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Hello. I'm James Willhite, with Friday's update as global stocks are looking to end the week with muted moves. Futures are up. Investors are bracing for volatility on a so-called quadruple witching—when both futures and options linked to individual stocks and to stock indexes expire on the same day. A measure of consumer sentiment is due this morning, and we'll hear from a couple of Fed speakers throughout the day. Read our full market wrap here. Meanwhile, our Ryan Dezember explains how hardships caused by the pandemic are likely to create new renters—and some investors are preparing to benefit. |
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| Millions Are House-Rich but Cash-Poor. Wall Street Landlords Are Ready. |
By Ryan Dezember, markets reporter |
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Americans with mortgages have accumulated nearly $10 trillion in home equity thanks to a decade of rising home prices. Yet millions of them have fallen behind on mortgage payments and risk losing their houses. It is a potential bonanza for rental-home investors. Since the coronavirus pandemic began, big single-family landlords have raised billions of dollars for homebuying sprees. Even if there isn’t a surge in repossessed homes to buy cheaply off the courthouse steps—which led to the emergence of Wall Street’s landlords during the foreclosure crisis a decade ago—there is likely to be a lot of forced sales and new renters. “A lot of people are house-rich but cash-poor,” said Ivy Zelman, chief executive of real-estate consultant Zelman & Associates. “If they bought in the last two or three years, even if they bought five months ago, they have equity.” |
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Having plenty of home equity but reduced means to keep making payments could prompt many to sell while prices are high and exit homeownership with a cash cushion, Ms. Zelman said. People behind on their payments aren’t being kicked out of their houses yet because of federal and local restrictions on foreclosure enacted during the pandemic. Many with federally guaranteed mortgages have entered forbearance, which allows them to skip payments for up to a year without penalty and make them up later. Some 3.5 million home loans—a 7.01% share—were in forbearance as of Sept. 6, according to the Mortgage Bankers Association. Many more borrowers are behind on their payments but not in forbearance programs with their lenders. Meanwhile, bidding wars are breaking out for suburban homes hitting the market. |
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For a longer version of this article online, follow this link. Are rental-property investors due for an earnings bonanza amid the pandemic? Let us know by replying to this email. Your comments may be edited before publication in future newsletters, and please make sure to include your name and location. |
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Auto credit measures at big banks are holding up during the pandemic even as stimulus measures fade. Still, the all-clear signal for borrowers and lenders hasn’t yet sounded, writes Heard on the Street columnist Telis Demos. |
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Weekly initial claims for jobless benefits edged down by 33,000 to a seasonally adjusted 860,000 in the week ended Sept. 12, as layoffs remain elevated despite signs of a broader labor-market recovery. |
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Chinese investors bullish on the country’s economic recovery have helped push local share prices to a more-than-four-year high relative to the same companies traded in Hong Kong. On Friday the premium for shares trading in Shanghai and Shenzhen, compared with equivalent stocks in Hong Kong, topped 45%, the highest since February 2016, according to the Hang Seng AH Premium Index. A strong rebound in Chinese car sales is helping to widen the price gap between palladium—already the most expensive of the major precious metals—and its sister metal platinum. This year, palladium prices have jumped 27% to $2,404 a troy ounce, while platinum has only recently returned to pre-pandemic levels of $979 an ounce. |
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On this day in 1873, Jay Cooke & Co. of Philadelphia, one of the nation’s largest investment banks, collapsed as a result of failed speculations in railroad stocks—triggering the Panic of 1873. Mr. Cooke—and the entire financial world—were taken completely by surprise. Just the night before, he had lavishly entertained President Ulysses S. Grant at the Cooke family mansion in Chelton Hills, Pa. |
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The U.S. current account deficit for the second quarter, due at 8:30 a.m. ET, is expected to widen to $164.2 billion from $104.2 billion in the previous quarter. The University of Michigan's preliminary consumer sentiment index for September, due at 10 a.m., is expected to rise to 75.4 from 74.1 at the end of August. St. Louis Fed President James Bullard speaks at 10 a.m. and Atlanta Fed President Raphael Bostic speaks at 12 p.m. The Baker Hughes rig count is out at 1 p.m. |
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| Snowflake Chief Executive Frank Slootman speaking with his team. The data-warehousing startup counts Capital One Financial and videogame maker Electronic Arts among its customers. PHOTO: SNOWFLAKE |
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Snowflake’s CEO scored an IPO hat trick with a big bet on data. With Snowflake’s supercharged IPO this week, Chief Executive Frank Slootman has achieved a rare investment trifecta: delivering three of the hottest tech public stock offerings of their time. Steven A. Cohen’s Point72 settled a gender discrimination case. Mr. Cohen’s Point72 Asset Management recently reached a settlement with a female employee who sued the firm in 2018 alleging unfair pay practices and a pervasively sexist work environment. The Federal Reserve detailed a new round of big-bank stress tests. The Fed will analyze large banks’ ability to withstand two coronavirus-related recession scenarios as part of a second round of stress tests later this year, the central bank said. Lawmakers are tangling over the Fed’s muni-market rescue. The Fed stood ready to back the municipal market as a lender of last resort during the pandemic. So far, only two borrowers have tapped the facility for funding. A judge rejected Hertz’s “offensive” bankruptcy bonuses. “It seems offensive to give senior executives bonuses when they were paid” retention compensation immediately before the bankruptcy was filed, Judge Mary Walrath said Thursday in U.S. Bankruptcy Court in Wilmington, Del. |
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| What We've Heard on the Street |
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“Oil-producing nations have shown remarkable discipline so far in making sure the global supply will be somewhat predictable. Demand, however, is proving much more elusive.” | —Heard on the Street columnist Jinjoo Lee |
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United Parcel Service: UPS is planning to offer buyouts to some management employees, according to a person familiar with the matter, as Chief Executive Carol Tomé aims to trim payroll costs at the delivery giant. Walmart, Oracle: Backers of plans for Oracle to join with TikTok to create a new U.S. company for the video-sharing app are working on a new ownership structure aimed at alleviating U.S. concerns over Chinese control. Moderna: A large, pivotal study of Moderna’s Covid-19 vaccine could yield a preliminary answer about whether the shot works safely as early as October, though it’s more likely to be November, the company’s leader said. |
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We want to be the first place you go to get ready for the opening bell every day. This newsletter is written and edited by James Willhite (@jimwillhite; james.willhite@wsj.com) in London. |
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