Stocks traded with mixed results today. The Dow made nice gains while the tech heavy NASDAQ fell off. Financial stocks led the Dow due in part to the anticipated increase in interest rates by the Fed. This has pushed the 10-year treasury above 3% which investors see as a tailwind for financial institutions. Big banks like Goldman, JP Morgan Chase, and Bank of America had nice days gaining about 3%. The Dow gained 158 points and closed at 26,405
While most people would be excited about 3% gains in one day, Tilray investors call that the first half hour of trading. New Bitcoin, I’m sorry, I mean newly traded stock, Tilray, has gained almost 100% this week and is up roughly 1,000% for the three months since going public. Its market cap is now $20 billion, which means it is now valued at 500 times annual sales and is currently on pace to lose about $40 million this year. Tilray went public in July and its market cap is already bigger than Chipotle. I wonder if Chipotle is hoping that their customers have big appetites too, and is viewing this as an opportunity to extend their hours of operation into the late night? The stock was so volatile today that trading was suspended twice throughout the day due to the massive price swings. At one point it was up 100% for the day, but it finished the day up 38% after gaining 25% yesterday. In case you’re curious, KMS does not permit us to trade the pot stocks.
Housing starts were up for the month of August, but most of that was multi-family building. Builders see the demand, and it is estimated that the U.S. needs 1.5 million news homes to be built each year. The last year the U.S. built at that level was 2006 (no surprise there), but with the strong economy and workforce, the labor market has been getting tighter leaving home builders with a shortage of employees. In addition, builders are seeing increasing prices in materials adding more risk to proposed projects. Here in Seattle, housing prices are now at 9 times annual income whereas they have historically been about 4 times annual income.