Happy Thursday!
The shortened week saw low trading volume and sector rotation. Home sales volumes are picking back up. Realtor commissions will soon be negotiable. Has Amelia Earhart’s plane finally been discovered? And new rules bring new energy to the NFL.
#1 – Weekly Market Recap – Stocks drifted through the shortened trading week as a relative lack of economic data & corporate earnings created a quiet week in financial markets.
All three major US indices stayed within 1% of last Friday’s close; through Wednesday’s close, the Dow Jones is up +0.7%, the S&P 500 is up +0.3%, and the NASDAQ is down -0.3%.
Monday saw the third-lowest trading volume of the year for the S&P 500, and the flagship SPDR S&P 500 ETF (SPY) saw the fewest shares traded since the Friday after Thanksgiving. A strong rally in the final hour of trading on Wednesday powered the S&P 500 into positive territory for the week.
Amidst a quiet backdrop, investor preference appeared to favor early-year laggards this week. As shown in the chart below, Utilities and Real Estate, the two sectors with the lowest year-to-date returns, saw the largest gains this week. Conversely, Communication Services and Technology trailed this week but remain the two strongest performers year-to-date.
#2 – Home Sales Surge – Home sale volumes have surged in the first two months of 2024 according to new data released by the National Association of Realtors on Monday.
Sales of new and existing homes have jumped above 5 million on a seasonally adjusted annual rate, following a sluggish 2023 that saw home sale volumes dip to their lowest levels since 2011.
Despite the recent surge, total home sale volumes remain sluggish compared to the 2016 – 2019 average of about 6 million home sales per year. Interestingly, new home sale volumes have already returned to pre-pandemic levels; the slump in volume is currently concentrated amongst existing homes, which make up about 87% of total transactions.
The lack of existing home sales may be attributable to the whipsaw in mortgage rates over the last 4 years. The average 30-year fixed rate mortgage is currently 7.2%; this is up from below 3.5% less than three years ago.
For homeowners that took out a mortgage or refinanced in the low-rate environment of 2020 – 2021, the prospect of doubling their mortgage rate may prove a significant disincentive for homeowners to move.
Source: National Association of Realtors
#3 – Home Sweet Home – As part of a settlement agreement, the National Association of Realtors (NAR) has agreed to do away with policies that have helped set realtor commissions. NAR is looking to resolve lawsuits that claim the policies have forced people to pay artificially high costs to sell their homes.
Currently, the seller pays a 5%-6% commission which typically is split between the buyer and seller’s agents. This practice became customary as home listings included offers of “cooperative compensation” between agents on both sides of the transaction.
The rule changes, which are set to go into effect in mid-July, will be a major change to how realtors have operated since the 1990s, and could enable homebuyers and sellers to negotiate lower agent commissions. While the commission which agents are paid may become negotiable, the policy changes could also affect whether the seller continues to cover the buyer’s agent’s compensation. This could potentially become a source of negotiation between the homebuyer and the seller. For example, a home seller with multiple offers could opt to go with a bid from a buyer who isn’t asking for agent compensation.
“It may take some time for the changes to impact the marketplace, but our hope and expectation is that this will put a downward pressure on the cost of hiring a real estate broker,” said Robby Braun, an attorney in a federal lawsuit bought in 2019 on behalf of millions of home sellers.
Source: Yahoo Finance
#4 – Earhart Mystery Solved? – A company specializing in underwater drone technology claims it has found Amelia Earhart’s plane 86 years after it went missing. The company released a grainy sonar image of what appears to be an aircraft thousands of feet below the surface of the central Pacific as possible proof of the discovery.
In June 1937, Amelia Earhart and her navigator, Fred Noonan, set off in a twin-engine Lockheed Electra 10E from Oakland California on a quest to circumnavigate the globe. They were flying the longest leg of their journey, 2,556 nautical miles over open ocean to tiny Howland Island, when the airplane disappeared July 2nd over the central Pacific. The Navy launched a massive search for the pair of aviators, but the search was called off on July 18, 1937. Nearly 18 months after their disappearance, Earhart was officially declared dead.
The Lockheed Electra Earhart piloted was carefully chosen for its capabilities, according to Mindi Love Pendergraft, director of the Amelia Earhart Hanger Museum in Atchison, KS. The powerful twin nine-cylinder Wasp engines were integral, and Earhart’s Electra had added fuel tanks inside the cabin increasing the range to 4,000 – 4,500 miles depending on conditions. Other modifications included a state-of-the-art radio system with three antennas.
However, it’s much too soon to say whether this discovery of a plane-shaped object some 16,000 feet below the ocean’s surface means this decades long mystery has been solved. Sonar images are not photographs so details can’t be seen, and some experts say if the object is a plane, the wing proportions don’t resemble that of the Electra.
Whatever the object is – it is located deeper than the Titanic making it accessible only to a few very select submersibles. Deep Sea Vision CEO Tony Romeo said they will be returning to the site this year and bringing along a documentary crew to capture the moment. “This is definitely something that we need to back and look at.”
Stay tuned – we will wait to see if the mystery can be solved!
This isn’t the only puzzle Deep Sea Vision is investigating. The company is also focusing on a more recent aviation mystery – missing Malaysia Airlines flight 370. This month marks 10 years since the flight mysteriously vanished after takeoff from Kuala Lumpur enroute to Beijing with 239 people on board.
Source: Kansas Reflector
Source: National Geographic
#5 – NFL Kicks Off New Rules – In a bid to revolutionize football’s kickoff and address player safety concerns, the NFL has unveiled innovative rule changes to significantly transform the kickoff.
Departing from the traditional kickoff, the new rules not only aim to enhance player safety but also promise to inject new excitement into the game.
Here’s what you can expect, as illustrated in the graphic below – under the new rules, kickers will initiate the kickoff from their own 35-yard line, while the remaining 10 players from the kicking team will position themselves along the opposing team’s 40-yard line. The receiving team is required to deploy a minimum of nine players within the “setup zone,” spanning from the 35-yard line to the 30-yard line. Two returners will be stationed in a landing zone, from the 20-yard line to the goal line (the yellow shaded area).
Players, except for the kicker and 2 returners, can’t move until the ball is caught by a returner. Returners can return the football wherever it lands. A touchback will be declared at the 20-yard line if the ball touches the ground or a player within the landing zone, rolls beyond the goal line, and is downed in the end zone. A touchback could occur at the 30-yard line if the ball goes out of bounds behind the receiving team’s goal line, if the ball strikes the goalpost, or if it lands at or beyond the goal line and is downed in the end zone.
Despite initial skepticism, NFL officials anticipate a notable resurgence in kickoff returns, projecting a return rate between 50% and 60% for the upcoming season compared to the return rate of 22% in the 2023 season.
Moreover, the impact of this revamped kickoff will prompt teams to reconsider their personnel strategies. With an increased emphasis on specialized roles and strategic innovation, the value of kickoff returners is expected to soar, ushering in a new era of player specialization and tactical depth.
Source: New York Post (3/26/2024)
Source: USA Today
Have a great weekend!
Denver & the DSG Team