House Of The Setting Sun
There is a house in the U.S.A. they call the “Setting Sun.” And it’s been the ruin of many a poor investor, but not you, my Great Ones.
At least not if y’all’ve been reading your Great Stuff, that is…
Yes, we’ve seen all your housing memes … and now we’re doing The Animals?
There are only so many songs about houses, y’all. I’m doing what I can.
Anywho, there are two reasons we’re discussing housing again. So let’s dive right in!
First, the National Association of Home Builders (NAHB) Wells Fargo Housing Market Index — holy cow that’s a mouthful! — just fell six points to a reading of 49 in August.
For reference, any reading under 50 indicates contraction in the market. What’s more, this is the eighth straight consecutive decline in the NAHB’s index.
Furthermore, the index’s last trip into negative territory (i.e., below 50) was a brief jaunt in March 2020 due to the pandemic. Before that, the NAHB’s index hadn’t been negative since June 2014.
But like I said, if you’ve kept up with your Great Stuff, you already know all of this.
You probably expected NAHB Chief Economist Robert Dietz to call this a “housing recession.” But you also know that Dietz isn’t covering all the bases when he blamed the recession on “tighter monetary policy from the Federal Reserve and persistently elevated construction costs.”
No, sir! Y’all Great Ones know that Dietz forgot to talk about corporations and hedge funds adding the to problem by snapping up houses by the armload … thus helping to price most regular homebuyers out of the market.
Did the Fed’s tightening negatively impact the housing market? Sure, in that mortgage rates are now steadily rising.
Did rising material and construction costs also negatively impact the housing market? Sure, in that it got more expensive to build houses.
But as y’all know, corporations buying entire neighborhoods didn’t help matters … at all. There is absolutely no way the average Joe can outbid a hedge fund. No. Way.
But never fear, Great Ones! Venture capital firm Andreessen Horowitz believes it has found a solution! And that solution is Adam Neumann’s new residential real estate company Flow.
Adam Neumann? THAT Adam Neumann?!
Yes. The Adam Neumann of WeWork fame. So you know this is gonna be just soooo good. Here’s what Horowitz said recently in a blog post about Flow:
That’s a lot of fancy words that really mean nothing.
Honestly, what does any of that mean?
Owning houses is good?
But people have trouble owning houses?
Something like that? Whatever…
The real question is: What does Flow do?
According to The New York Times, Flow is “effectively a service that landlords can team up with for their properties, somewhat similar to the way an owner of a hotel might contract with a branded hotel chain to operate the property.”
A property management company. That’s what Neumann has invented. A property management company.
Basically, Flow is just American Homes 4 Rent (NYSE: AMH) with Keurig coffeemakers, beanbag chairs and a bar.
Or in less flattering terms: Neumann has invented a way to make it easier for venture capitalists to buy up more houses and rent them to you. Because unlike American Homes 4 Rent, Flow doesn’t have traditional shareholders. It has venture capital investors. And they have a lot more money.
So, no. I don’t think Adam Neumann is the housing market savior we’re looking for. He’s not even the droids we’re looking for.
Adam Neumann and real estate go together about as well as grandma and a rental home with asbestos insulation. Sure, it’s cheap to get started, but the long-term prospects are gonna leave everyone in tears.
Now, I’m not saying that you shouldn’t invest in real estate. Property values always come back. Always. Even during a recession.
But … be smart about real estate. Don’t go full Adam Neumann and reinvent the wheel. Don’t go flipping houses and chasing waterfall windfalls. What you do need is Fundrise.
Fundrise gives you an easy way to invest in real estate assets for as little as $10. That’s right: Real estate for $10.
Eat your heart out, Adam Neumann!
With Fundrise, you can get access to a portfolio with a wide range of assets, all managed for you.
And the best part … you could get paid for “holding” real estate with Fundrise.
You can learn all about it right here.
Give me gin and tonic … American Airlines (Nasdaq: AAL) can have it all, but how much does it want it? Well … how much do you want to go supersonic? As in, Mach 1.7? A whole 1,304 miles per hour?
American Airlines is banking on the return of commercial supersonic travel, and it just ordered 20 Overture planes from Boom Supersonic.
An airplane-maker called “Boom?” Ummm…
You said it, not me. Personally, I already hear the complaints from folks in high-traffic flight paths … like serious Concorde flashbacks … assuming the company lives up to its name. But according to Boom CEO Blake Scholl:
So the downside? Annoying people with sonic booms. (And I’d hate to be in the bathroom when they make the jump to hyperspeed.)
The plus side? Your time “sharing” an armrest with the guy cracking up over an Adam Sandler movie just got cut in half.
Editor’s Note: 4X Less Risk … Up to 3X Better Gains
Mike Carr’s not one to mince words. He knows most Americans are financially conservative — and that their needs aren’t being met.
That’s why he’s done something about it.
Mike was one of the first to create a “first of its kind” investment fund after the fallout in 2008 to grant investors the chance at better returns with less risk.
Now he’s making this strategy available to the public for the first time ever.
Home Depot (NYSE: HD) has come quite a long way since those heady days of the pandemic’s labor shortage… First it was catering to those stuck-at-home DIY-ers … then the contractors who inevitably returned once all that stimulus money ran out for the DIY-ers.
And through it all? Home Depot has posted one bang-up quarterly report after another, and its latest report is no different. Earnings and revenue both beat expectations, while same-store sales went up 5.8%.
Sure, Home Depot saw fewer transactions during the quarter, but shoppers spent more, thanks to a mix of inflation and … you know … contractors needing to buy more stuff than your average homeowner:
Decker? I hardly … never mind.
We’re All Very Impressed Down Here
So if Home Depot’s reporting glowing earnings, the retail big shots like Walmart (NYSE: WMT) should be doing just fine too, right?
Well … as with basically everything related to retail … it’s complicated.
By the numbers, Walmart beat both revenue and earnings estimates, even if those numbers are roughly on par with last year’s meh-worthy results. Same-store sales rose 6.5% during the quarter, with Sam’s Club sales ticking up 9.5% as more people turn to bulk shopping.
That’s all fine and dandy, but then Walmart goes and spoils it all by saying earnings per share will drop between 9% and 11% in fiscal 2023. It’s better than Walmart’s previous, more pessimistic guidance for a drop of 11% to 13%. But still, what the heck, Walmart?
Remember when Target started discount-selling all its old merch to preempt the earnings hit? Yeah, Walmart left that memo on “read.”
Overall, it’s not good guidance, but Walmart’s maintaining it … so that has to count for something. “It’s complicated,” indeed.
Except you, AT&T (NYSE: T).
No, AT&T is still the same bloated media corpse it always has been — and now Warner Bros. Discovery (Nasdaq: WBD) is stuck managing the damage.
Ever since AT&T spun off (read: untethered) WarnerMedia from the telecom’s umbrella to merge with Discovery, it was only a matter of time before the new streaming company “restructured” … as in, cut 14% of HBO Max’s workforce.
Them’s the breaks when you’re, you know, not Disney.
AT&T screwed up HBO so bad that Discovery was always going to have to deal with this eventually. AT&T and WBD investors alike should have expected this … and this is a step in the right direction.
Most of these layoffs, while unfortunate, affected the middle management execs at HBO Max — not the creative, content-producing types that the company desperately needs to stay relevant in the streaming market.
And that’s the crux of this whole thing: Warner Bros. Discovery is cutting all the fat that AT&T left behind … but where will the streaming market be when the company finally fixes this mess? Not waiting on Warner Bros., that’s for sure.
What do you think, Great Ones?
Where’s the housing market headed? Do you have strong thoughts on Adam Neumann’s “revolutionary” post-WeWork hustle? Would you travel in a supersonic plane? Have you ever flown in a supersonic plane? Can you fly supersonically? Like, without a plane?
Let me know in the inbox: GreatStuffToday@BanyanHill.com. Write to us!
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Regards,
Joseph Hargett
Editor, Great Stuff