The Housing Boom Is Accelerating

Sjug's streak continues... The housing boom is accelerating... Big news for financials... A huge potential tailwind for regional banks... Last call for tonight's big reveal...

Yesterday, we shared some great news from Steve Sjuggerud...

In short, after a brief warning last month, all five of his favorite market indicators are giving the "all clear" once again. Despite fears to the contrary, Steve says all signs suggest the market remains healthy. The "Melt Up" should continue.

Longtime readers know no one has been more bullish (or more correct) about U.S. stocks over the past eight years than "Sjug." Time and again, he reassured readers that the long bull market wouldn't end until investors turned wildly bullish on stocks again.

But his Melt Up thesis isn't the only bold call that continues to play out almost exactly as he has predicted...

The boom in housing is accelerating...

Steve has been bullish on the U.S. housing market for nearly as long. He was among the first analysts anywhere to recommend buying back in 2011.

Today, despite a big rebound in prices to new all-time highs, Steve remains incredibly bullish. He summed up the reasons for his True Wealth readers back in September (emphasis added)...

It's simple, really... Looking at the numbers, I see only one logical outcome: dramatically higher home prices in America...

You see, despite a massive real estate boom, the simple supply-and-demand fundamentals for housing point to much higher prices.

Housing demand is high, but supply is low. Therefore, prices must go higher. It's Economics 101.

The latest data suggest Steve is exactly right...

And nowhere is this more apparent than the sudden resurgence of all-cash deals. As the Wall Street Journal reported on Tuesday...

Meagan Freeman and her boyfriend have been looking for a midprice house in the Seattle area for six months but keep running into a hurdle: cash buyers swooping in and snatching up their properties.

It has happened three times, she said, most recently two weeks ago. The couple bid on a home in an unfashionable suburb they believed was a sure bet in the midst of a dreary Seattle November, when the market typically is slow.

Instead, the 27-year old said, a cash buyer won out yet again. "It is definitely discouraging," she said.

According to housing data provider Attom Data Solutions, all-cash transactions have accounted for 29% of U.S. home sales this year.

This is below the peak of more than 40% in 2011 and 2012, when mortgage credit was still relatively tight and rental investors were buying heavily.

But it's well above the historical average of 20%. And it has remained high despite easing in mortgage availability.

Why? Because sellers often favor cash offers, and buyers are increasingly competing with each other for a limited number of homes. More from the Journal...

Cash deals are attractive to sellers because they don't need to wait around for a bank to make a mortgage. Closings are quicker, and risks are lower. Many sellers choose all-cash offers over higher offers that come with a mortgage attached...

Housing inventories are so low that buyers even in historically calm markets such as Boise, Idaho, and Minneapolis are facing bidding wars, prompting them to dig deep into their coffers to win deals.

Again, if you're not already profiting from this trend, Steve says it's not too late...

In fact, he has found an unusual "one click" way to do so that's as easy as buying a regular stock.

It's a way to own a stake in tens of thousands of rental homes in some of the best markets across the U.S. Steve says this opportunity has practically all the upside of rental-property ownership – including leveraged home price appreciation and net rent paid out as dividends – without the headaches of dealing with tenants and repairs.

Shares are up just 4% since Steve first recommended them in September, so you haven't missed anything yet. You can get instant access to this recommendation with a 100% risk-free subscription to True Wealth. Click here to learn more.

Tax reform isn't the only big news out of Washington this week...

Yesterday, the Senate Banking Committee voted to approve the nomination of current Fed Governor Jerome Powell as the next chairman of the Federal Reserve. His nomination will now go to the full Senate for a confirmation vote.

The committee also voted to approve a bill that would change some key portions of the Dodd-Frank financial regulations passed in 2010. As Bloomberg reported yesterday...

Bipartisan legislation advanced Tuesday by the Senate Banking Committee would revise many parts of the sweeping 2010 overhaul, particularly those pertaining to small and regional banks. It would free midsize lenders from some of the strictest post-crisis oversight and cut compliance costs for community banks.

The bill sponsored by Senator Mike Crapo, the Idaho Republican who leads the banking panel, has backing from several Democrats. That support from across the aisle means the proposal represents the financial industry's best hope in years of dialing back rules that it blames for inhibiting lending and needlessly increasing the cost of doing business.

Why is this important?

Because it would be a boon for a select group of banks and their shareholders. As financial journal Barron's explained over the weekend...

For the larger regional banks that Uncle Sam classifies as systemically important financial institutions, there are major drawbacks – in particular, heightened regulatory scrutiny and higher costs...

The rigorous Comprehensive Capital Analysis and Review, which is part of the post-financial-crisis Dodd-Frank Act and applies to bank holding companies with assets of at least $50 billion, includes an annual financial stress test and a capital-planning review.

But [the bill] calls for raising the threshold for being considered a systemically important financial institution, or SIFI, from $50 billion to $250 billion... Under the bipartisan agreement, banks with $100 billion to $250 billion in total assets would be released from the more stringent regulatory requirements 18 months after the revised rules take effect. Banks in the $50 billion to $100 billion range would be released immediately after the threshold rises, potentially boosting their earnings sooner.

In other words, banks with assets below $250 billion would see regulatory costs fall dramatically in less than two years...

And those with assets below $100 billion would be released from federal oversight immediately.

So dozens of small and midsize regional banks could soon see a dramatic increase in earnings. This could drive additional dividend growth and share buybacks. And it's likely to lead to a wave of mergers and acquisitions ("M&A") in the sector.

Remember, the more assets a bank holds, the more money it can lend... and the more potential profit it can earn. So banks with assets below $250 billion would now be incentivized to grow assets up to that threshold.

Of course, none of this should be a surprise to Stansberry NewsWire readers...

Our colleague C. Scott Garliss and the NewsWire team have been covering this situation in detail for months. We asked him to share his latest thoughts on the news with Digest readers today...

One of the subjects we have been discussing here in the Stansberry NewsWire is the Systemically Important Financial Institution ("SIFI") threshold. This is a measure of assets a financial institution holds. When it crosses a specific threshold (currently $50 billion), the institution must meet additional guidelines and regulations that increase costs, as well as submit to annual tests and review by the Federal Reserve. The Fed has the ultimate say regarding the institution's ability to conduct share buybacks or issue dividends.

Current Senate Banking Committee Chairman Mike Crapo has reached a deal with Senate Democrats to raise the current SIFI threshold from $50 billion to $250 billion. As part of the deal, banks with less than $100 billion in assets would get immediate relief, which could take a lot of pressure off regional banks.

Again, regional banks stand to benefit the most from the proposed SIFI increase. You see, the current threshold of $50 billion comprises around 40 banks. Only 10 firms would remain above the SIFI threshold if it were raised to $250 billion. As banks fall below the threshold level, they would be free to buy up other banks until their total asset levels reach $250 billion.

Scott also shared a list of the banks he expects to benefit the most...

The financial institutions that would be affected by a rising SIFI threshold (i.e. ones with assets between $50 billion and $250 billion) are:

The names toward the bottom of this list would be prime candidates to either go on an acquisition spree (increasing their assets and revenue potential) or would be likely to get acquired.

Stay tuned to the Stansberry NewsWire as we'll be closely monitoring this trend.

Finally, a quick reminder before we sign off...

Less than two hours from now – at 8 p.m. Eastern time – we'll be unveiling our brand-new "Golden Triangle" research... which Porter himself has called "our most lucrative discovery ever."

It's a remarkable way to find stocks that are likely to double your money or better over the following 12-24 months with near-perfect accuracy. Our research shows you could've made average gains of 215% over the past several years – with no losing trades – simply by following this rare market pattern.

Again, this live event is absolutely free for Stansberry Research readers... and you'll even hear our two favorite Golden Triangle opportunities today – for free – just for attending. Simply click here a few minutes before 8 p.m. Eastern time. We hope to see you there.

New 52-week highs (as of 12/5/17): Arch Coal (ARCH), American Express (AXP), CBRE Group (CBG), McDonald's (MCD), U.S. Concrete (USCR), and short position in Sprint (S).

A quiet day in the mailbag. Be sure to let us know what you think of tonight's big event at feedback@stansberryresearch.com.

Regards,

Justin Brill
Baltimore, Maryland
December 6, 2017