Your Tuesday Blip 8/25/20

Your Tuesday Blip 8/25/20

Stocks got an early boost from news of renewed trade talks between China and the US but then traded lower and closed down 60 points at 28,248. Trading volume was much lower and IBD continues to show markets in rally mode. Within the markets however there are pockets of extreme valuation which can present opportunity. Tech stocks are rich while sectors like banks and energy are cheap plus the valuation gap between these groups appears to be widening as more money flows into the likes of Amazon and Tesla. This trend is worth watching.
Housing markets continue to recover and demonstrate resilience. Home prices continued to creep higher in June gaining 3.5% year over year. Gurus were expecting a growth rate of 3.8% and May’s increase was 3.6%. The S&P 20 city composite home price survey showed broad increases across the country with Phoenix rising the most at 9%, Seattle came in second with a 6.8% increase while Chicago had the smallest increase at just 0.6%.
Lumber futures have recently shot up to over $800 per thousand board feet and gurus are worried that lumber shortages will negatively affect retailers like Lowe’s and Home Depot. The reason for the spike in prices can be traced back to the pandemic which disrupted logging and mill operations on the one hand while on the other hand people stuck at home got bored and started home improvement projects. The feeling is that it will take some time for supply to catch up with demand but rest assured those crazy loggers and mill rats will and are getting back to doing what they love.

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