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The ethics of home ownership in an age of growing inequality

A scholar who examines the impact of property ownership explains why purchasing a home comes with many moral obligations.

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8 months ago

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Purchasing property as a primary home is considered more ethical than acquiring property for investment. Ilya Burdun via Getty Images

For many Americans today, homeownership is an unattainable dream.

In 2022, the average long-term U.S. mortgage rate rose to 7% for the first time in more than two decades. The median sales price of existing homes climbed to a record US$416,000 while demand for mortgages dropped to a 25-year low.

Experts forecast a turnaround in 2023, predicting a fall in home prices and mortgage rates. With the housing market likely to cool modestly, the prospect of a gradual return to affordability may sound like music to buyers’ ears.

But should people be purchasing property at all?

My research examines the negative impact of property ownership. Despite the current state of the housing market, property is still considered a sound investment – at least for the limited group who can afford it. However, property ownership can have serious consequences on others’ lives.

Buying to make a profit?

There is a difference between the two main categories of property buyers: those purchasing property as a primary home versus property for investment.

Purchasing property as a primary home is considered more ethical than acquiring property for investment, as housing is considered a basic necessity.

Property for investment, however, is owned for personal profit, often without the owner’s intending to ever live there. Investors may purchase homes that can be “fixed and flipped” and sell them at a profit or lease them to renters.

As of 2019, renters headed around 36% of the nation’s 122.8 million households. Census data shows that there are 48.2 million rental units in the U.S., roughly 70% of which are owned by individual landlords.

Landlordphobia?

Landlords have often been criticized for being callous and greedy. COVID-19 exacerbated landlords’ poor reputations because the pandemic increased renter payment difficulties and triggered widespread evictions and homelessness.

A sign saying, 'For rent: Evicted.'
The COVID-19 pandemic triggered widespread eviction of tenants of rental properties. pcess609 via Getty Images

Some renters complained about uncaring landlords who were accused of pressuring and threatening vulnerable tenants. The federal and state governments stepped in to help people with such interventions as the federal eviction moratorium and New York City’s rent freeze program.

Yet landlords also provide rental opportunities for those who prefer not to buy and for those who wish to buy their own home but cannot afford it. Furthermore, landlords can be seen as offering a valuable service to those who are not seeking long-term occupancy, such as university students who plan to leave upon graduation or temporary visitors to the U.S.

The ethics of renting out property, then, seems to turn partly on whether renters need it for long-term basic shelter.

Landlords are often blamed for the housing crisis. However, it is the responsibility of the government to ensure the right to long-term shelter.

Individual landlords may contribute toward a poor housing system, but they act within the confines of the system. Only governments have the power to change the system, through investment in affordable housing.

The ethics of owning a home

Homebuyers also have ethical obligations to others.

Choosing to own property in a gentrifying neighborhood, or one considered at risk of gentrifying, may contribute to the forced displacement of existing long-term residents. The harms of having to leave one’s former neighborhood include the severing of community networks or enduring the strain of extraordinarily long work commutes. Additionally, persons of color are disproportionately affected by gentrification, which may create new patterns of racial segregation.

Given these consequences, aspiring homeowners should perhaps avoid purchasing homes in neighborhoods with vulnerable residents. But, with housing unaffordability writ large, first-time buyers may be able to afford properties only in neighborhoods at risk of gentrification.

Mitigating risk

How can governments mitigate risks like racial segregation while also providing affordable housing?

One example is Singapore’s system of affordable public housing. To prevent segregation, Singapore introduced racial quotas in public housing that require minimum levels of occupancy of each of its main ethnic groups – Chinese, Malay, Indian, and others, which includes all other ethnicities. Though intrusive and imperfect in its execution, the Singaporean approach shows that a more proactive approach to housing is possible.

Landlords may have moral duties, but the government’s role in recognizing and protecting the right to stable long-term housing must not be ignored.

Désirée Lim does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Three Big Biopharmaceutical Stocks to Buy Due to Product Pipeline

Three big biopharmaceutical stocks to buy are bearing fruit due to their strong product pipelines. The three big biopharmaceutical stocks to buy shine…

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1 hour ago

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October 18, 2023

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Three big biopharmaceutical stocks to buy are bearing fruit due to their strong product pipelines.

The three big biopharmaceutical stocks to buy shine amid their peers even though that sector’s performance has been “underwhelming” compared to the broader market with the S&P 500 up 13.90% vs. a 6.08% drop for the biotech year to date, according to a recent BofA Global Research report. The reasoning is that sector rotation has put biotech at a disadvantage against a better macro-economic scenario of a “soft landing,” according to the report.

The focus for investors interested in exposure to big biopharmaceutical stocks is a company’s strength of “commercial execution,” versus macro risks, BofA wrote in its research note. With third-quarter earnings season about to start, biopharmaceutical companies with promising products should stand out.

Despite market headwinds of ongoing food and energy inflation, an expanding auto strike and diplomatic challenges in the Middle East, Ukraine, Russia and Iran, the market is trading better than most observers would expect, Perry recently wrote to his Cash Machine subscribers. It also explains why investors with a collective $5.5 trillion are content to collect 5%-plus in guaranteed short-term cash instruments and Treasuries, he added.

Paul Dykewicz interviews Cash Machine investment newsletter leader Bryan Perry.

Three Big Biopharmaceutical Stocks to Buy and Why

The three big biopharmaceutical stocks to buy offer both dividends and a chance for capital appreciation. Perry, who currently averages a dividend yield of 10.8% with Cash Machine’s 29 recommendations, recently wrote that investors can take heart that the Personal Consumption Expenditures (PCE) index data released by the U.S. Bureau of Economic Analysis on Sept. 29. The data showed overall inflation dipping below 4% on an annual basis. When excluding volatile food and energy prices, the latest rise in the key inflation gauge of the Federal Reserve was just 0.1%, a 3.9% increase from the same time span last year.

Three Biopharmaceutical Stocks to Buy: Eli Lilly

Indianapolis, Indiana-based Eli Lilly & Co. (NYSE: LLY) is one of three big biopharmaceutical stocks to buy that are buoyed by their product pipelines.

The stock gained the attention of co-editors Mark Skousen, PhD, and Jim Woods of the Fast Money Alert trading service that features recommendations of both stocks and options.

Mark Skousen, head of Five Star Trader and scion of Ben Franklin, talks to Paul Dykewicz.

Lilly makes a diabetes shot called Mounjaro that company management is hoping will gain Food and Drug Administration (FDA) approval later this year as an obesity treatment. Lilly’s leaders also discussed working on a next-generation diabetes and weight-loss drug called Retatrutide.

Strong revenue and earnings growth of LLY, along with the promise of millions in additional revenue each quarter for its next-generation weight-loss drug,  has the stock surging. During the past 52 weeks, shares are up 87.40%. Lilly’s price performance puts the company’s shares in the top 2% of all stocks on a relative price strength basis.

As shown by the chart below, LLY shares are on a tear, up some 7.12% in the past month and breaking out to new highs on a bullish cup-with-handle pattern. That performance bests its industry, which is down 1.44% in the last month.

Paul Dykewicz meets with Jim Woods, head of Intelligence Report.

The co-leaders of the Fast Money Alert trading service profited from Lilly last year. the duo produced a 11.06% total return in barely five months on October 17, 2022, after its recommendation on May 16, 2022. Now, they are looking to cash in again.

Chart Courtesy of www.stockcharts.com

BofA recently increased its price objective for Lilly to $700 on the back of its clinical and commercial success, with the bullishness based on tirzepatide’s likely approval in obesity during the fourth quarter this year and the company’s incretin pipeline featuring orforglipron and retatrutide. Plus, Lilly has been putting its cash to work with a slew of mergers and acquisitions (M&A) activity, including acquisitions of Versanis, Sigilon, DICE and POINT Biopharma, which BofA  wrote investors seem to view favorably.

Three Big Biopharmaceutical Stocks to Buy: Bristol-Myers Squibb

BofA also has a “Buy” recommendation on Bristol-Myers Squibb (NYSE: BMY), of Princeton, New Jersey. Heading into the third quarter, commercial performance from core products such as Opdivo and Eliquis, as well as nine significant new product launches, likely will be top of mind for most investors, BofA opined.

While solid growth from Opdivo, up 13% year over year (y/y), Eliquis, rising 8% (y/y) and the Big 9 new launches, soaring 80% (y/y), is expected, BofA wrote it will take the company a few more quarters for Camzyos and Sotyktu to reach an inflection point. Further, cell therapy products like Abecma and Breyanzi likely will continue to face headwinds from manufacturing and supply in the third quarter, BofA wrote.

BofA wrote that it continues to view Bristol’s shares as attractive, given its robust new product cycle and reasonable valuation of 8x forward P/E, compared to 16x for its peers. The investment firm reiterated its buy rating and $80 price objective on BMY.

Skousen previously recommended Bristol-Myers Squibb profitably in his TNT Trader service that features both stocks and options. In less than two months after he advised its purchase on December 10, 2019, he told his subscribers to take a profit. His related call option recommendation turned a profit, too.

Chart Courtesy of www.stockcharts.com

Three Biopharmaceutical Stocks to Buy: Merck

BofA wrote the Merck & Co. Inc. (NYSE: MRK), of Rahway, New Jersey, is poised to deliver another solid commercial third quarter, driven by strong growth from core products such as Keytruda and Gardasil. Indeed, BofA wrote it expects robust growth of Keytruda in 3Q, spurred by recent approvals in adjuvant lung, continued market penetration and solid data updates.

The investment firm expects strong demand, aided by increased supply due to new manufacturing capacity in 2023/24. Looking forward, BofA forecast  investors likely will focus on FDA approval and launch of sotatercept in the first half of 2024. BofA added that market uptake could be robust, given the close-knitted community and treatment centers.

“Ultimately, we remain bullish on MRK shares, given its strong core business,” BofA wrote in a recent research note.

BofA reiterated its buy rating on Merck and set a price objective of $130 per share.

Chart Courtesy of www.stockcharts.com

Three Biopharmaceutical Stocks to Buy: Stocks or Funds?

Another keen observer of the industry is Bob Carlson, a pension fund chairman who also heads the Retirement Watch investment newsletter that features a variety of portfolios. As a risk-averse pension fund leader, Carlson favors funds to enhance diversification and reduce risk.

“I still believe biotech and pharmaceuticals will do well, though they haven’t done well recently,” Carlson told me. “The companies continue to develop new, innovative products.”

Bob Carlson, head of Retirement Watch, gives an interview to Paul Dykewicz.

For a broad-based exposure to biotechnology, consider the ETF iShares Biotechnology (IBB), Carlson advised. The fund tracks the ICE Biotechnology Index, which is composed of U.S.-listed companies. It owns mostly large and mid-cap companies, though about 20% of the fund is in small and micro-cap firms.

IBB recently had 261 stocks, but 56% of the fund was in the 10 largest positions. Top positions were Amgen, Vertex, Regeneron, Gilead Sciences and Seagen. The turnover rate is only 13%.

The fund lost 13.69% in 2022 and is down 6.68% so far in 2023. It lost 4.51% in the last three months and is up 2.54% over 12 months. The dividend yield is around 0.25%.

Three Biopharmaceutical Stocks to Buy: ETFs Offer Alternative

Investors who want to focus exclusively on pharmaceuticals can consider First Trust Nasdaq Pharmaceuticals (FTXH).

The fund tracks the index in its name. About 55% of the fund is in stocks that Morningstar classifies as either giant or large. The stocks in the ETF also on average sell at lower valuations than other health care companies. Almost all the companies are listed in the United States.

FTXH recently owned 50 stocks, and its 10 largest positions were 56% of the fund. Top holdings were AbbVie, Johnson & Johnson, Merck & Co., Pfizer and Bristol-Myers Squibb. The turnover ratio is 76%.

The fund gained 2.55% in 2022 but is down 4.57% so far in 2023. It slid 0.24% in the last three months but rose 7.07% in the past 12 months. Its dividend yield is around 1.67%.

Three Biopharmaceutical Stocks to Buy: Political Risk

The Hamas attack of Israel that triggered a war and Russia’s sustained invasion of Ukraine remain a big factor in keeping lifting political risk for investors. Political risk could rise further after the Russian Defense Ministry released documents recently indicting its military spending could rise by more than 68% in 2024 to reach $111.15 billion. That amounts to about 6% of Russia’s gross domestic product (GDP), more than the country’s spending on social programs, according to Moscow Times. Russia’s military spending is set to total about three times more than education, environmental protection and health care spending combined.

The three big biopharmaceutical stocks to buy offer the appeal of both income and potential capital appreciation. Dividend-paying biopharmaceutical stocks should have extra staying power for investors willing to buy shares in them.

Paul Dykewicz, www.pauldykewicz.com, is an award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at StockInvestor.com and DividendInvestor.com. He also serves as editorial director of Eagle Financial Publications in Washington, D.C. In that role, he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other reports. Previously, Paul served as business editor and a columnist at Baltimore’s Daily Record newspaper and as a reporter at the Baltimore Business Journal. Plus, Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many other sports figures. To buy signed and specially dedicated copies, call 202-677-4457.

The post Three Big Biopharmaceutical Stocks to Buy Due to Product Pipeline appeared first on Stock Investor.

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Chinese Data Dump Steamrolls Expectations, Setting Victorious Stage For Xi’s BRI Address

Chinese Data Dump Steamrolls Expectations, Setting Victorious Stage For Xi’s BRI Address

With Xi preparing to address delegates from 130 nations…

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2 hours ago

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October 17, 2023

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Chinese Data Dump Steamrolls Expectations, Setting Victorious Stage For Xi's BRI Address

With Xi preparing to address delegates from 130 nations around the world at the third Belt and Road Initiative Forum, we should not be too surprised if the deluge of Chinese macro data tonight - headlined by Q3 GDP - will beat expectations.

In fact, as Bloomberg's Chang Shu and David Qu noted, China’s recovery could be starting to get some traction, supported by stronger public investment and monetary easing, as weekly activity data rebounded in September...

...and overall China data has surprised more to the upside in recent months (admittedly against very weak expectations)...

However, bear in mind that base effects will dampen the year-on-year readings.

Growth in 2Q23 was flattered by a comparison with a depressed performance in 2Q22 caused by the Zero-COVID lockdowns. That boost will be gone in 3Q23, so most economists will be focused on the QoQ growth.

The Yuan has been relatively stable since the end of Q2, after plunging in Q1 and Q2...

And, despite all the pumping and support, China's Credit Impulse remains negative (for the 5th month in a row) as its real estate market continues to implode sucking up every yuan to fill the hole-filled bucket balance sheet of Chinese citizenry...

Oh and while we are discussing that, China Property Stock gauge plunged to its lowest since 2009...

So, eyes down for a fun night of 'adjustments' from Beijing.

China's GDP growth YoY in Q3 was expected to come in at +4.5% (down from +6.3% in Q2) but most eyes will be focused on the QoQ number (+0.9% exp) due to base effects from the COVID lockdowns.

The headline QoQ GDP printed +1.3% (better than expected).

Helped by a downward revision for Q2 from +0.8% to +0.5%. The headline YoY data beat expectations (+4.9% YoY vs +4.5% exp and +5.2% YTD YoY vs +5.0% YTD YoY exp)...

Industrial Production and Retail Sales beat expectations...

  • *CHINA SEPT. INDUSTRIAL OUTPUT RISES 4.5% Y/Y; EST. 4.4%

  • *CHINA SEPT. RETAIL SALES RISE 5.5% Y/Y; EST. 4.9%

While the data show increasing consumer spending growth, the big downside is that China’s property slump is still deep and ongoing.

  • *CHINA JAN.-SEPT. FIXED INVESTMENT RISES 3.1% Y/Y; EST. 3.2%

  • *CHINA JAN.-SEPT. PROPERTY DEV. INVESTMENT -9.1% Y/Y, EST. -8.9%

Worse still, the area of property sold fell 7.5% in September, lower than -7.1% seen the previous month.

Chinese unemployment miraculously tumbled to 5.0% - the lowest since Oct 2021.

Of course, China continues to hide its youth unemployment rate - after it reached record highs at 21.3% in June.

China's statistics bureau said in the release, overall, China’s economy continued to recover in the first three quarters, laying a “solid foundation” for achieving the full-year development goals. Although, China once again warned of the external environment, saying it is becoming more complex and severe.

Under the hood, the fastest growing retail sales categories relate to vice and virtue.

Tobacco and alcohol sales were up a massive 23.1% year-on-year, a remarkable number (the highest recorded since April 2021). Sports items sales surged 10.7%.

So to sum things up - while investment (especially property) continues to be ugly everything else beat (miraculously)

Michael Hirson of 22V Research says in a note he’s paying most attention to signs of any recovery in household and private sector demand.

“Property sales and related indicators will provide a sense of whether recent easing measures are having an effect preliminary data suggest a pick-up in sales in the largest markets (tier 1 and some tier 2) but one that is thus far limited in its strength and breadth,” he wrote in a note.

“On the consumption side, August showed some improvement in household spending on goods, rather than just services, and it will be important to see whether there are further signs of progress as reflected not only in monthly retail sales but also the quarterly survey of household income and spending.”

Given his thoughts, property sales and investments data were ugly - not a good sign... and on the consumption side, everyone was celebrating their non-job 'job'.

The bottom line from the data - China bottomed... a perfect narrative for Xi.

Tyler Durden Tue, 10/17/2023 - 21:15

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Top Japanese Energy Trader Warns ‘World Running Short Of LNG For Energy Transition’ 

Top Japanese Energy Trader Warns ‘World Running Short Of LNG For Energy Transition’ 

Liquefied natural gas (LNG) plays a pivotal role in…

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4 hours ago

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October 17, 2023

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Top Japanese Energy Trader Warns 'World Running Short Of LNG For Energy Transition' 

Liquefied natural gas (LNG) plays a pivotal role in the world's changing energy landscape. By substituting dirtier fuels, LNG curtails carbon dioxide emissions and enhances air quality. This underscores its vital importance in the energy transition. 

Bloomberg recently spoke with Kenichi Hori, president of Japanese trading house Mitsui & Co., who said global LNG demand will likely be much higher than forecasted and the current "pipeline of projects" won't be enough. 

"Announced projects in the world still won't make up for the supply needed when considering the energy transition that will take several decades," Hori said. 

Hori is one of Japan's top traders of LNG and believes, just like Chevron Corp. and Shell Plc, that the fuel will play a crucial long-term role in the energy transition. His comments follow a fracturing of the global LNG market as Europe no longer sources a majority of the fuel from Moscow but instead relies on the US and other countries abroad.  

According to BloombergNEF data, global LNG demand is set to rise 3.4% annually over 2022-26, reaching about 444 million metric tons. This comes as countries and companies view LNG as one of the cleanest fossil fuels that can lower emissions. Bloomberg noted supply will be tight until 2026 - after that, new projects are forecasted to come online. 

Hori pointed out his firm has "projects in the US, Middle East, and Africa" to ensure a diverse supply chain. 

He added his firm is interested in signing a contract with Qatar. He stated the Middle Eastern country is an "important source of LNG" as Japan strives for further diversification. 

Besides LNG, Hori invested $6.4 billion in an offshore wind project off Taiwan and exploring opportunities in e-methanol.  

"All these projects are going to shape the future of our portfolio that is transitioning from a traditional energy business to a low-carbon-intensive era," he said.

Last month, Lorenzo Simonelli, chairman and CEO of service company Baker Hughes, was quoted by Reuters at Gastech, the industry's largest conference in Singapore, as saying, "Natural gas will continue to play a critical role as a bridging and destination fuel for the energy transition."

The biggest takeaway is that LNG has a bright future as it becomes the 'transition fuel' as the world progresses to net-zero emissions by 2050. 

 

Tyler Durden Tue, 10/17/2023 - 20:25

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