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Why High-Flying U.S. Home Prices Are About to Get Another Jolt

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Video commentary for April 25th 2018

Eoin Treacy's view
A link to today's video is posted in the Subscriber's Area.

Some of the topics discussed include: potential for a triple waterfall event in bonds, lumber surge and inflation, stocks steady, bonds weak, gold eases back, oil steady



Why High-Flying U.S. Home Prices Are About to Get Another Jolt
This article by Vince Golle for Bloomberg may be of interest to subscribers. Here is a section:

The framing of homes, or putting up roofs and walls, accounts for 15 percent of the cost of construction. A composite measure of the cost of lumber for framing rose 16 percent from December to March, according to data from Random Lengths, a publisher of information on wood products.

And it’s not just lumber. A Labor Department gauge of prices paid at the producer level for construction inputs -- everything from particleboard and plumbing to concrete and insulation -- was up 5.1 percent in March from a year earlier, the biggest annual advance in nearly eight years.

So far, neither higher home prices or a four-year high in mortgage costs have been enough to dissuade buyers. Results of the Conference Board’s consumer confidence index on Tuesday showed 1.7 percent of the group’s respondents in April planned to purchase a new home in the next six months, matching the highest share in this expansion.

Eoin Treacy's view
The falling cost of mobile phone tariffs are what helped to keep inflationary pressures under wraps last year. However, that effect will fall off the gauge for the March reading which will be released on May 1st. Meanwhile, the range of new inflationary pressures on the horizon continue to increase. Continues in the Subscriber's Area.



Varadkar Wants Progress on Ireland Border by June
This article by Timothy Ross and Alex Morales for Bloomberg may be of interest to subscribers. Here is a section on David Davis’ testimony to Parliament today:

Davis suggested the thorny question of how to avoid a hard border in Northern Ireland might still not be resolved when the U.K. leaves the EU next March.

He said a solution for the border won’t really be needed until the end of the transition period on Jan. 1, 2021 because the U.K. will effectively remain inside the EU customs union and single market during this interim phase.

But his comment has dramatic implications for what Brexit might look like. It suggests that the U.K. accepts it may have to agree to an unpalatable backstop plan for keeping Northern Ireland -- and possibly the whole U.K. -- in many parts of the customs union and single market rules indefinitely.

If an alternative answer can’t be agreed, the U.K. will have to take a leap of faith, leave the EU next March and hope that it can reach a deal on the Irish border before the end of the following year

Eoin Treacy's view
I believe Davis is wise to push the issue of the Irish border out to the end of the transition arrangement for the simple reason that it may be a moot point by that stage. Parliament will have the final say on whether to accept the negotiated deal and there is a substantial cohort which wants to remain in the customs union or at least very close to it. Continues in the Subscriber's Area.



Controversial New Milk Shakes Up Big Dairy
This article by Mike Cherny for the Wall Street Journal may be of interest to subscribers. Here is a section:

Both are following the success of a2 Milk Co., a New Zealand-based company that has found fans in its home country, as well as Australia and China, and has recently entered the U.S. market. The company’s revenue is expected to grow some 70% in the year ending in June, according to S&P Global Market Intelligence. It already has more than 10% of the milk market in Australia. A similar share in the U.S. would be about $1.5 billion in annual sales, according to Euromonitor International.

A2 milk differs from regular milk because the latter contains both A1 and A2 proteins. Supporters of A2 milk contend it is the A1 protein that causes indigestion for many people, a problem that lactose-free milk won’t solve. Skeptics say there hasn’t been enough independent research to show there is any real benefit to A2 milk, which is naturally produced by cows with a particular set of genes. A DNA test can determine which cows in a herd produce A2-only milk.

Although the science behind so-called A2 milk remains disputed, the entry of big companies into the market shows how changing consumer preferences create new opportunities that dairy giants can’t afford to ignore—especially as profits have been eroded in recent years by everything from almond milk to dairy-free ice cream. In the U.S., traditional milk sales have fallen about 7% annually on average over the last four years, according to the most recent data from Nielsen.

Eoin Treacy's view
A2 Milk is a remarkable success story and it represented part of the discussion at the recent Melbourne venue for The Chart Seminar. There is evidence of a clear acceleration for what has already been an impressive trend and the share has now posted its largest reaction to date. Continues in the Subscriber's Area.




Across the Valley
Thanks to a subscriber for this report from Pantera Capital focusing on cryptocurrencies which may be of interest. Here is a section:

Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area.

Bitcoin crashed in no uncertain terms in the first quarter of this year; losing about 70% of its value. As the first and largest of the cryptocurrencies it represented the epicentre of risk during the crash and therefore is also likely to be the most likely to form a lengthy base formation. Continues in the Subscriber's Area.




Long-term themes review April 10th 2018

Eoin Treacy's view
FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

Here is a summary of my view at present - continues in the Subscriber's Area.




The 49th year of The Chart Seminar

Eoin Treacy's view
If you have an interest in attending an online Chart Seminar please contact Sarah and we will arrange times based on the time zones of those who wish to attend. I envisage holding our first online seminar in late May or early June.

There will be another Seminar in London in November and I am in initial discussions with a potential partner about organising a New York Seminar.

If you would like to attend or have a suggestion for another venue please feel to reach out to Sarah at [email protected] 

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non EU residents are not liable for VAT). Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates. Continues in the Subscriber's Area.




Eoin's personal portfolio April 11th 2018

Eoin Treacy's view
One of the requests subscribers have asked for most over the last few years has been to have an easy way to find what positions I have open at any given time. Therefore, I repost this section on a daily basis and the title will always include the date of my most recent trade. Continues in the Subscriber's Area.

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