A few things of note/"Lagarde is living on Mars"
There is not much to add here on the UAW strike as it is what it is at this point. The UAW wants to recapture their lost REAL wages over the past few years as the last deal was struck pre Covid and thus didn't protect them when inflation spiked. The auto makers know that the pivot to EVs will entail less workers to make them vs an ICE car and also, the only way to get more people to buy them is to make them cheaper and a high cost labor deal won't help get them there. It also won't help them compete against its non union competitors. I'll leave it to the economists and analysts to figure out the daily financial impact both macro and micro.
With respect to the ARM IPO, I've gotten a lot of questions about what this means for the overall stock market and the IPO calendar from here. Just talking from decades of being in this business, I've found that more IPO's follow a steady/rising market for stocks but doesn't lead it. Once markets have shaky knees, the IPO window shuts.
We're reminded again from the press release comments from Lennar that it is not just the dearth of existing home supply that home builders are trying to supplement with new homes but their ability to offer discounts helps to bring in buyers. They said "Homebuilders continued to use incentives, including buy-downs, to offset rising interest rates and tighter capital, which limit affordability." Unless a seller of an existing home is offering their own seller finance, an existing home seller of course can't compete with a builder on price.
The challenge though for homebuilders with this is that it hits their profit margins. Lennar's gross margin in Q3 was 24.4% vs 29.2% in Q3 2022, "as the Company priced homes to market, which was partially offset by a decrease in costs per square foot due to lower material costs. In addition, land costs increased y/o/y."
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