| | Good morning and happy Thursday. President Trump said he plans to limit dividends, buybacks and executive pay if big defense contractors do what big defense contractors always do: go over budget or fall behind schedule on contracts with the Department of Defense. So shares in major US military suppliers took a tumble yesterday. Trump said he will sign an executive order that caps executive compensation at $5 million and bars suppliers from paying dividends to shareholders or making stock buybacks until they build "new and modern production plants" to make equipment faster. Lockheed Martin closed down 4.8% and Northrop Grumman fell 5.5%. Trump blasted RTX (formerly Raytheon) as "the least responsive" defense contractor and threatened to cut off its business with the Pentagon entirely, though its shares finished down a comparatively lower 2.5%. Investors weren't very responsive. | | | | | | | | Wall Street's invitation to the open house in your neighborhood may soon be revoked. On Wednesday, President Trump called on Congress to codify a new proposal to ban large institutional investors from buying more single-family homes, saying in a Truth Social post, "People live in homes, not corporations." For prospective buyers, this could mean not having to go up against, say, Blackstone when you put in a bid for a home. Location, Location, Location Nationally, roughly 20% of the nation's 86 million single-family homes are investor-owned, according to a report published last year by real estate data provider BatchData. But mom-and-pop operations, or investors owning between just one and five properties, account for 85% of that mix, while large investors, or those with more than 1,000 properties, account for just a 2.2% slice of the investor-owned pie. The footprint of large investors is so small that most experts don't see it as having much of an impact on the overall supply, which is sparse. "I think that the investor problem is kind of a boogeyman for the housing market," RedFin economist Daryl Fairweather told non-profit news organization CalMatters. But in a handful of hotspot housing markets, institutional investors are causing a major distortion, typically winning bids with all-cash offers and later turning properties into rentals. One study from The Urban Institute found that 45% of single-family homes owned by institutional investors are in just six markets: Atlanta, Phoenix, Dallas, Charlotte, Houston and Tampa Bay. Properties owned by large-scale investors tend to increase the price of nearby homes, while those owned by smaller investors usually have the opposite effect, according to a recent report from the Federal Reserve Bank of St. Louis. That said, the White House's policy proposal (far from the first of its kind) is a small win for Americans and a major loss for a few big investment firms: - Shares of Blackstone plummeted more than 5% on Wednesday, as did those of Apollo Global Management, while shares of Invitation Homes (the largest renter of single-family homes in the US) fell 6%.
- "This should have a material impact on their business. PE firms are having a tough time monetizing many of their investments," Matt Maley, chief market strategist at Miller Tabak, told Bloomberg. "But, Blackstone has generated some nice income running the largest single-family rental business in the US."
  Six Is Not the Fix: Buyers still appear to need all the help they can get. Total mortgage application volume fell nearly 10% in the week ending January 2, the Mortgage Bankers Association said Wednesday. That's despite mortgage rates finally falling near the 6% mark that many believed would juice the market. Written by Brian Boyle | | | | | | | | | Photo via Fisher Investments | It isn't just about saving enough — it's also about making sure your savings last. Over time, the steady effects of inflation can significantly reduce your purchasing power, especially as costs for essentials like healthcare continue to rise. What seems like a comfortable nest egg today could fall short tomorrow without a forward-looking strategy. A successful plan requires a clear objective that accounts for your goals, time horizon, and the impact of rising costs. Fisher Investments' free guide, The 15-Minute Retirement Plan, can help you define your goals, understand these challenges and build a tailored strategy designed to support the retirement lifestyle you've worked for. Download the guide for free.  | | | | | There is nothing middling about biopharma innovation in the Middle Kingdom. A new report from McKinsey found that almost half of the world's innovative drug pipeline now comes from Asia, with China alone responsible for 29%. Researchers said the region is "outpacing the United States and Europe in pipeline growth, patents and next-gen therapies" and has upended the global biopharma market in just five years. Going Intercontinental Not long ago, Asia was considered a biotech manufacturing hub, with the innovation happening elsewhere. That dynamic has shifted, thanks to China, South Korea, Singapore, Japan and India variously employing public investment, venture activity and capital markets. An example is South Korea, which committed $2 billion to a fund for 1,200 innovative projects through 2030. Japan, meanwhile, allows so-called "Sakigake" designations that fast-track important treatments for priority review. McKinsey said Asia accounted for almost two-thirds of the world's biotech patent grants in 2024, five times the European share. It was also responsible for a quarter of global out-licensing deals, which occur when a company licenses its IP abroad — like AstraZeneca offering $100 million upfront and up to $1.9 billion in milestone payments for the rights to a clinical-stage drug from China's Jacobio Pharma last year. China, in particular, has emerged as an innovative and brutally efficient competitor: - What most differentiates China is R&D velocity, McKinsey said. Drugs move from early discovery to human trials 50% to 70% faster than elsewhere on the planet because work is broken down more efficiently across developers and contract research organizations. Of particular note, China moves two to five times faster than the US and EU at trial recruitment during late development, and its share of global clinical trials at 39% is outpacing both as well.
- Where Asia still trails considerably is in FDA novel-drug approvals, where it represents just 10% of candidates. But McKinsey noted that this may be a lagging indicator, as China's 2017 accession to the International Council for Harmonisation aligned its regulators with global standards; domestic approval times have already been cut from about four years to one year.
Buy Their Way Out: Staring down a multi-billion dollar patent cliff of their own, US firms are poised to continue a buying spree to keep their pipelines full. Earlier this week, The Wall Street Journal reported Indianapolis-based Eli Lilly is deep in talks to acquire Ventyx Biosciences, which specializes in pills for Crohn's disease and has a treatment for cardiovascular disease in trials, for $1 billion. Written by Sean Craig | | | | | | Much of the hype around AI seems to be directed at humanoid robots and augmented reality glasses, but some of the less Jetson-esque applications are breaking ground … literally. Caterpillar has started using AI to automate its mining and construction equipment. On Wednesday, the company demoed a new "Cat" excavator that taps Nvidia's physical AI platform. Caterpillar's new AI-powered lineup also includes loaders, dozers and off-road hauling trucks, and it's working with Nvidia to create construction site simulations for testing out workplace scenarios. Putting AI in a Hard Hat Caterpillar's CES announcements expand its AI-powered lineup, which is already one of the largest in the mining industry. The company said three years ago that its autonomous machines had moved more than 11 billion metric tons of material and traveled more than 380 million kilometers. Caterpillar's not alone in transforming worksites: Deere & Co. showed off new equipment at CES this week, too, including autonomous dump trucks that can be used at quarries and tractors for farming. Nvidia, meanwhile, is trying to provide the infrastructure that supports industrial AI and laid out plans to boost its physical AI offerings during its Monday CES keynote. There are a few reasons that companies are digging blade-first into physical AI: - The vast majority of contractors told Dodge Construction Network and software provider CMiC that they believe AI will save them time on repetitive tasks and help them analyze and learn from past projects. Caterpillar's systems can advise workers on-site and offer safety tips.
- At the same time, construction, mining, and farming all face skilled-labor shortages that automated equipment and productivity-boosting software could help to alleviate. Additionally, many of the jobs that autonomous vehicles could take on are hazardous or difficult for humans, like driving through miles of tunnels.
Two-Pronged Approach: While industrial giants are leveling up their equipment with AI, The Wall Street Journal reported, they're also capitalizing on AI's growing energy demand. Caterpillar's power and energy biz is surging as the yellow-tractor maker sells generators that fuel AI data centers. So while Caterpillar's AI-boosted dozers take the spotlight at CES, it has another way to tap into AI's potential profits off stage. Written by Jamie Wilde | | | | | - Out of Work: The number of open jobs in the US fell to 7.1 million in November, suggesting a hiring slowdown in the same month that unemployment reached a four- year high of 4.6%.
- Out of Print: The Pittsburgh Post-Gazette, the largest and oldest newspaper in the Pennsylvania city, announced it will shut down in May.
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