Juggling Dynamite

Canada needs to build things the world wants.

A Canadian car company is rolling in a zero-emission vehicle called ‘Project Arrow’. CTV’s Sean Leathong reports. Here is a direct video link.

Also, see Donald Trump’s disdain for wind energy could create windfall for Nova Scotia: experts:

New England states and New York have been leading development of the offshore wind sector in the U.S., but Trump’s opposition could stall the industry for the next four years.

“They need to find renewable sources to supply this energy,” Sorensen said. “That’s where large-scale Canadian wind could come into the picture, specifically Wind West …. There’s a golden opportunity in this for Canada.”

Nova Scotia Premier Tim Houston has plans to license enough offshore wind farms to produce 40 gigawatts of electricity — which could supply 27 per cent of Canada’s total electricity demand. But what will it take to get there? Here is a direct video link.

And also…

CNBC’s Phil LeBeau talks with JB Straubel, Redwood Materials CEO and Tesla co-founder, to discuss the Redwood’s new enterprise to convert EV car batteries into energy storage for data centers. Here is a direct video link.

Many people believe that “rich people always have money.” What is typically overlooked is that people with higher incomes tend to have higher overhead and debt levels, and any savings they have are often invested in risky asset markets. This magnifies vulnerability to downturns in the economy, income, and stock market, eventually intensifying liquidation cycles.

Most people borrow heavily to buy their real estate. Even those with multi-million-dollar homes tend to have mortgages and other kinds of debt, believe it or not.

Erisk Sykes, of Sykes Property, explains it well in the segment below:

“I work Manhattan, the Hamptons, Palm Beach, Miami, entry levels below $2 million, that stayed strong. Those people expect to have a mortgage. They’ve already factored it in. We’ve seen prices adjust accordingly. Now in the 2 to $10 million, which I call the keeping up with the Joneses sector in those particular markets. And granted, those numbers change depending on a your portion of the country, but the keeping up with the Joneses are the ones who have been hit with the one two punch. Not only are they beholden to elevated mortgage rates, but they’ve also seen some challenge on, you know, either their stock portfolio or in terms of the job market. They have seen this lifestyle creep where they have been exposed to ultra low rates and borrowing potential over the last decade. Now, they’ve gotten used to a certain comfortability, and it’s just not in their wheelhouse anymore in terms of affordability.”

Here is a direct video link.

US new home sales were off 13.7% month over month in May, double the 6.7% drop forecast. At the same time, the new home supply, at 9.8 months in June, is the highest since 2006, with the number of new US homes for sale the highest since October 2007 (as shown below since 1990).

In the first quarter, the median new US home price of $403,600 (approximately five times the median household income) was down approximately 7.5% from its peak in late 2022.

Not reflected in this figure are the concessions that new home builders have made in ‘free’ upgrades, giveaways and mortgage rate buydowns to entice people to buy at current prices. This hurts homebuilder profits.

The iShares US Home Construction ETF (XHB) is currently down approximately 20.5% from its peak earlier this year. During the 2007-2009 housing downturn, US home builder shares declined by 81.6% (a 47.7% drop in 2007 and an additional 36.8% in 2008).

The median US home price fell from an average of $305,800 in 2007 to $272,900 in 2009 — a drop of nearly 14%. More inclusive measures, such as the S&P/Case-Shiller index, indicate a 30% fall from the mid‑2006 peak to the depth of the crisis (2008–2009).

There is no evidence that the current housing cycle is bottoming anytime soon.

An insightful overview in this segment. Happy Friday!

Guy Adami and Dan Nathan host economist ⁠David Rosenberg⁠ of ⁠Rosenberg Research⁠ on the RiskReversal podcast to discuss the state of the market, economic conditions, and geopolitical factors. Rosenberg outlines the volatility seen in the S&P 500, emphasizing that recent market moves are sentiment and momentum-driven rather than based on fundamentals. He highlights concerns about a potential topping formation in the market and discusses the impact of tariff policies, the labor market, the housing market, and global geopolitical tensions, particularly around Israel and Iran. Rosenberg also shares his views on inflation, interest rates, and the potential for recession, suggesting that the economy may already be contracting. The discussion concludes with a focus on risks in the private equity and debt markets and the potential for pension funds to be the center of the next financial crisis. Here is a direct video link.