Stocks were essentially unchanged this week in a relatively quiet week. There were no major economic releases or corporate earnings reports and trading was pretty calm all week. The Dow gained 10 points on the week, which rounds to a 0.0% change. The S&P 500 increased 0.2%.
Cord Cutting – A growing trend in the cable TV industry the last couple of years has been customers cancelling their service, aka ‘cord cutting.’ A new study out this week says Hulu users are 16% more likely to cut the cord and cancel cable than Netflix users. People who had both Hulu and Netflix were 32% more likely to cut cable than non-subscribers to those services. We recently dropped our Comcast cable in favor of internet TV. The cost difference was significant and while the internet TV isn’t perfect, it’s plenty good for our use. We never watch scripted shows live anymore, which is probably why Hulu users are so happy to cut cable. Broadband internet will continue to fuel companies like Comcast for a while, but I have to think in the coming years there will be realistic internet alternatives that are fast and cost effective. So far, cable stocks have held up nicely, but it seems to be a industry facing a long-term secular change from consumer preference. Read More
Commercial Real Estate – One of the more interesting aspects of the changing retail landscape to me is what to do with all the malls we have. Apparently, we might have a solution. Given how much retail sales have shifted to e-commerce, the US is lacking warehouse space. Investment firm Jefferies estimates that e-commerce retailers require three times the warehouse square footage as brick and mortar companies. We could starting seeing struggling malls converted in e-commerce warehouses in the coming years. Amazon on its own has increased warehouse square footage at a 35% annualized rate over the last 10 years. Read More
Oil kept moving lower this week, decreasing another 3.6% to close at $43.11/barrel. The yield on the 10-yr Treasury moved slightly lower, closing at 2.15% from 2.16% a week ago. The average rate on a 30-yr fixed rate ticked lower this week, to 3.90% from 3.91% last week. Mortgage rates have essentially been flat for three consecutive weeks.
|10-yr Treasury (∆ in bps)||2.15||(1)||(30)|