PROFESSIONALLY BIASED SHORT TAKES
US Pending Home Sales Hold Steady in November, Indicating Stable Market Growth; Experts Optimistic for 2024
28 December 2023
Pending home sales in the US remained unchanged in November, according to data released by the National Association of Realtors (NAR). The index measuring contracts to buy existing homes was at 71.6, level with the previous month’s reading. Economists had expected a 1% increase. However, chief economist Lawrence Yun remains optimistic, stating that falling mortgage rates will lead to an improvement in home sales in 2024.
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US Initial Unemployment Benefit Claims Rise, Reflecting Fourth Quarter Labor Market Slowdown
28 December 2023
The number of initial unemployment benefit claims in the US increased last week, signaling a cooling labor market in the fourth quarter. New state claims rose to 218,000, higher than the expected 210,000. The number of individuals receiving benefits after a week rose to 1.875 million. Despite slower job growth and lower inflation, the Federal Reserve has maintained its benchmark interest rate.
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West Fraser Timber: Undervalued Stock with Strong Growth Potential
27 December 2023
The projected fair value for West Fraser Timber is CA$210, suggesting the stock is potentially 50% undervalued based on its current share price of CA$105. Analysts have a price target of US$129 for the stock, which is 39% below the projected fair value. However, it’s important to note that these valuations are based on the company’s future cash flows and discounting them to their present value.
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The Outlook for the Oil Market in 2024: Ongoing Supply Concerns and Potential Transformations
26 December 2023
Experts have warned that the oil market could experience significant changes in 2024 due to ongoing supply concerns. This year, crude prices have fallen by around 35% due to booming US oil production and uncertain global demand. Key factors to watch include OPEC production cuts, the US oil boom, market share wars, and oil demand, which is projected to grow at a slower rate compared to previous years. However, long-term improvements in oil demand are expected.
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US Dollar Struggles Amid Reduced Inflation and Anticipations of Fed Interest Rate Cuts
25 December 2023
The US dollar is struggling in global currency markets due to reduced inflation and expectations of future interest rate cuts by the Federal Reserve. Amid thin holiday trading, the euro and sterling show minimal changes against the dollar, while the Australian and New Zealand dollars remain near their five-month highs. The Japanese yen has steadied near its five-month peak as the Bank of Japan hints at a potential departure from its ultra-easy monetary policy. These developments are shaping currency dynamics, with further impact expected in the coming year.
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Polarizing Projections: Fitch Ratings vs Realtor.com on Home Price in 2024
25 December 2023
Fitch Ratings predicts that home prices may increase after the Federal Reserve cuts rates next year, further exacerbating an already overvalued housing market. Fitch expects the interest rates to be lowered by 75 basis points in 2024. This projected increase in home prices will impact affordability, especially for entry-level and first-time homebuyers, potentially dampening demand. Currently, 88% of US metro areas are overvalued, with a widening margin. However, not all experts agree with Fitch’s projections, as Realtor.com predicts a 1.7% dip in home prices in 2024 due to lower mortgage rates affecting demand.
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US Federal Reserve Forecasts Three Interest Rate Decreases with Nominal Economic Downturn in 2024
25 December 2023
The US Federal Reserve plans to lower interest rates three times in the coming year, according to a recent report. While the economy was robust in 2023, many remain concerned about high inflation, elevated mortgage rates, and student loan payments. Economists predict a slight downturn in 2024 but expect it to be relatively mild due to the financial position of households and some labor-hoarding effects among businesses.