Premarket stocks: Real estate market madness is everywhere

What happens: The International Monetary Fund’s Global House Price Index, which covers 57 countries, has surpassed its previous high of 2008. House prices are increasing by over 10% year-on-year in many major economies, according to Oxford Economics.

The frenzy strengthens the stocks that are involved in this sector. The iShares exchange-traded fund, which tracks residential real estate, rose 23% in 2021, significantly outperforming the S&P 500.

AvalonBay Communities (AVB), which develops and manages homes in the United States, has skyrocketed 31%. Invitation houses (INVH), which owns and operates US single-family homes, is up 26%. There are many stories about madness. Real estate agents have told CNN Business of the increasingly rabid methods customers have used to secure property – from bidding for $ 1 million above the asking price to sending hundreds of thousands of dollars to a competing bidder just to walk away. One agent this week listed a $ 590,000 home in Colorado Springs that she described as “any landlord’s nightmare.” It is still expected to sell for more than $ 600,000, likely in cash. The holiday homes also go quickly. Sales in 2020 were up a whopping 16% year over year, according to a report by the National Association of Realtors. And the trend has continued this year, with sales up 33% year over year by April.

In: The online real estate agent Redfin said houses had only been on the market for an average of 16 days in May, a record low. At the same time, 54% of homes were sold above their list price, an all-time high.

Intense bidding wars, supply bottlenecks for materials such as sawn timber and the prospect of higher interest rates threaten to derail the market. The number of starts and building permits for May were weaker than expected, according to a government report on Wednesday.

And some are ringing the alarm bells, even though analysts say the market is healthier than it was in the run-up to 2008 thanks to tightened lending standards.

Bloomberg Intelligence economist Niraj Shah wrote earlier this week that the market will “face a critical test” as borrowing costs start to rise. The Federal Reserve announced on Wednesday that it could hike rates earlier than expected on fears of inflation (which, according to Oxford Economics, were made worse by the boom in house prices).

But Lennar (LEN), a Miami-based home builder, says the good times are not over yet. The company said in its earnings report this week that its backlog and home orders continue to look strong. The stock rose 3.6% on the news Thursday.

Wall Street is rushing to get the workers back into the office

Wall Street doesn’t waste time getting its employees back into the office – whether they want to be there or not, reports my CNN business colleague Matt Egan.

Morgan Stanley (MRS) CEO James Gorman warned this week that he will be “very disappointed” if workers don’t get back by Labor Day. And if not? “Then we’ll have a different type of conversation,” he said.Goldman Sachs (GS) asked his staff to be back in the office by that week and ordered staff to reveal whether they had been vaccinated. Bank of America (BAC) also wants employees to be in their places by Labor Day.

Big Picture: Wall Street, even more than any other industry, is in a hurry to turn the page in this expanded era of virtual work.

One factor is cultural concerns as executives find that Zoom calls and Slack messages are no substitute for face-to-face contact and training. Others worry about the cybersecurity and risk management vulnerabilities inherent in businesses that conduct billions of dollars in transactions virtually every day.

Plus, banking is at its core a personal business – and no one on competitive Wall Street wants to lose a deal over a slow WiFi connection.

“You create your own unequal playing field when you work from home while your competition is out to see customers face-to-face,” said Mike Mayo, a senior banking analyst at Wells Fargo. “The banking industry certainly seems keen to get people back into the office. But on Wall Street, where competition has always been a lot higher than the rest, it’s much more pronounced.”

Corporate America is fighting for Juneteenth’s honor

On Thursday, President Joe Biden signed a bill declaring June 19 National Independence Day in June – a federal holiday commemorating the end of slavery in the United States.

Now markets and regulators are scrambling to figure out how to add the day to their calendars.

SIFMA, the US securities industry lobbying group, tweeted Thursday that it would not recommend a market holiday this year as June 10th falls on a Saturday. Going forward, however, the organization announced that it would be adding them to its recommended holiday schedule for the bond markets.

The Federal Reserve announced in a statement that it would close its Washington, DC office on Friday.

Note this area: Bloomberg advises that US markets may be slow to catch up with Congress. Martin Luther King Jr.’s birthday became a federal holiday in 1983, but it was 15 years before major stock exchanges decided to close for the day.

Corporations – which began rallying around Juniteenth after the murder of George Floyd by a former police officer last year – are taking a number of approaches to celebrating the holiday that marked the day in 1865 that former American slaves entered Galveston, Texas, was finally informed of the President Abraham Lincoln’s Emancipation Proclamation and the end of the Civil War, reports my CNN business colleague Chauncey Alcorn.

Amazon is sponsoring several Juneteenth events this weekend. Apple grants US corporate employees free on Friday. Starbucks pays its employees 1.5 times their regular wages on Saturday, while Chipotle gives its customers the opportunity to bridge the racist prosperity gap by donating to Project 10X, an initiative promoting racial justice.

Next

Coming next week: Amazon (AMZN) holds its annual Prime Day sale, which is estimated to have grossed more than $ 10 billion last year. The event could also be a lightning rod for criticism of the company’s dealings with workers.