By Michael Every of Rabobank
US stocks decided to stage a hefty rally yesterday “because stocks”. That’s not that unusual for said market, but the excuse for why this happened was intellectually lazier than usual.
Apparently it was housing starts data that did the trick at 0.3% m/m rather than -1.6% expected. If so, we hardly have firm foundations for such optimism. First, it’s a volatile series. Second, builders reported soaring prices for the stuff needed to construct homes across the board. Third, starts of single-family homes --you know, the American dream-- were -1.7% m/m, while starts of multi-family units --you know, the American nightmare-- were up 7.5%. In short, fewer houses and far more luxury condos and low-end rental housing to squeeze all the people into who, despite living in a land with nothing but land, can no longer afford a home. But these rental units will be owned by Wall Street. And it’s a one-way street, as The Hill reports “More Americans losing confidence they will ever own a home”: a NY Fed survey found only 43.4% of renters believe they’ll ever own a home, the first reading below 50% in the survey's history.