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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