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

#1 MONEY FLOWS: According to analysis provided by Strategas, money market funds have seen
significant inflows compared to equity ETFs since the October 2022 low in the S&P 500. Since the low money market funds (some yielding around 5%) have accumulated more than $831 billion, equity ETFs have experienced inflows of $181 billion.

#2 BUY VERSUS RENT: As mortgage rates have moved back to nearly 7% for a 30-year fixed mortgage, the average cost to buy a house in America is now approaching a monthly cost of $2,700 when including mortgage, tax, insurance, and maintenance based on data from Zillow and Case Shiller. In contrast, the average home rent is $1,850 monthly, representing one of the most significant gaps ever experienced.

#3 SPAC MERGER BLUES: According to Bloomberg’s analysis, 100 companies that became public through SPAC mergers since late 2018 have seen their share prices fall over 90% since becoming public. In addition, over $100 billion in market value has been wiped out from companies that went public using SPAC mergers, with at least 12 already having filed bankruptcy, according to a recent article published in the Wall Street Journal.

#4 CEO QUOTE REGARDING HOUSING: “As I pointed out in the past, there is a substantial shortage of homes for sale in the U.S., with new housing starts failing to keep up with population growth for at least the past 15 years. With 90% of outstanding mortgages under 5%, the market is seeing the other impact of a low-interest rate lock-in effect; existing homeowners are reluctant to give up their low-rate mortgages, leading to historically tight resale inventories.” Doug Yearley, Toll Brothers Chairman & CEO

#5 HIGHER EDUCATION SLIPS: Recent data from the National Student Clearinghouse Research Center indicated that 62% of high school graduates between the ages of 16 and 24 attended college in 2022, down from 66% in 2019.

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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.

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