But this isn’t the only industry to take a hit.
“It’s been a crazy year,” Matt Holm, an agent for Compass in Austin, Texas, told my CNN business colleague Anna Barney recently.
He recalls a tiny five-year-old house that hit the market last January for $425,000, already above the listing price for similar properties. Interest is overwhelming.
“I stopped counting 35 offers,” he said. The home sold for $545,000, 30 percent above the list price.
Shares of Toll Brothers are up nearly 67% in 2021, while the S&P 500 is up 27%. Lennar rose 52% and PulteGroup rose 33%.
But the prospect of higher interest rates, a key benchmark for mortgage lending, is shaking.
The Fed said the era of minimum interest rates will soon be over, given the need to fight inflation and signs that the economy is returning to normal. Friday’s employment data reinforced those expectations.
“With unemployment below 4% and wage pressures mounting, the Fed looks set to respond quickly,” ING chief international economist James Knightley told clients.
In a report late Sunday, Goldman Sachs said it now expects the Fed to raise interest rates four times this year, starting in March. It had previously planned three additions.
That could be good news for would-be buyers who have been weeded out by affordability concerns — but for companies like Toll Brothers and Lennar that have been riding a tailwind, it could lead to a weaker performance this year.
Still, with the U.S. desperate for more housing supply and prices likely to remain high, analysts believe betting on homebuilders is still a smart move.
“The post-pandemic housing supercycle is far from over,” Raymond James analyst Buckhorn said in a research note published Monday.
Will Taxes on Big Oil Increase With Energy Costs?
My CNN Business colleague Charles Riley reports that the British government is under increasing pressure to answer that question as British households grapple with skyrocketing bills.
The main opposition Labour Party this weekend called on Prime Minister Boris Johnson to impose a windfall profits tax on companies extracting oil and gas from the North Sea, saying the money raised could be used to cut £200 ($272) from soaring household bills.
According to the report, the party said the corporate tax rate paid by companies should be increased by 10 percentage points within a year. It would also allow the government to increase energy subsidies for the poorest households.
The big picture: British consumers will pay about $1,075 more this year to heat and light their homes, according to Bank of America figures, as wholesale energy prices have risen sharply, causing dozens of British energy suppliers to fail in recent months.
According to Bank of America data, wholesale natural gas prices in Europe were up 400 percent from the previous year, and electricity prices were up 300 percent. The increase was due to cold weather, power outages at nuclear power plants in France and reduced gas flows from Russia.
Both BP and Shell have operations in the North Sea and benefit from rising gas and oil prices. BP chief executive Bernard Looney told the Financial Times in November that the surge in commodity prices had turned the company into a “cash machine”. The company posted a third-quarter 2021 profit of $3.3 billion and said it plans to return an additional $1.25 billion to shareholders.
Rebuttal: OGUK, an industry group representing UK offshore producers including Shell and BP, said last week that the windfall profits tax would cause “irreparable damage” to the industry by making it less likely for energy companies to invest in the country Consumers are more vulnerable to global shortages.”
Why Nike and Ralph Lauren products are getting harder to find
These days, you might have better luck snapping them up from their own store or their website than at a smaller chain.
Instead, they focus on letting customers buy directly from their own channels as well as from a handful of wholesale partners.
Strategy: Selling directly to customers allows brands to make more money, control their prices, and present products the way they want in store displays. They can also prevent their labels from being over-discounted, which can erode their brand image and pricing power.
But the shift means shoppers will have fewer places to shop for their favorite products. It’s also putting pressure on retailers, who will no longer be able to stock the highly sought-after shoes and apparel.
Under Armour and Ralph Lauren have stopped shipping to discounters like TJ Maxx, while Nike has stopped shipping to shoe warehouse DSW.
Coming soon: All eyes will be on the latest U.S. consumer price data due on Wednesday.
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