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

#1 COMMODITIES: Jeff Currie, the closely-followed head of commodities research at Goldman Sachs Group, says he’s never seen commodity markets pricing in the shortages they are right now. “This is a molecule crisis. We’re out of everything; I don’t care if it’s oil, gas, coal, copper, aluminum, you name it, we’re out of it.” – Bloomberg

#2 WEALTH TRANSFER: According to a report by Cerulli Associates, 45 million U.S. households will pass a mind-boggling $68 trillion down to their children, representing the largest generational wealth transfer ever. The Baby Boomer generation will leave $48 trillion to its heirs over the next 25-years.

#3 TIGHTER ASAP: Bianco Research indicated that interest rate futures priced a 4.6% probability of a 50 bps rate hike at the March meeting as of February 2, 2022. After the blowout employment report last Friday, that likelihood skyrocketed to 32.7%. The market is now reflecting 79% odds that the federal funds rate will reach at least 1.25% by year-end, with 46% odds of a push to 1.5% before the calendar flips to 2023.

#4 SHRINKING HERD: According to the USDA’s annual cattle report, the cattle herd shrank 2% in 2021 and is approaching the 40-year low set in 2014. Current retail beef prices are at a record level for February, 20% higher year-over-year.

#5 HOUSING DEMAND: “In the fourth quarter, across our more than 40 markets, the estimated months of supply decreased to an average of approximately one month, well below the current national average of 2.4 months. This constrained supply of available homes is occurring at a time when millions of millennials, the largest generational group in the country, are reaching the prime age for new household formation, driving demand and further exacerbating the shortage. By 2025, it is expected that an additional 6.4 million new households will be formed as millennials continue to age into their buying years.” – Dale Francescon, Chairman & Co-CEO of Century Communities

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This discussion is not intended to be a forecast of future events and should not be considered a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk. Principal loss is possible. Investing in smaller companies involves additional risks such as limited liquidity and greater volatility. No current or prospective client should assume that information referenced in this communication is a recommendation to buy or sell any security or is a substitute for personalized investment advice from your individual advisor. HCM does not provide tax or legal advice. Consult your tax or legal advisor for any related questions.

All information referenced herein is from sources believed to be reliable and is provided as general market commentary and does not constitute investment advice. This material was created for informational purposes only and the opinions expressed are solely those of HCM. HCM shall not in any way be liable for claims and makes no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information. The data and information are provided as of the date referenced and are subject to change without notice.