Five interesting things that Hodges Capital research analysts discovered this week...

#1 MORTGAGE DEMAND: According to the Mortgage Bankers Association, mortgage demand remained tepid last week despite lower interest rates. As of December 20, the average interest rate for a 30-year fixed-rate conforming mortgage was 7.07% compared to 7.90% at the October peak.

#2 PET ADOPTIONS: Pet adoptions have fallen significantly over the last two years from a peak experience during the pandemic, according to Shelter Animal Counts. Moreover, adoptions are estimated to be down by roughly 16% year-over-year, which has weighed on pet supply-related businesses.        

#3 EARNINGS: Although corporate earnings decelerated for much of 2023, the consensus earnings estimate for the S&P 500 reflects 10.2% growth in 2024, according to data compiled by UBS Investment Research.

#4 MARKET MOMENTUM: The S&P 500 completed a seventh week of consecutive gains last week. Strategas Research points out that the market has only declined 5 out of the 29 times in the 12 months after such streaks have occurred. One year after all observations of seven consecutive weekly gains or more, the average gain has been +8% one year later.    

#5 RENT INFLATION: As the Wall Street Journal reported, UBS economist Alan Detmeisterexpects the shelter component of CPI inflation to fall as much as 3.75% by the end of 2024. He also points out that in some cities that have seen excessive rent rises, like Seattle, prices are already starting to fall.

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