Levi Thornton

Mostly equity markets, real estate, and venture capital commentary

[Levi Thornton @levithorntonxc]

Warsh may be right that inflation is still too high and still make a policy mistake. If he hikes while the economy is already slowing, inflation could fall anyway and the Fed ends up tightening straight into a downturn. But if he holds and inflation stays around 3.5–4%, he risks losing credibility. Today he made it pretty clear he’s more worried about inflation than overtightening. So we know his next move, which puts us in a potentially nasty late-cycle combination with real-economy momentum deteriorating while leverage/capex and inflation remain elevated.

[Levi Thornton @levithorntonxc]

@Reiwholesaler He had the right idea, but the spread is roughly $4,600 a year. Average turnover cost on a 1,000 sq. ft. unit is about $6,000. If the rent gap widened gradually, the break-even point was around 2021. After that the lost rent becomes more expensive than turning the unit.

[Levi Thornton @levithorntonxc]

Fannie Mae forecasts nominal home-price appreciation slowing from 2.3% in 2026 to 1.0% in 2027, while Zillow expects just 0.3% growth in 2026. With both forecasts remaining below CPI inflation, real home prices appear to be settling into a broad plateau rather than beginning a sharp correction.

My forecast has nominal home prices rising 1.0% in 2026 against 3.5% inflation, remaining flat in 2027 against 2.8% inflation, and rising 1.0% in 2028 against 2.4% inflation. This would produce a gradual downward drift in real prices through 2028. By 2029, nominal appreciation of 2.0% nearly matches inflation, before strengthening to 3.5% against 2.2% inflation in 2030.

Under this forecast, real national home prices move sideways within a three-year plateau. The adjustment occurs primarily through inflation and nominal price stability, not a nationwide housing crash.

[Levi Thornton @levithorntonxc]

Median home prices vs. inflation are leveling off nationally. This could be the bottom, but there’s still room for another leg lower, similar to the 2009–2011 period. Plan for a three-year trough, then we’ll likely begin the next housing bull run into 2040 if my thesis sticks.

[Levi Thornton @levithorntonxc]

Median home prices vs. inflation are leveling off nationally. This could be the bottom, but there’s still room for another leg lower, similar to the 2009–2011 period. Plan for a three-year trough, then we’ll likely begin the next housing bull run into 2040 if my thesis sticks.

[Levi Thornton @levithorntonxc]

@amitisinvesting 👆WARSH

[Levi Thornton @levithorntonxc]

Found something interesting in the Russell 2000. $EGAN trades at roughly 10x EV/adjusted EBITDA and ~1.4x EV/revenue, with nearly 40% of its market cap backed by net cash. Its AI Knowledge Hub ARR is growing 26% YoY and now represents the majority of SaaS ARR, while gross margins sit above 70%, cash flow is strong, and buybacks are reducing the share count. A small-cap enterprise software company priced like a stagnant legacy business despite an emerging AI-driven growth engine. 🤔

[Levi Thornton @levithorntonxc]

@iamBarronRoth @taurobots Is this what happens when you feed your Wi-Fi router Brawndo?!

[Levi Thornton @levithorntonxc]

@SMB_Attorney Entrapment means someone forced you into committing said crime. This was clearly not the case.

[Levi Thornton @levithorntonxc]

It is an abomination to portray Leopold as some kind of investing genius or stock-market maverick. His paper was published in 2024, long after the AI trade was already well underway. He did not discover the trade. He arrived late, extrapolated an obvious trend, then expressed it with the risk discipline of a gambler. His fund was foolishly overleveraged, concentrated in the same crowded theme, and when the trade turned against him, the leverage did exactly what leverage does. If anything, he is nothing more than a grand example of the market’s overexuberance around the AI bubble.

[Levi Thornton @levithorntonxc]

My six-month outlook:

Real GDP has slowed to 1.5% annualized, July payrolls fell by 23,000, and real consumer spending was essentially flat. But unemployment remains only 4.1%, while headline PCE is 3.7% and core PCE is 3.3%.

In other words, growth is weakening before inflation has been defeated.

40% probability of a slowdown eventually forces easing.

Payroll weakness spreads, unemployment begins rising, consumer demand deteriorates further, and inflation finally starts moving lower. The Fed transitions from defending against inflation toward defending employment, pushing shorter-term rates lower and eventually pulling down the 10-year.

35% probability of stagflationary hold.

Growth remains weak, but inflation stays around or above 3%. The Fed cannot meaningfully cut despite increasing economic stress. Rates remain restrictive, credit continues tightening, and housing, consumers, leveraged companies, and federal finances remain under pressure.

20% the magical soft landing.

Growth stabilizes around 1.5–2%, payrolls recover, inflation gradually falls, and unemployment remains near current levels. The Fed can eventually ease modestly without responding to a recession.

5% nightmare scenario is reacceleration

Growth and employment rebound strongly enough that inflation remains elevated and the Fed resumes tightening. This remains possible, especially given that three FOMC members already preferred a hike in July, but I see it as the least likely six-month outcome.

The critical data now are payrolls, unemployment and inflation. We already have slowing growth and weak job creation. What we do not yet have is the rising unemployment and falling inflation required to force a genuine Fed pivot.

[Levi Thornton @levithorntonxc]

@unusual_whales Only one version can be true. one is defrauding the courts, and the other version is called false advertising, which is fraud, and they can be sued.

[Levi Thornton @levithorntonxc]

@fthegurus There’s only one way out of this now

[Levi Thornton @levithorntonxc]

$ACN is at 13.5x expected adjusted earnings, a 3.5% dividend yield, 9.5–10% headline FCF yield, and has a net-cash balance sheet. Durable enterprise relationships, strong execution, and meaningful buybacks at a compressed valuation that, like $CRM, looks misplaced due to AI fears. A classic Warren Buffett style play.

[Levi Thornton @levithorntonxc]

This is exactly why I bought CRM a while back, and ACN a few days ago. I have an extensive background as a full-stack developer and spent nearly a decade working for PR firms with major corporate clients. The client doesn’t have time to learn every system or hire specialists for each one, so outsourcing is usually the cheapest and most efficient model. The companies that try usually end up regretting it later. This entire idea that AI is will replace everyone is a pipe dream, because not everyone wants to manufacture their own CRM, or whatever else they think AI can magically handle.

[Levi Thornton @levithorntonxc]

@realMeetKevin This aged well

[Levi Thornton @levithorntonxc]

The current structure eventually causes enough economic damage that rates have to fall. 10-year is already 4.66% while real GDP is only 1.5%. Once unemployment starts to crack, then things will change. Most recessions start around Q4. Keep an eye on unemployment, it likes to pop like a champagne cork!

[The Kobeissi Letter @KobeissiLetter]

BREAKING: US July PCE inflation, the Fed's preferred inflation metric, hits 3.7%, above expectations of 3.6%.

Core PCE inflation was 3.3%, the second highest reading since October 2024.

US inflation continues to run at nearly double the Fed's 2.0% target.

Own assets or be left behind.

[Levi Thornton @levithorntonxc]

I won’t do deals with the hard money guys because they’re just predatory, but the bigger lenders that are backed by Blackstone have good options. All the local regional banks I talk to nowadays are more concerned with trying to get your retirement accounts and savings accounts and all your accounts just so they can give you a loan because the loan itself is not worth any money to them.

[Levi Thornton @levithorntonxc]

The key element is that you have to look at the local population and their source of income. Are they importing their money, or is it local? Once you understand the source and level of income, you can then determine what an affordable price is. If remote work continues to unwind, people will have to return to the source of their income. If that’s happening in your market, prices are going to go down.

[Levi Thornton @levithorntonxc]

@stevehou A sharp 36% deceleration in just two months, while total spend is holding up much better than customer growth. That suggests retained customers are increasing usage, but overall customer adoption may not be as sticky promoted.