1. November’s Sector Performance
Via Ned Davis
2. Sector % Above 200-Day Moving Average
3. 2025 IPO Market Upswing?
4. $2 Trillion Could Come Out Of Money Markets
5. But…We Are At “Extreme” Levels Of Inflows
Equities: US fund inflows are hitting extreme levels.
Via Goldman Sachs; @Marlin Capital
6. Energy Transition And Infrastructure Funds
7. Good Reminder: 30-Year Mortgage Rates Were Never Below 5% Until Jan 2009
The average 30-year fixed mortgage rates were never below 5% in the data from Freddie Mac, which goes back to 1971, until the Fed started buying MBS in January 2009, which pushed mortgage rates below 5% for the first time ever.
8. Housing Supply: Still Undersupplied By Millions Of Units
Housing affordability remains one of the top economic issues facing American households. Both homeowners and renters have seen the cost of housing increase faster than other consumer prices, putting a significant strain on household budgets. As we have documented in several previous research notes, the root cause of decreased housing affordability is the fact that housing supply has not increased enough to match demand. Inadequate housing supply leads homeowners and renters to bid up the sale price and rent of available housing, which puts a squeeze on affordability.
In this spotlight we provide an updated estimate of the housing supply shortage relative to long-run housing demand. In our last published estimate from May of 2021, we estimated that the U.S. housing shortage was 3.8 million units as of Q4 2020. Our updated estimate based on data through Q3 2024 is that the U.S. housing shortage has declined slightly to 3.7 million units.
Exhibit 2 below breaks down how we arrived at the new estimate and compares it to prior estimates. Since our previous estimate for Q4 2020, the U.S. housing stock has increased by 5.8 million units, or an average annual rate of 2.1 million units per year. However, over that same time the number of households increased by 6.3 million (2.3 million annual rate), while target or latent households increased by 6.9 million (2.5 million annual rate). But despite the increases in housing stock and the much larger increase in household formation, our estimate of housing shortage is slightly lower than our previous estimate.
That’s due to our lower target vacancy rate assumption. Our previous analysis assumed a target vacancy rate of 13% which was the average vacancy rate during the period between Q1 1990 and Q2 2018. The target vacancy rate assumed units held off market would continue to remain high as was the trend at that time. However, since our last estimate, housing market conditions have changed, and the units held off market have been declining, especially since 2022. Therefore, we revised our target vacancy rate assumption to correspond to the stable period in the housing market which we consider was from Q1 1994 – Q4 2003. Thus, our target vacancy rate declined from 13% to 11.7%, reducing the number of vacant housing units needed by 1.3 million.
9. Google Says AI Weather Model Masters 15-day Forecast
A new artificial intelligence-based weather model can deliver 15-day forecasts with unrivaled accuracy and speed, a Google lab said, with potentially life-saving applications as climate change ramps up.
GenCast, invented by London-based AI research laboratory Google DeepMind, “showed better forecasting skill” than the current world-leading model, the company said Wednesday.
The European Centre for Medium-Range Weather Forecasts (ECMWF) produces predictions for 35 countries and is considered the global benchmark for meteorological accuracy.
But DeepMind said GenCast surpassed the precision of the center’s forecasts in more than 97 percent of the 1,320 real-world scenarios from 2019 which they were both tested on.
Details of its findings were published in Nature, a leading science journal.
ECMWF chief Florence Rabier told AFP the project was a “first step” towards integrating AI in weather forecasting but that “it is indeed a leap forward.”
At this stage it can be used to supplement their current models, she said.
“We are progressing year by year,” she added. “Any new method that can enhance and accelerate this progress is extremely welcome in the context of the extreme societal pressures of climate change.”
The model was trained on four decades of temperature, wind speed and air pressure data from 1979 to 2018 and can produce a 15-day forecast in just eight minutes — compared to the hours it currently takes.
“GenCast provides better forecasts of both day-to-day weather and extreme events than the top operational system… up to 15 days in advance,” a DeepMind statement said.
DeepMind said GenCast “consistently outperformed” the current leading forecast model when predicting extreme heat, extreme cold and high wind speeds.
“More accurate forecasts of risks of extreme weather can help officials safeguard more lives, avert damage, and save money,” DeepMind said.
Extreme weather is becoming more common and more severe as a result of human caused climate change.
In August 2023, a series of wildfires in Hawaii killed around 100 people. Authorities were criticized by locals who said they were given no warning of the impending blaze.
This summer, a sudden heatwave in Morocco killed at least 21 people over a 24-hour period. And in September, Hurricane Helene killed 237 people in Florida and other southeastern US states.
“I am confident that AI-based weather forecasting systems will continue to incrementally improve in the future, including better prediction of extreme events and their intensity, for which there is a lot of need to improve upon,” said David Schultz, a professor of synoptic meteorology at Manchester University, who was not involved in the research.
But he said these forecasting systems are reliant on the weather prediction models that are already running, such as that operated by ECMWF.
10. Tim Harford On How To Give A Good Speech
I was recently leading a seminar about public speaking, when one woman asked me how she should deal with speaking to reluctant audiences. She worked in health and safety, she explained, and people only attended talks about health and safety because they were compulsory. She seemed self-effacing and glum.
“Do you think health and safety is important?” I asked her. Yes, she did. “Do you think that if people understood your ideas better, it might prevent an awful accident?” Yes. Well, I suggested, perhaps that might be a starting point.
She might build her talk around the message, “The simplest-seeming details could save your life.” But not necessarily. Another good talk about health and safety could emphasise that when you pay attention to safety, you raise your game more generally: “health and safety doesn’t just save lives, it saves money.”
Or maybe there’s a different angle altogether. I’m not a health and safety expert, after all. But most people, I would hope, have at least one interesting thing they might want to share with the world. If you have one, start there.
In his book TED Talks, Chris Anderson (the head of TED, the conference that has become synonymous with compelling public speaking) emphasises the “throughline” — the thread that should connect everything in the speech, every story, every joke, every slide and every rousing call to action.
The throughline is the most important idea in public speaking. A good speaker mixes things up, varying tone and pace and subject-matter — but the one thing they should never mix up is their audience. That means linking everything, from tear-jerking anecdotes to statistical analysis, to the throughline. More fundamentally, it means knowing what the throughline is.
It isn’t easy to speak compellingly in front of an audience, but our fear of the occasion does us more harm than good. It’s best not to prepare in a defensive crouch. Instead, start with having something to say. Then say it.
Written for and first published in the Financial Times on 25 October 2024. Full article is here.