Timber!
Wealth in the woods
Good morning, my chips off the old block. This is your Stock Market Rundown for July 24th, 2023. Thanks for joining me for another fun week. Let’s chop it up:
TODAY’S TOP STORY: SPRUCING THINGS UP 🌲
Lumberjack jackets might be coming back in style. Thanks to the boom in US home construction, demand for wood is up.
And stocks of public companies that harvest and process lumber have been surging. That includes Louisiana-Pacific, which specializes in oriented strand board (OSB), a building material made of compressed layers of wood strands.
To keep it simple for the non-construction workers: OSB is to plywood, as a prime rib beef burger is to chuck roast. Similar function; just a li’l bit more “engineered”.
Another play on timber demand is Weyerhaeuser, which owns over ten million acres of US timberlands. The company produces enough wood panels every year to cover Manhattan. But don’t fret, tree-huggers: they replant more than enough annually to replenish the crop. Carbon heroes, truly.
Why are lumber futures up? The Canadian forest fires that cast a post-apocalyptic haze over New York (and had me feeling like a pack-a-day smoker) created short-term disruption to wood production.
A longer-term issue is demand outstripping supply. There just aren’t enough existing houses for sale to satisfy demand, so builders are launching building projects faster than a kid with a Lego set.
That has the sector optimistic, with residential investment showing the best growth since early 2021. Industry bellwether DR Horton, America’s largest homebuilder, recently reported quarterly earnings that raised its forecast of how many homes it expects to build this year.
And just in time, since higher interest rates have sunk an axe into house-hunters’ buying power. Without more supply, would-be homeowners groaning under pricy mortgage payments are at risk of having to replace surf & turf dinners at Red Lobster, with ramen noodles from the microwave. (Pro tip: try the Maruchan Shrimp Flavor.)
SO WHAT ELSE IS GOING ON?
Musk gonna give it to ya: Elon says Twitter will change its logo to X. Really wish DMX were here to see this.
Chinese investors are retreating from glamour assets in the west in favour of sinking money into manufacturing and natural resources in Southeast Asia and the Middle East. Would you rather own a five-star hotel in New York City, or an Indonesian nickel mine? (The nickel mine doesn’t have room service.)
I knew these credit card bills were trouble: Taylor Swift’s tour has helped businesses across the US recover from the pandemic as her superfans cry, shriek, and spend oodles of money.
Theft rates of Kia and Hyundai vehicles are skyrocketing due to a “TikTok challenge” demonstrating how to steal the cars. Why doesn’t my For You Page ever show money-making ideas like this, instead of dachshunds riding skateboards?
That’s it for today, see you bright and early tomorrow. Yours in capitalism, The Axe