| | | | | | | Presented By Raytheon Technologies | | | | Axios Markets | | By Courtenay Brown ·Dec 10, 2020 | | ☀️ Welcome back. If this email was forwarded to you, sign up here. (Today's Smart Brevity count: 977 words, 3.7 minutes.) 🎙"There's a thin line between to laugh with and to laugh at." — See who said it at the end of the newsletter. | | | | | | 1 big thing: Lumber's wild year |  | | | Illustration: Eniola Odetunde/Axios | | | | Lumber prices are shooting up again — extending the commodity's wildest stretch ever. Why it matters: The housing market (and home remodeling) has boomed — creating historic demand for lumber that hasn't let up. - This unexpected effect of the coronavirus economy has played out in the futures market since the onset of the pandemic.
What's they're saying: "If people bet prices were going to go lower, they were wrong and so now they kind of have to chase the market," says Alex Mead, a lumber consultant at StoneX Group. - "The people I work with, they're not lumber producers. They just want to buy lumber on paper because they think it's going to go up," says John Payne, a futures broker at Daniels Trading.
Flashback: Lumber prices soared, hitting their highest level ever in September — a run that far outpaced any seasonal surge the commodity has ever seen. - Then there was a "big correction to the downside, but we're still at significantly higher price levels than people are accustomed to," says Greg Katu, founder of Westline Capital Strategies, which focuses on lumber futures.
- Now: There's unseasonably good weather, allowing builders to keep working (and keep up demand for lumber) — bucking the typical slowdown this time of year when prices bottom.
Catch up quick: Lumber producers ramped down when COVID-19 hit — partly because they had to in order to comply with lockdown orders, partly because orders were canceled and demand was expected to plunge. - Yes, but: Locked down Americans took on lumber-involved DIY projects. The housing market took off.
- "There's a shortage of existing homes and new homes. There's all this demand and record low interest rates. You've got all these drivers pushing demand and you still don't have the supply to satisfy demand," Katu says.
The fallout: The high prices reflected in the futures market are "passed on directly to consumers, whether you're buying lumber yourself at a big box store or you're buying a new house," Pete Stewart, the founder of lumber analytics firm Forest2Market, tells Axios. - The National Association of Home Builders estimated earlier this year the spike in lumber prices increased the price of a single-family home by over $16,000.
A big question: How much longer the consumer will be able to absorb the high prices, before demand slips. The latest: Lumber (and wood) is the most reported material shortage among commercial contractors — and the problem is getting worse. - One in 3 contractors say they don't have enough — up 20 percentage points from last quarter, according to survey results from the U.S. Chamber of Commerce Commercial Construction Index, first provided to Axios.
|     | | | | | | Bonus chart: The futures frenzy |  Data: FactSet; Chart: Axios Visuals | | | | | | | | 2. Catch up quick | | The U.S. reported more than 3,000 coronavirus deaths on Wednesday, the highest single-day total yet. (The COVID Tracking Project) General Electric will pay $200 million to settle SEC charges over whether it misled investors about its power and insurance businesses. (CNBC) The Trump administration's first complaint under the USMCA trade pact accuses Canada of blocking market access for U.S. dairy products. (WSJ) | | | | | | | | A message from Raytheon Technologies | | The future of aerospace and defense is here | | |  | | | | At Raytheon Technologies, nearly 200,000 engineers, scientists and researchers are pushing the limits of known science to explore deep space, advance aviation and build smarter defense systems that protect all of us here at home. That's the future of aerospace and defense. Learn more at RTX.com | | | | | | 3. Airbnb & DoorDash add to the stock sale boom |  Data: Dealogic; Chart: Naema Ahmed/Axios Yesterday, this newsletter talked about the secondary offering palooza. - In addition to Tesla's stock issuance, there are two primary offerings adding to the overall surge: DoorDash and Airbnb.
More context, via Axios' Felix Salmon: Giant as the DoorDash, Airbnb, and Tesla offerings are, they account for less than 4% of the IPO and follow-on issuance this year. - If you include special-purpose acquisition companies (SPACs) and convertibles, these deals are less than 2.5% of the total.
What's next: Airbnb starts trading on the New York Stock Exchange later today. - Shares reportedly priced at $68 — higher than its upwardly revised $56-$60 per share range.
- Its fully diluted valuation is around $47.3 billion.
| | | | | | | | 4. Job openings tick higher |  Data: FRED; Chart: Axios Visuals The number of job openings kept rising in October — though there's still a whopping shortage for the number of unemployed, according to the Job Openings and Layover Turnover survey (JOLTS) out Wednesday. - The numbers: 6.7 million open jobs, but roughly 10.9 million people considered unemployed.
Why it matters: It's a more granular look at the labor market improvement before the brakes were tapped in November. It also illustrates how far away the job market is from full recovery. - JOLTS is dated, but it offers more clues about the job market than the payrolls report.
What they're saying: "The improvement is good news but it is not good enough for the unemployed," Conrad DeQuadros, an economist at Brean Capital, wrote in a client note. - Some sectors are faring worse. Leisure and hospitality, for instance, has 0.2 job openings per unemployed person, DeQuadros notes.
Details: - Layoffs and discharges rose by 243,000. But that includes the 90,000+ temporary Census workers let go.
- The hiring rate fell 0.1 percentage point to 4.1% — historically high, but a slowdown from the 5.4% rate when the economy reopened.
- The quit rate held at 2.2%, the lowest since March 2018. (When this rises it's a sign workers feel good enough about the labor market to quit their job.)
| | | | | | | | 5. Antitrust suits could be biggest threat yet to Facebook's business |  Data: Company filings; Chart: Axios Visuals The historic lawsuits brought against Facebook Wednesday could be the first serious threat to its booming business, Axios' Sara Fischer writes. Why it matters: Facebook's user growth and bottom line have historically been resilient in the face of external pressure. - But the lawsuits, if they succeed, would fundamentally limit Facebook's ability to keep growing so fast.
How it works: Some of the most drastic measures in the lawsuits call for Facebook to sell Instagram and WhatsApp. - Instagram brought in roughly 30% of its nearly $70 billion in annual revenue last year.
- The company says its fastest-growing ad format is "click to message" ads, which allow advertisers to target users with ads that direct them to WhatsApp or Messenger to chat with businesses.
- In the years since acquiring both apps, Facebook has been able to significantly grow its Facebook Audience Network, an ad network that allows businesses to buy ads targeted to Facebook users on other apps that aren't owned by Facebook.
Yes, but: A break-up is a worst-case scenario for Facebook, and winning an antitrust suit like this is a tough hill to climb legally. | | | | | | | | A message from Raytheon Technologies | | The future of aerospace and defense is here | | | | | | | | At Raytheon Technologies, nearly 200,000 engineers, scientists and researchers are pushing the limits of known science to explore deep space, advance aviation and build smarter defense systems that protect all of us here at home. That's the future of aerospace and defense. Learn more at RTX.com | | | | 📧 Tips, questions or concerns? Reply to the email. See you back here tomorrow! Quote: "There's a thin line between to laugh with and to laugh at." Who said it: Legendary stand-up comedian Richard Pryor, who died from a heart attack 15 years ago today. | | | | Axios thanks our partners for supporting our newsletters.
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