates come down, both IPO activity and M&A activity, I think, will increase.
It's a time to be invested.
And finally, before I let you go, any price targets you're keeping your eyes on?
So I've heard some outlandish targets for Bitcoin and Ethereum, and I certainly spent a lot of my time focusing on digital assets.
I don't know if we get to 200,000 by the end of the year.
It's a pretty lofty goal, but I think we trend in the right direction.
And the same thing with Ethereum.
Ethereum has really been the darling over the last several months. with stablecoins.
I'd be looking at 5 or 6000 maybe by year end for that.
I know there's some projections that are much higher than that.
I'm going to be a bit more modest.
Well, Patrick, I'm sure we'll have you back here before year end, so we'll check in on those price targets next time you hear it.
Thank you so much for joining me.
Thank you.
