The Small Balance Intersection Update - July 27, 2024

On Friday, the Dow Jones Industrial Average (DJIA) increased by 654.27 points, rising 1.64% to 40,589.34. The Nasdaq Composite rose by 176.16 points, or 1.03%, to 17,357.88. The S&P 500 increased by 59.88 points, climbing 1.11% to 5,459.10. The S & P 500 increased by 59.88 points, rising 1.11% to 5459.10. The Russell 2000 increased by 37.09 points, rising 1.67% to 2,260.07. The CBOE Volatility Index (VIX) decreased by 2.07 points, falling 11.21% to 16.39.

On Friday, in the U.S. Treasuries market, the 30-Year Bond's yield fell to 4.454%,. The 10-Year Note's yield decreased to 4.200%. The yields for the 7-Year, 5-Year, 3-Year, and 2-Year Notes saw minor changes. Shorter-term bills saw minor decreases observed in their yield changes.

Stat Of The Day: 2 in 5 business leaders claim AI has boosted creativity - Canva and Harvard Business Review Analytic Services

Thought Of The Day: May Your Weekend Be Filled with Positive Thoughts, Kind People, and Happy Moments.

Market Trends Avenue

10 Things to Know About the Mortgage and Housing Market Right Now?—?July 2024

The July 2024 "10 Things to Know" report from CoreLogic outlines key trends in the mortgage and housing market. High mortgage interest rates during the spring home season led to lower home sales and cooling home prices in several markets. The demand has decreased across all buyer types, including investors and new home buyers, pushing some to consider adjustable-rate mortgages (ARMs) to manage rising homeownership costs. The number of mortgages with delinquencies of six months or more has dropped to levels last seen in 2008, with approximately 100,000 borrowers past due, and the foreclosure rate has fallen to 0.2%, the lowest since early 2022.

The share of ARMs in mortgage originations increased to 15.5% in May 2024, the highest of the year, reflecting the rise in mortgage rates. Despite this, ARMs constitute only 5% of total outstanding mortgages, a decline from about 20% before the Great Financial Crisis. Appraisal gaps have also returned to pre-pandemic levels, with 8.6% of home sales appraised below the contract price in June, a decrease from 10.7% a year ago. Sales of newly built homes are down 17% year-over-year, with only Portland, Oregon, and Las Vegas showing increases.

Investor activity in single-family home purchases fell to 23% in June 2024, the lowest in two years but still above pre-pandemic levels. Existing home sales declined 19% in June compared to last year, breaking the trend of slight annual improvements seen in previous months. Despite the slowdown, 34% of homes sold over the asking price in June, indicating strong demand in markets with limited inventories. Spring home price appreciation slowed due to high mortgage rates, with prices up just 0.6% from April to May. Annual home price appreciation also slowed to 4.9% in May, with five major markets reporting year-over-year declines.

For detailed insights, visit CoreLogic's 10 Things to Know - July 2024.

Consumer Resilience Boulevard

Mixed Signals: Inflation Cools but Consumer Spending Remains Robust in June Report"

The June report on personal income and spending, released just before the upcoming Fed meeting, shows that inflation is cooling, but consumer spending remains robust. The headline (+0.1%) and core (+0.2%) PCE deflators indicate progress towards the inflation target, yet services spending remains strong. Durable goods spending fell 0.2% in June, highlighting consumer caution in financing big-ticket items. Despite reduced spending in areas like hotels and restaurants, overall services spending increased by 0.2%, the fastest pace in four months. Personal income rose by 0.2%, while spending grew by 0.3%, causing the saving rate to drop to 3.4%, its lowest this year. Real disposable personal income growth slowed to 0.1%, consistent with its yearly average. Despite these mixed signals, Q3 is set up for solid growth, with preliminary estimates suggesting over a 2% annualized rise in real spending. For more details, visit Wells Fargo Economics.

Demand Ahead: Strong Rental Market Forecast

Invitation Homes Bets on Strong Rental Demand Amid Economic Challenges

Invitation Homes, the largest single-family rental landlord in the United States, is optimistic about the demand for rental properties despite economic challenges. The company is investing heavily in expanding its portfolio, banking on the continued need for rental housing as homeownership remains out of reach for many. Invitation Homes has faced challenges such as rising interest rates and inflation, but it believes that the demand for rental properties will remain strong. The company is focused on strategic markets where job growth and economic opportunities are robust, ensuring a steady flow of potential tenants. They are also investing in technology to enhance the tenant experience, making property management more efficient. Despite the economic headwinds, Invitation Homes reported strong financial performance, attributing it to the resilient rental market. The company remains committed to providing quality rental homes and meeting the evolving needs of renters. Their confidence is rooted in the belief that the rental market will continue to grow, driven by demographic trends and economic factors. Overall, Invitation Homes is betting on the long-term demand for rental properties to navigate through current economic challenges and sustain its growth.

Read the full article here.

Restaurant Resilience Road

Restaurant Industry Faces Challenges and Opportunities Amid Economic Trends

Recent economic trends have severely impacted the restaurant industry, causing significant financial strain and operational challenges. Rising operational costs and dwindling consumer demand, exacerbated by high interest rates and inflation, have made it difficult for franchise-operated chain restaurants to meet stringent financial covenants. This has led to a shift towards more expensive asset-based lending facilities. High interest rates have further squeezed already thin margins, while inflation has increased the cost of raw materials and reduced consumers' disposable income. Changing consumer behavior, particularly the persistence of remote and hybrid working environments, has decreased foot traffic for fine dining and chain restaurants that relied on weekday office traffic.

High-profile bankruptcies and closures among major chain restaurants, such as Red Lobster and TGI Fridays, highlight the industry's struggles. Despite these challenges, the restaurant sector showed resilience in 2023, with sales from the top 500 restaurant chains growing by approximately 7.8% and a 1.8% increase in domestic footprint. This growth, driven by key players like fast-casual chains Cava and Chipotle, indicates a potential path forward. The industry is navigating a complex economic landscape but shows signs of adaptation and resilience. Anticipated interest rate cuts in 2024 offer hope for market stabilization and recovery, presenting opportunities for innovation and renewal.

Read the full article on Chain Store Age here.