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Weekly Realist Real Estate Roundup

Part 6
Weekly Realist Real Estate Roundup (Part 6 of 7)

The upcoming FOMC meeting

With a relatively light week data-wise, the market will probably just fret about the upcoming FOMC meeting

This week is relatively data-light, as the big report was last Friday’s jobs report. This week, we’ll get some inflation data through import prices and the PPI. We will also get retail sales, which will cover back-to-school shopping and give us a read on how the consumer is doing.

MR-consumer sentimentEnlarge Graph

Economic data this week

Monday, September 9

  • Consumer Credit

Tuesday, September 10

  • NFIB Small Business Sentiment
  • JOLT Job Openings

Wednesday, September 11

  • MBA Mortgage Applications
  • Wholesale Inventories

Thursday, September 12

  • Initial jobless claims
  • Bloomberg Consumer Comfort
  • Import Prices
  • Monthly Budget Statement

Friday, September 13

  • Producer Price Index
  • Retail Sales
  • University of Michigan Consumer Confidence

Earnings Releases this week

Monday, September 9

  • Hovnanian Enterprises (HOV)

Implications for mortgage REITs

After not mattering for quite some time, inflation numbers are now relevant as far as Fed policy goes. REITs like American Capital Agency (AGNC) or Annaly (NLY) will focus on the import price index and the producer price index. If the Fed starts seeing some inflation, it will not only breathe a sigh of relief, but it will also probably accelerate the unwinding of quantitative easing. Needless to say, next week will basically just be a week of marking time, waiting for the FOMC meeting.

Implications for homebuilders

Homebuilder earnings are largely done, with only Hovnanian (HOV) left. That said, there’s a lot of economic data of interest to builders like Lennar (LEN) and KB Home (KBH) this week. Retail sales will give clues as to how the consumer is faring—a happy consumer spending money is good for the economy and new home sales in particular. The back-to-school shopping season is second to the holidays in importance for retailers. Watch to see how different sectors of the retail space are performing and compare them to the builders. Is it the high end that is doing well?  (Tiffany and Toll Brothers), or is it the lower end (Walmart and Pulte). Finally, the University of Michigan Consumer Confidence number is big, as consumer confidence is a big driver of homebuilders.

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