💥 DHI May Be The First Major Fed Cut Winner

🌞Good Monday Morning, Folks!

This market is out of its mind. Traders are reacting to every tick like it’s gospel — celebrating “peak inflation” one day, panicking over rate odds the next. And the same voices who swore housing was finished are now suddenly pretending they’ve got clarity. They don’t. It’s noise on repeat.

Here’s what nobody admits: the real money isn’t made chasing headlines. It’s made sitting still long enough to see where pain has been over-discounted, where patience pays, and where boring suddenly becomes brilliant. The setups that work never feel exciting at the start — they feel uncomfortable, almost laughable.

This week’s focus is one of those setups. It’s not AI, it’s not flashy, it’s not a meme stock. It’s a homebuilder that everyone swears is done, even as the cycle quietly turns beneath their feet. That’s why I’m zeroing in on D.R. Horton (DHI).

⚡ Quick Hits

⚠️ Washington May Ban AI Chip Exports to China

A group of Senate Democrats is pushing the Trump administration to throttle advanced AI chip exports to China. This is more than geopolitical posturing—it’s a real chokehold that could slam Nvidia, AMD, and Tesla’s compute ambitions. If you’re not repositioning now, you risk missing a policy-driven rotation into domestic “secure tech” plays.

🏦 Powell Walks a Tightrope in Jackson Hole

Jerome Powell is going into Jackson Hole under a microscope. Markets are pricing in a September cut, but inflation still lingers annoyingly high. If he flinches dovish, rate-sensitive plays could skyrocket—if he doesn’t, they get smacked. Positioning now isn’t just smart. It’s defensive strategy.

🔋 Good News Finally for Tesla Investors

Despite an otherwise grim 2025, Tesla investors may have some breathing room. According to The Motley Fool, there’s finally a glimmer of positive fundamental or technical setup. Before this story becomes mainstream, those tracking the rebound quietly will be the ones ahead of the pack.

TOGETHER WITH OUR PARTNER

Training cutting edge AI? Unlock the data advantage today.

If you’re building or fine-tuning generative AI models, this guide is your shortcut to smarter AI model training. Learn how Shutterstock’s multimodal datasets—grounded in measurable user behavior—can help you reduce legal risk, boost creative diversity, and improve model reliability.

Inside, you’ll uncover why scraped data and aesthetic proxies often fall short—and how to use clustering methods and semantic evaluation to refine your dataset and your outputs. Designed for AI leaders, product teams, and ML engineers, this guide walks through how to identify refinement-worthy data, align with generative preferences, and validate progress with confidence.

Whether you're optimizing alignment, output quality, or time-to-value, this playbook gives you a data advantage. Download the guide and train your models with data built for performance.

Download the guide

💡One Big Idea: Why DHI Could Be Poised to Pop - A Setup Hiding in Plain Sight

Everyone’s chasing AI, meme stocks, or whatever’s trending on X this week. But the real asymmetric setup is hiding where most investors aren’t looking: D.R. Horton (DHI), America’s largest homebuilder.

This isn’t flashy. It’s not buzzy. But it’s real. And here’s the kicker: with mortgage rates dipping and the Fed nearly locked into cutting, DHI could be the first domino in a housing recovery trade.

🏠 Housing’s Pain Isn’t the Whole Story

The headlines are grim: DHI’s Q3 net income dropped 24%, revenue fell 7%, and backlog value shrank 19% year-over-year. On the surface, that screams weakness.

But dig deeper. Liquidity sits strong at $5.5 billion, debt-to-equity is just 0.30 (30%) — far healthier than peers — and 76% of land holdings are optioned, not owned. That means flexibility, not dead weight.

And while the backlog shrank, new orders were nearly flat year-over-year. That’s not demand destruction. It’s demand in waiting, paused until mortgages ease.

This isn’t a collapse. It’s a coil.

📉 Don’t Wait for a Fed Cut

Most investors are waiting for Powell to actually announce a cut. That’s the wrong play. By then, the move will already be gone.

As of August 14, the average 30-year fixed mortgage rate slipped to 6.58% — the lowest level of 2025 so far. That’s below the behavioral threshold where buyers start peeking back in.

And futures markets (CME FedWatch) now put the odds of a September cut at ~92%. You don’t need confirmation when probabilities are already that high.

DHI doesn’t need the Fed to slam rates down. It just needs the wink — a hint of flexibility in tone — and the stock will sprint ahead of the herd.

🏆 Scale Wins in Recovery

Why Horton and not some smaller builder? One word: scale.

• Pricing Power → DHI can hold margins while weaker players slash prices.

• Land Discipline → With most land optioned, they’re not crushed by holding costs.

• Execution Speed → When demand returns, DHI can deliver at volume faster than anyone else.

Valuation backs it up. Forward P/E is ~13.2–13.8x — near historical averages, but cheap relative to its balance sheet and market position. Price-to-book is ~2.0x, EV/EBITDA just over 10x. This isn’t a bubble valuation.

It’s why Berkshire Hathaway disclosed a stake earlier this year. Buffett’s team knows housing is cyclical, scale is advantage, and relief is inevitable.

⏳ Been Here Before

I’ve seen this movie before. In 2019, housing looked frozen. Mortgage apps inched higher, sentiment ticked up, and DHI ripped ahead before anyone admitted the cycle was turning.

I waited for confirmation back then. By the time I bought, the stock was already up 20%. That scar still stings.

I’m not making that mistake again. Housing trades are slow to start but brutal to miss.

🧠 The Pragmatic Edge

Here’s what I’m tracking this week:

• Treasury Yields → A slide into the 3.8%–4.0% range could push mortgages firmly under 6.5%. That’s the behavioral unlock.

• Mortgage Applications → Even a 2–3% weekly lift is enough to flip sentiment from “dead” to “reviving.”

• Fed Language → Watch for words like patient, flexible, or data-dependent. Those are code for easing.

• Institutional Moves → Berkshire is already in. If we see more 13F disclosures from large funds, that’s conviction, not noise.

This isn’t about guessing the date of a cut. It’s about being ready when the tape shifts.

☑ Key Takeaways

• DHI’s weakness isn’t collapse — it’s setup.

• Balance sheet strength, disciplined land strategy, and backlog resilience keep it lean.

• Mortgage rates at 6.58% and Fed cut odds at 92% set the macro table.

• At ~13.2x forward P/E, valuation gives upside room without demanding perfection.

• Institutional capital (Buffett) is already sniffing opportunity.

TOGETHER WITH OUR PARTNER

Marketing ideas for marketers who hate boring

The best marketing ideas come from marketers who live it. That’s what The Marketing Millennials delivers: real insights, fresh takes, and no fluff. Written by Daniel Murray, a marketer who knows what works, this newsletter cuts through the noise so you can stop guessing and start winning. Subscribe and level up your marketing game.

Sign Up Free

🧠 Final Thought

The hardest part of investing isn’t spotting opportunity — it’s sitting with the discomfort that comes before the turn. A stock like DHI won’t ring a bell when the cycle shifts. It just sits there, boring and overlooked, while the market distracts you with louder trades.

What I’ve learned is that boredom is often the best signal. Excitement belongs to momentum chasers; patience belongs to compounding. The question isn’t whether DHI will look smart tomorrow. The question is whether you can hold the clarity to prepare today, before the market forces you to react.

In the end, edge rarely comes from speed. It comes from standing still long enough to see where the real leverage hides — and being brave enough to look boring until it pays off.