2019 Recession Hoax Exposed: Millennial Housing Market & Unemployment
That’s right. I’m saying it. A recession hoax.
I’m calling out the financial media for what the past year — and more — of recession-mongering has been — a HOAX.
Whether it was an inverted yield curve or a trade war scare tactic, no number has ever pointed to a recession in this timeframe.
Tell your friends, tell anyone who will listen — don’t miss out on the incredible bull market we are smack in the middle of because institutions want your shares. And want them cheap.
Get all the facts in today’s Market Talk, and see why our economy is not just strong, it’s record-breaking strong. Watch this week’s Market Talk below. Watch it now!
November 4, 2019
Amber Lancaster: Welcome to this week’s Market Talk. I’m Amber Lancaster, joined by Paul Mampilly and Hudson Cashdan. Each week we look forward to sharing our viewpoints and giving insight into what’s on our radar. Today’s outlook is for the week of November 4, 2019.
For this week’s update I’ll begin by sharing with you what I’m watching and then we’ll hear from Hudson and Paul. Today I’ll cover three major topics. The first will be my take on recent and upcoming U.S. economic releases. Then my innovation story of the week rounding out with our Good News Roundup. Let’s begin.
Last Wednesday, the Federal Reserve delivered on its anticipated 25 basis point cut. That same day, the third quarter GDP advanced number exceeded expectations coming in at 1.9% versus expectations of 1.6%. What really sent stocks soaring to new record highs was the October jobs report released on Friday.
This chart shows that the report revealed payroll surprised. The U.S. economy added 128,000 workers in October, beating estimates. Plus, revisions for the previous two months added 95,000 jobs. The unemployment rate ticked slightly higher to 3.6% from 3.5%, which is still historically low.
Moreover, the average hourly earnings for October increased 3% on a yearly basis while September’s wages revised higher. This means the overall job market continues to be healthy. Get this, what really caught my eye is what’s happening in the private sector. The private sector added 131,000 new jobs in October, completely trouncing projected estimates of 80,000 new jobs.
Plus, September’s private sector economy payrolls were revised higher. Originally 114,000 private sector new jobs were reported, but now it was actually 167,000 new jobs added in September. The private sector economy is adding a real boost to the U.S. labor market.
Lastly where jobs are concerned, the U.S. labor participation rate increased to 63.3% — the highest since 2013. What this means is that Americans previously not working are now employed and fully participating in the workforce.
Also, I must highlight the encouraging numbers in the construction sector released last week. The Commerce Department showed that U.S. construction spending rose 0.5% in September, beating estimates of 0.2%. This was helped by private residential and government projects. In all, private residential construction spending increased 0.6% for the third straight month of gains.
Saving the best for last, per Bloomberg, “contract signings to purchase previously owned U.S. homes posted the largest annual increase in four years, signaling lower mortgage rates are reviving interest for buyers.”
As this chart shows, the National Association of Realtors index of pending home sales increased 6.3% since September from a year earlier, the biggest gain since August 2015. On a monthly adjusted basis, contracts rose 1.5% exceeding the median forecast in Bloomberg’s survey for a gain of 0.9%.
Bloomberg also quoted the National Associate of Realtors Chief Economist Lawrence Yun as saying the following, “Even though home prices are rising faster than income, national buying power has increased with lower interest rates. Home prices are rising too fast because of insufficient inventory.”
This comment goes hand in hand with Paul’s forecast that there are not enough homes to support the coming millennial housing boom. This is why we’re bullish on affordable housing and construction sectors in 2020.
Where this week’s economic releases are concerned there will just be three major economic releases. On Tuesday, September trade balance number will post at 8:30 am. On Friday, preliminary University of Michigan sentiment number and September’s final wholesale inventory month-over-month number will post at 10 am.
Now for my innovation story of the week. We all know when driving through construction zones a slower and careful speed is paramount to protect workers as they do their jobs. Tesla is aiming to help keep road construction workers safer by installing a new software that detects traffic cones.
Per Electrek, “Tesla has updated its driving visualization powered by Autopilot to detect construction cones and plan around them.” Per Tesla, “in cases where a traffic cone is detected and navigate on Autopilot is engaged, the vehicle is designed to suggest a lane change to avoid cones.”
Now for our Good News Roundup. Good News Roundup story number one: Venture Beat is reporting that esports video games can now lead to college scholarships. “High School Esports League has teamed up with the charitable organization Varsity Esports Foundation to provide financial aid and opportunities for under-resourced students across the United States.”
“The High School Esports League is one of several competitive video game companies that is bringing esports to high schools. It has partnered with 2,100 schools and has 60,000 participating students.” If you know a high school student who is exceedingly proficient in playing video games, there might be a college scholarship for them.
Good News Roundup story number two: Anyone who drives knows that blindspots, even with backup cameras and car sensors, can be a problem. Now, per Engadget, a teenager has solved the problem for car blindspots with the use of a webcam and a projector.
The innovative 14-year-old from Pennsylvania decided to “put a webcam on the outer roof pillar of a car which could record everything masked from the driver’s view. Then she used a projector to display the live feed from the webcam onto the interior pillar with 3D printed parts aligning the image exactly between the window and windshield.”
As you can see in this image, the passenger side blindspot is gone. “The teen won a top award from Broadcom Masters Science and Engineering competition for middle schoolers and was also awarded a $25,000 prize. With her use of a fairly simple and affordable material, her idea could eventually make it into commercial vehicles as a standard safety feature.”
Good News Roundup story number three: HousingWire has this screaming headline: “The Buyers Are Coming, the Homebuyers Are Coming.” According to Transunion, “a flood of first-time homebuyers is about to hit the market over the next three years.”
Transunion is currently projecting that at least 8.3 million first-time homebuyers will enter the market between 2020 and 2022. On top of that, if economic growth exceeds expectations that number of looming homebuyers in the next three years could reach as high as 9.2 million people. That’s a stellar projection and goes hand in hand with what Paul says and what we forecast here at Bold Profits regularly.
I thought I’d interject this one question. If you are seeing new single-family home construction in your area, please let us know. Especially if you are seeing more affordable homes being built with price points for millennial buyers. We’d love to see what’s happening in your neighborhood. I can definitely see it happening where I live.
That’s it from me. Hudson, please tell us what you’re watching for this week.
Hudson Cashdan: Thanks Amber.
I’m down here in this coworking space called The Farm. I came to New York City this weekend to watch a friend run the marathon and stayed. When I’m here I like to bounce around to different coworking spaces and talk to the owners and see if they like them, get a gauge on what the rates are.
I think it’s an interesting industry and I think WeWork will eventually be back into our universe and come public as we’ve spoken about. I like to keep tabs on it. This is a soundproof room that looks a little strange but it works. You come in here to do Market Talk so you don’t bother everyone else out there working hard. So that’s where I am.
This week in the IPO world is that we have three things. Saudi Aramco is coming public. That is the Saudi Arabians oil company and the biggest source of oil in the world. They are going to go public at somewhere between a $1.2 trillion to $2.3 trillion market cap.
That is being negotiated now. Where they list, in addition to their domestic market, is going to be negotiated as well. That’s still moving parts there, but that’s big news for the kingdom of Saudi Arabia.
Another article I read this week that was interesting was titled “Billionaire Families Reshape Silicon Valley’s Venture Terrain.” That’s basically saying that family offices have been moving into venture investing. They are moving into venture investing for the same reasons we do and even hits on our theme: disruptification.
Family offices see disruption everywhere in all industries and they want to be a part of it and get in early. That’s a trend we’re seeing in the United States, less so in Europe and very much so in Asia. U.S. families are getting involved and they are also getting involved in buying public companies they think are underpriced.
That could also put a bid under some of the stocks we follow. We saw a bid just last week in Fitbit. Google is acquiring Fitbit for $2.1 billion, which is about $7 or so a share. That’s good for people who bought Fitbit in the last couple months, but not a particularly successful IPO from Fitbit.
I think it’s a good example of what to be wary of in the IPO market. They came as a hardware company with wearables and they pitched eventually figuring out software. They have data they were going to sell software as a service solution. They didn’t really figure it out and they tried to figure it out as a public company. I think that was their mistake.
They didn’t execute and traded down. But they have a lot of assets. Google looked at it said they were going to acquire the company for their customer base, their wearable hardware and their data and they are going to make it work with their software. That’s what Google is doing now. I think that’s interesting.
I think we might start to see some more m&a and I think that’s a good sign for the markets. What do you think, Paul?
Paul Mampilly: That’s right, Hudson. In fact, just this morning doing the news roundup I see that Wright Medical, which is a company that makes a camera that goes down your throat and will make an image of your insides, is being taken over by Stryker. Stryker is a big player in the medical device area. The premium there is 30%.
It does go to your point which is that bankers bring companies public when there is an appetite from investors to buy. It may sometimes coincide when it is right for the company and when the company has everything worked out — technology, business model, commercialization strategy.
If you buy at the wrong time from the IPO market or with the wrong advice and you could see poor returns. Buy at the right time and you could see returns like Google and Facebook where you make a lot of money. In the broader sense I would say that these takeovers, whether it be Google buying Fitbit or Stryker buying Wright Medical, is a sign that the economy is just fine.
Today, if you look, the media is still trying to persuade people a recession is coming. It’s really clear it was a hoax. There never was a recession and there never were any numbers that pointed to a recession. Sure there was a slowdown of some magnitude but there was a never a recession of any kind that was countrywide.
Amber has talked to the strength in the housing market. That’s been one of the hallmarks of any growing economy in our country. When we have household formation, that’s when our economy grows. We have it and we have it in spades. We have underbuilt now for a decade. This can run a long time.
This is why we have been telling you to focus on the millennial generation through housing. The other places we have been telling you about is to buy into precision medicine through biotechnology. Some of the other places where the family offices are investing in as Hudson was talking about are seeing the benefits of data coming to transform healthcare and precision medicine.
Also, that rapid complete collapse in the cost of sequencing a genome is going to generate an incredible amount of data. Last week we ran a special promotion for my Extreme Fortunes service. This week to help pay our bills we are running a special promotion for my True Momentum service.
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I want to mention that I am regularly on Twitter putting up all kinds of information, including some of the information Amber reports to you on Monday and some of the same kind of information that Hudson relays to you. If you want to follow me on Twitter, I’m @MampillyGuru on Twitter.
Some of these are also on Facebook. I’m Paul Mampilly Guru on Facebook. Of course we ask for your support. If you like what Amber does and what Hudson does, please subscribe to this channel. Give this video a like. Tell your friends to come watch this video. Answer Amber’s question: Are you seeing the effects of the millennial generation coming to buy houses?
The last thing I want to mention is our focus throughout our services is on millennial generation through housing, biotech and Internet of Things. We are seeing this push in the economy into the industrial Internet of Things, which is why I’ve been telling you about it. You’ll see all of that in our services.
That’s the last thing from me. Back to you, Amber.
Amber: Thank you, Paul. Thank you, Hudson. Great information as always. Thank you to our viewers for tuning in to the Paul Mampilly YouTube channel. As Paul mentioned, please subscribe to this channel. We love to hear your comments below. Until next time, take care.
For more of my thoughts on investing and industry news as it happens, be sure to follow me on Twitter @MampillyGuru. Let me know what you think about the 2019 recession hoax.
Editor, Profits Unlimited