Warren Pies of 3Fourteen Research returns to Forward Guidance to share his views on oil, bond supply, the housing market, and the labor market. Having been an underweight bonds and overweight commodities (oil), Pies now views both the 10-Year Treasury and oil as roughly fair value.
Pies expects the mortgage buydowns, where homebuilders shield new homebuyers from the cost of higher mortgage rates, to no longer work at 8% mortgage buyers. He thinks a recession might start in Q2 2024 as employment in residential construction begins to wane. Filmed on October 27, 2023.
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Timecodes:
(00:00) Introduction
(01:14) Why Warren Has Been Significantly Underweight Bonds (And Why He Is No Longer)
(12:12) Earnings Expectations For Stocks
(24:59) Warren's View On Housing Market & Recession
(33:31) The Buydown Math For Homebuilders Stops Working At 8%
(40:21) Labor Market Remains Very Tight
(43:44) Is U.S. Economy Reaccelerating From Trough of 2022?
(48:21) Warren's View On Oil
(50:56) Hedge Funds Tend To Short Oil On A Directional Basis As Opposed To Being Part of a Basis Trade (Such As So Often The Case In Bonds)
(52:42) Overweight Position In Energy Stocks (Within Equity Sleeve)
(01:00:09) Pro-Cyclical Deficits Run By U.S. Government
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
