The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles to a large degree - have moved overseas, where labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines and AI) and services (such as Zoom calls) and moving into new markets, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

Homebuilder confidence rose for a third month in February, according to the National Association of Home Builders. "Buyer traffic is improving as even small declines in interest rates will produce a disproportionate positive response among likely home purchasers," NAHB Chairman Alicia Huey said. The NAHB expects single-family starts to rise about 5% in 2024, but notes the recovery may be "bumpy." Luxury builder Toll Brothers recently provided an upbeat outlook along with better-than-consensus earnings. "Since mid-January, we have seen a marked increase in demand coinciding with the start of the spring selling season," CEO Douglas Yearley said. "With a healthy job market, improving consumer sentiment, and continued low levels of resale inventory, we are optimistic that demand for new homes will remain strong in 2024," he added. Last week, the Commerce Department reported January Housing Starts of 1.33 million at a seasonally adjusted annual rate, down 0.7% from a year earlier. This morning, we expect the National Association of Realtors to report January Existing Home Sales of 4.0 million (SAAR), the same as in January 2023. On February 26, we expect the Commerce Department to report January New Home Sales of 670,000 (SAAR), up 3% year-over-year. Based on the February 16 GDPNow estimate from the Atlanta Fed, first-quarter GDP is expected to rise 2.9%, with a small, but positive, contribution from residential fixed investment. The S&P/Case-Shiller National Home Price Index jumped 5.2% in November. We expect it to rise about 3% for December. The Zillow Home Value Index was up 2.6% in December and 3.1% in January. In this evolving housing market, Argus recommends Lennar, D.R. Horton, and Toll Brothers -- companies with solid financial strength and that are adapting to market conditions.

Arista Networks is a leading supplier of cloud networking solutions for internet companies, cloud service providers, and next-generation data centers. It generates the largest portion of its revenue from switching products that incorporate its Extensible Operating System (EOS) software.

Stocks bounced back on Wednesday from yesterday's inflation fueled sell-off. Chicago Fed President Goolsbee noted that 'Even if inflation comes in a bit higher for a few months...it would still be consistent with our path back to target.' The Dow was up 0.1%, the S&P rose 0.4%, and the Nasdaq gained 0.7%. Crude oil fell slightly to $77.50 per barrel, while gold fell $2 to $2005 per ounce.