A daily market update from Fundstrat — what you need to know ahead of opening bell.

“I don’t know exactly why the notion of homeownership has such a grasp on the American imagination. Perhaps as descendants of landless immigrants we turn our plots into symbols of stability.” – Ellen Goodman

Overnight

Banks are running ‘war rooms’ to prepare for Trump trade disruptions RTR

Hedge fund leverage is at the highest since 2010 RTR

Tech leaders pledge $500B in US AI investments WSJ

Rare snow imperils Texas gas exports, shuts Louisiana roads BBG

Trump halts more than $300bn in US green infrastructure funding FT

Trump orders plan to speed permitting of projects across US BBG 

Trump pardons Silk Road dark web market creator Ross Ulbricht BBC

Goldman picks leaders to run Wall Street engines in revamp BBG

Netflix posts record quarter thanks to ‘Squid Game’, live sports BBG

3M beat Q4 earnings estimates and forecast profit growth for 2025 on successful efforts to revive sales and reduce costs RTR

United Airlines beat Q4 earnings estimates and forecast strong Q1 earnings on strong travel demand CNBC 

Perella Weinberg feud goes to trial a decade after schism FT

Virus season roars back with “quad-demic” of illness AX

Chart of the Day

MORNING INSIGHT

Good morning!

The inauguration of the 47th President marks a focus on a pro-biz environment, and this is a bigger deal than many realize.

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TECHNICAL

• SPX has broken out of its near-term consolidation, as part of a long-term bullish uptrend.
• Healthcare looks to play catchup in the short run but selectivity is important.
• Gold and Silver both seem close to stalling, but pullbacks make both highly attractive.

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CRYPTO

Lately we have been asserting that the market has been pricing in a worst-case scenario regarding President Trump’s likely trade and tariff policies and their effect on inflation, and that this should ease once Trump actually takes office. In our view, we are seeing evidence of this coming to fruition.

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First News

Wildfires continue to menace residents of greater Los Angeles, with winds expected to pick up and meteorologists seeing little chance of significant rainfall in the near-term. And while it’s only common sense to expect Angelenos to see rising insurance costs boosting the cost of home ownership in the foreseeable future (a trend further exacerbated by the housing shortage caused by the inferno), Californians outside the Los Angeles metropolitan area might also find themselves hit by a surprising shock in the coming months and years, despite living far from any neighborhood directly affected by the blaze. 

They’re not the only ones at risk for unexpected ownership-related expenses. Many Floridians and North Carolinians are already experiencing surprise homeownership expenses, as are Louisianans, Texans, and Americans in other states. Insurance and taxes now cost more than mortgage for many homeowners across America, according to a Wall Street Journal story.

Residential insurers have been limiting their exposure to the California market for years or even pulling out of it altogether, citing the state’s rising risk from natural disasters like earthquakes and, unsurprisingly, catastrophic wildfires. Home insurance companies like State Farm, Allstate, and Farmers Insurance have faced the increasing likelihood of major losses at a time when reinsurance companies like Swiss Re and Munich Re have become less willing to help shoulder some of the risk. California’s response has been to create a state-chartered “insurer of last resort,” known as the FAIR (Fair Access to Insurance Requirements) Plan. FAIR provides insurance to homeowners who cannot obtain coverage from a private insurer, funded by the pool of private insurers still covering homes in the state.

That’s where the sticker shock to homeowners in, say, northern California, might come in. Should FAIR’s reserves prove inadequate to cover claims from a major disaster like the current wildfire crisis, a recent state law empowers the private insurers behind the FAIR Plan to impose an assessment to all home-insurance policyholders across the state. That means that because of the Palisades fire, a homeowner in Mt. Shasta, CA, roughly 600 miles north of Los Angeles, could end up paying a surcharge of hundreds or even thousands of dollars on top of their next insurance premium. 

That’s not a problem unique to Californians. In Florida – another disaster-prone state from which private insurers have been fleeing in recent years, the Citizens Property Insurance Corporation (the Sunshine State’s government-run “last resort” insurer) has quietly become the largest property insurer in the state. Last April, Gov. Ron de Santis warned that Citizens was “not solvent,” leading observers to worry last autumn that if one or more particularly catastrophic hurricanes overwhelmed Citizens’ capital reserves, that a “hurricane tax” could be imposed on homeowners with private insurance policies to cover the damages. 

In fact, a December 2024 Senate study showed that since 2018, home insurance companies have opted not to renew existing policies covering more than 1.9 million homes all across the U.S. Doug Heller, director of insurance with the Consumer Federation of America, a research and advocacy nonprofit, told Stateline that “The private sector approach to property insurance is starting to crack under the weight of climate change and the public [last resort plans] can’t fill in the gaps under the existing structure,” he said.

Such unexpected surges to the cost of home ownership don’t just come from natural disasters or climate change, either. In the wake of the 2021 Surfside condominium collapse, in which 98 people died, Florida authorities pushed through regulations that require older condominium buildings to pass structural inspections and maintain sizeable “structural integrity” financial reserves for future repairs. For many of the estimated 900,000 owners of aging condos impacted by the law, were unexpected assessments reaching into hundreds of thousands of dollars, significant increases in condo association dues, and in extreme cases, forced eviction from their homes after their buildings were condemned outright. In some cases, rather than enact the expensive but necessary repairs, entire condo buildings have become “ghost condos” – abandoned by their owners en masse and sold to developers. 

Home ownership might still be the American dream. But increasingly, it is one subject to rude wakeup calls from surprising expenses.