Housing’s Big Spenders

Plus: The FTC thinks it knows why chemo drugs are in short supply. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

February 15, 2024

SPONSORED BY RAD DIVERSIFIED

Good morning. Our obsession with Super Bowl ads makes us forget how much we really don't like commercials. This guy really hates them.  A California man filed a class-action lawsuit against Amazon because he now has to watch commercials on the streaming service or pay an extra $3 a month. Amazon Prime was relatively late to the ad-tier game, announcing the change last fall and implementing commercials only last month. The plaintiff's argument is that people who signed up for Amazon Prime before it announced the impending commercials wouldn't have subscribed and thus shouldn't be subjected to ads nor have to pay extra to skip them. Why do you think we all cut the cord in the first place?

INFLATION & PRICES Investors Are Buying Up a Bigger Share of Cheap Homes Photo by Jonathan Cooper via Unsplash The US housing market may seem dead in the water, but one well-heeled group of buyers is partying like it's 2006.  A report by real estate company Redfin on Wednesday revealed that real estate investors (any business or institution buying residential real estate) bought more than 26% of low-priced homes that sold during last year's fourth quarter. That's the highest share on record and up from 24% a year earlier. Buy Low, Sell Never Homebuying is a universal proposition — for investors and us regular people alike, the goal is to buy a property and watch it spike in value. In other words, what influences our buying choices is impacting investors as well, which explains the inherent attraction of low-priced homes: they don't cost as much as high-priced homes! That's particularly compelling now, when home prices and borrowing costs remain high, and the dearth of affordable homes can give lower-priced properties a higher ceiling for appreciating value. What this trend means for non-investors, though, is a little harder to parse. In its press release, Redfin said that it remains an "open question" as to what kind of impact increased investor activity has on other buyers, even citing an academic paper released last week that found there's "no evidence" that big corporate investors crowd out residential homebuyers or increase home prices. And yet, does that finding feel right to you? It may certainly be true in housing-shortage meccas like coastal California, where paying in cash (as most investors do) is the default process to even have a chance to beat out fellow bidders. But it's hard to believe that in most markets average homebuyers and cash-rich investors are playing the same game: Investor purchases in last year's Q4 were actually down more than 10% from a year earlier, but that's still a lighter decline than the 12.2% overall decline in US home purchases. The housing market presents an acute supply-and-demand double-whammy for any potential buyers. The total supply of homes for sale in the US fell 5.1% year-over-year in December and has remained well below pre-pandemic levels, with many homeowners hunkering down rather than lose the ultra-low, 2%-3% mortgage rates that many scored just a couple of years ago. The markets where the share of investor purchases rose and fell the most in Q4 seem to align with the country's broader migration: markets like Miami, Jacksonville, and Anaheim are in; Providence, Warren, Michigan, and Montgomery County, Pennsylvania, are decidedly not. Growing Old at Home: Besides high mortgage rates keeping a lid on home sales, there's the demographic matter of being a country of aging Baby Boom homeowners. A separate Redfin survey on Wednesday found that homeowners now stay in their homes twice as long as they did in 2005, an average of nearly 12 years (though the level has declined since the pandemic-moving frenzy of 2020). In many markets, homeowners have extra incentives to stay put, like in California, where Proposition 13 has created a nearly 50-year cap on property tax increases. Not that this Berkeley renter has any feelings about that, of course. Written by Michael Goodman

SPONSORED BY RAD DIVERSIFIED Beats Bonds. Outshines Gold. Hedges Inflation. Can you guess what it is? Here's a hint:  it's a real asset with a historically strong track record. Ok, one more hint: both famous billionaires (and China) are accumulating it aggressively. Of course, it's American farmland. Good News! To own farmland, you don't have to be a billionaire (or even a farmer). RADD America Land REIT specializes in acquiring and operating prime American farmland so you can protect your wealth (while safeguarding our nation's sovereignty and resilience). Diversify with expertly managed prime American farmland. Explore RADD America Land REIT for access to premium, vetted, farmland.

HEALTHCARE FTC, US Health Dept Launch Probe Over Chemo Drug Shortages Each year, roughly 2 million Americans are diagnosed with cancer, and for some, getting the proper treatment has become a very serious waiting game. This week, the Federal Trade Commission and the US Department of Health jointly launched a probe seeking information on how middlemen — group purchasing organizations (GPOs) and drug wholesalers — may be contributing to a lack of chemotherapies and other generic drugs.  The Cost of Cheap Drugs While various cancer treatments have gone in and out of short supply for years, the problem became particularly acute in 2023. In May, a survey from the National Comprehensive Cancer Network found that 93% of treatment centers reported they were short on carboplatin and 70% reported they were short on cisplatin. Those two drugs are used together and are prescribed to 10% to 20% of cancer patients. Those shortage rates dropped in the fall, but still sat at uncomfortably high levels, with many patients experiencing longer wait times between chemo sessions. Access to raw materials for making drugs and an increase in patients play a part in the shortages, but the FTC and the Health Department suspect the middlemen buying and selling the medications might be at the heart of the issue: Hospital transactions for medications are controlled almost entirely by three GPOs — Vizient, Premier, and HealthTrust — that purchase drugs on behalf of health centers, and three wholesalers — AmerisourceBergen, Cardinal Health and McKesson — that supply 90% of the pharmaceuticals, The Wall Street Journal reported. Doctors, drugmakers, and patient advocate groups have argued that because the three GPOs represent so many hospitals, they're able to win extremely low prices from wholesalers. But the prices may be so low that some drugmakers slash production or stop making the drugs entirely if they feel they can no longer turn a profit.  "For years Americans have faced acute shortages of critical drugs, from chemotherapy to antibiotics, endangering patients," said FTC Chair Lina Khan. "Our inquiry requests information on the factors driving these shortages and scrutinizes the practices of opaque drug middlemen."  A Growing Concern: A short supply of cancer treatments isn't a great development, especially with new evidence that the disease is on the rise among younger generations. Most cancer patients are 65 and older, but one study published in JAMA last summer found cancer rates among people 50 and younger are going up, mostly driven by women and people in their 30s. Written by Griffin Kelly

REGULATION Europe Wants Big Telecoms to Merge Big Tech mergers are out in Europe. But Big Telecom mergers? They're way, way in. On Tuesday, regulators at the European Commission signaled their willingness to approve mergers in the telecom space that could hasten the rollout of 5G and full-fiber networks. It's a de facto infrastructure exception to the group's antitrust zealotry. On the Count of 5G Add telecom infrastructure to the list of ways that Europe is nothing like the US. Here, just three telecom giants — AT&T, Verizon, and T-Mobile — control roughly 94% of the market, per a recent study from the United States Telecom Operators Country Intelligence Report. The EU, meanwhile, is far more fragmented, with roughly 100 telecom operators servicing customers across the continent. A competitive market has been good for consumers, offering typically cheaper prices with little or no data caps compared to the US market. But amid the costly transition to faster 5G and fiber networks, EU telcos are hurting. And, in a white paper expected to be published next week and seen Wednesday by the Financial Times, EC regulators argue that consolidation could offer a remedy: The commission writes that "fragmentation [of the sector] could impact the ability of operators to reach the scale needed to invest in the networks of the future, in particular in view of cross-border services." Faster 5G availability varies widely across Europe but is generally lower compared to the US. About 31% of mobile connection in the US is through a 5G network, per a research study published last summer by Open Signal, good for fourth in the world; 5G availability in Europe's five biggest markets, meanwhile, ranges from 20% (France) to just 10% in the UK — though speeds are comparatively faster versus the US. Fair Share: In typical European fashion, the region's telcos are demanding that Big Tech players contribute to infrastructure investment. Just five tech firms — Google, Meta, Amazon, Netflix, Apple, and Microsoft (the usual suspects) — account for about half of all internet traffic in the bloc, telcos say. Just wait until they hear how much of a crunch is involved with generative AI. Written by Brian Boyle

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