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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