Need to Know: Here’s what investors should do as the housing market faces tough times

Here’s a chart showing the rough ride for shareholders since Compass’s spring 2021 debut from blogger Wolf Street, who warns the end is nigh for the company based on how fast it has been burning cash:

What’s a wary real-estate investors to do? Our call of the day from Nuveen’s chief investment officer Saira Malik anticipates “neither a bubble nor bottom” for the market, but says defense is the smartest play right now when to comes to this market.

“Deteriorating home builder and consumer sentiment, higher mortgage rates, historically low affordability, declines in housing starts and building permits, and record-low inventories of existing homes for sale, among other factors,” will have implications for the housing sector and broader economy, Malik wrote in a commentary Monday.

“But in our view they’re not evidence of a housing bubble that’s due to burst” with demand still healthy, she said.

Still, plenty of pain remains for renters as prices continue to soar, and with higher home prices and rental costs, Americans will curb spending on goods and services, eventually hitting corporate earnings and keeping markets volatile, said Malik.

Real-estate investors need to stay “well-positioned, especially if their sector and regional exposures are aligned with prevailing demographic and supply/ demand trends. Builders are still playing catch-up from the global financial crisis, with housing starts still above trend. This reinforces longer-term price stability in the sector and supports our constructive outlook,” she added.

Also, she advises staying defensive through dividend growth stocks that are often higher quality and derive more of total return from dividends instead of price appreciation.

On the housing data front, we’ll get housing starts and sales of existing homes ahead of the open, following Monday’s data showing another drop in confidence. An update on existing-home sales is due later in the week.

Read: This stock-market milestone indicates the S&P 500 could be as much as 16% higher one year from today

The markets

Stock futures
ES00,
-0.07%

YM00,
-0.01%

NQ00,
-0.10%
are slipping, with bond yields
TMUBMUSD02Y,
3.199%

TMUBMUSD10Y,
2.805%
inching up and modest pressure for oil prices
CL.1,
+0.85%

BRN00,
+0.46%,
following the weakest day in over a month due to sluggish China data. Bitcoin
BTCUSD,
+0.02%
is trading just under $24,000.

The buzz

Following a profit warning last month, retailing giant Walmart
WMT,
+0.29%
has beat earnings expectations, and shares are up. Home Depot
HD,
-0.09%
also beat on profit with record sales, but the stock is down. TJX
TJX,
-0.15%
is still to come.

Merck
MRK,
-0.46%
and Orna Therapeutics will collaborate in a deal to discover and develop programs including vaccines, allowing the latter up to $3.5 billion in milestone payments.

Signs of more Big Tech fallout from a slowing global economy, with Apple
AAPL,
+0.63%
reportedly laying off about 100 contract workers. Also, Apple wants workers to return to the office three days a week.

In One Chart: Life in America is getting back to ‘normal,’ except when it comes to the office

Warren Buffett’s Berkshire Hathaway
BRK.A,
+0.55%

BRK.B,
+0.42%
boosted stakes in Amazon
AMZN,
-0.26%,
while selling GM
GM,
-0.20%
over the past quarter, according to filings that rolled in Monday from hedge and investment funds. Elsewhere, Paulson & Co., the hedge fund run by John Paulson, exited Exxon Mobil
XOM,
-1.79%
and SPDR Gold ETF
GLD,
-1.29%.
George Soros’s investment fund bought Tesla
TSLA,
+3.10%
and Ford
F,
+0.87%
stakes, adding to Lucid
LCID,
+0.54%
and NIO
NIO,
+0.90%,
and Ray Dalio’s Bridgewater picked up Rivian
RIVN,
-4.16%
and Amazon.

On the data front, building permits and housing starts will be released at 8:30 a.m. Eastern, followed by industrial production and capacity utilization.

President Joe Biden will sign the Democrats’ landmark climate change and healthcare bill on Tuesday. 

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The chart

Bank of America has released its monthly global fund manager survey. Among the findings, the net percentage of investors who expect growth will beat value in the next 12 months has turned positive for the first time since August 2020:

Read: Fund managers are no longer ‘apocalyptically bearish,’ BofA says after latest poll

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m. Eastern Time:

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