(New York)

After about three years of being a laggard and worrying investors that a recession may be coming, US real estate looks to be turning the corner. Not only have home sales been rising, but new mortgage data looks very encouraging. Home lenders extended $2.4 tn in new home loans last year, the most since 2006. That figure is a whopping 46% increase from 2018. One economist from Freddie Mac described the situation bluntly, saying “When a large and cyclical part of the economy—housing—is starting to improve, it’s a good sign for the economy at large”.

FINSUM: It is important to note that most of this was refinancing activity because of the drop in rates, so it is not as massive an increase as it appears. Still, good momentum.

(San Francisco)

Barron’s has featured a very eye-opening call. The argument comes from the CIO of Ariel Investments. She argues that it is time to short Apple. Referring to the company as the “blue chip of yesterday”, she contends that Apple is not a tech company, but a consumer electronics one, and that whether its new products are a hit has a huge impact on revenue. It is trying to pivot to services, but it has no first mover’s or any other natural advantage in doing so and is competing with big names like Netflix and Disney. It is even behind competitors in its core iPhone business and trying to catch up. She argues that a blue chip of yesterday is the worst kind of stock because all the good news is priced in, but none of the bad news is.

FINSUM: This is quite a stark portrayal of Apple. While we do not completely agree, there is some significant truth to this argument and it warrants concern.

(New York)

The market is at all time highs, multiples are huge, and earnings are trending the wrong way. If you are looking to buy into some downside protection, take a look at these 4 tech names. These stocks have big dividends which should offer some significant downside protection as tech shares with lower multiples and good dividend yields provide insulation. Here are the names: IBM (4.7% yield), Broadcom (4.2%), Hewlett Packard (3.2%), and Cisco Systems (2.9%).

FINSUM: IBM trailed the tech market last year but still had a respectable 16% gain. Seems like a good choice given the big dividend yield.

(Beijing)

The new SARS/Coronavirus that has broken out in China has been serious enough that it has actually spooked markets. 17 people have already died and 600 more have the pathogen, which is as yet poorly understood. Now the city where it was first found, Wuhan, has been quarantined. However, the quarantine has been greatly undermined by the fact that it was instituted after the country’s biggest annual migration—the Lunar New Year, when Chinese go home to visit family. One the big worries is that the virus seems to have “superspreading” characteristics, or the kind of virus that spreads much more rapidly from person to person than normal.

FINSUM: This is a pretty scary bug, and the US already had its first confirmed case (a man in Seattle that had come directly from Wuhan).

(Atlanta)

US Real estate has been a worry spot for the last few years. For the last three years or so everyone thought real estate might be the initial signal that the economy was headed lower. However, that never materialized and real estate has been looking modestly better for the last several months. The end of 2019 continued that streak as existing home sales rose 3.6% in December as low unemployment helped support the housing market.

FINSUM: We think the housing market is just solid and steady right now. No huge speculative gains, no gigantic increases in debt etc. It is a nice contrast to publicly-traded securities!