San Jacinto Capital

Independent Texas market analysis, privately owned and operated, trusted by Texans. An @OldSanJacinto company.

[San Jacinto Capital @SanJacintoCap]

The new Houston geofence runs from the 290 corridor through the Heights and downtown to Pasadena and South Houston, which adds the Medical Center and the East End to the service area.

Austin was the first Texas market last year. Houston is the one that tests the business, because the trips are longer, the freeway share is higher, and the rain comes down harder than anywhere Tesla has run cameras without lidar.

[San Jacinto Capital @SanJacintoCap]

The $80.7 billion loss is mostly accounting. $72.4 billion of it is the change in fair value of convertible notes and SAFEs, which is what happens when the next round values the company far above the last one.

The operating loss was $693 million on $16.3 billion of revenue, which is a company close to break even.

The line Texas should read is compute and infrastructure: $8.9 billion in six months, up from $2.3 billion a year earlier. Most of that is paid to SpaceX and Google, and SpaceX's share of it is booked in Texas.

[San Jacinto Capital @SanJacintoCap]

Three oil and gas executives on the map, in Norway, Russia, and Azerbaijan.

The pattern holds in the US. The highest paid executive category in Texas is energy, the highest paid salaried profession is medicine, and the two overlap in Houston, which has both the largest medical complex in the world and the largest concentration of energy headquarters.

[San Jacinto Capital @SanJacintoCap]

Five ETFs listed on TXSE in October, two of them WisdomTree's, alongside ten operating companies.

The FT piece puts NYSE and Nasdaq's combined share of new listings at a record low, which is the first measurable market share shift since Cboe and the others entered ETF listings a decade ago.

The listing fee schedule published Friday prices TXSE below both incumbents on annual fees, which is where ETF sponsors actually feel it.

[San Jacinto Capital @SanJacintoCap]

The median age of first marriage for men went from about 23 to about 30, and the median first time homebuyer is now 40, per NAR.

In 1960 a 30 year old had typically done both. In 2025 he is just getting married and is ten years from buying. The chart measures when, not whether. Homeownership at 65 is about the same as it was in 1990.

Texas sits above the national line for one reason: the statewide median home is roughly 20 percent below the national median.

[San Jacinto Capital @SanJacintoCap]

The $10,000 figure is nursing home or memory care pricing.

Assisted living runs about $5,900 a month at the national median and under $5,000 in Texas, per the Genworth cost of care survey.

The reason it is so hard to fund is that Medicare pays none of it and Medicaid pays for it only in a nursing facility or through a waiver program with a waiting list.

It is the largest expense in American life that nobody is told to save for.

[San Jacinto Capital @SanJacintoCap]

Monday open.

- The S&P 500 is up 0.7 percent to 7,679.
- The 10 year Treasury is at 5 percent.
- WTI is down 2 percent to $101 and Brent is back under $110 after a six month high Friday.
- Gold holds above $4,000.

The Fed meets Tuesday and Wednesday. The market expects a hold, and the small probability it is pricing is for a hike, not a cut. That is the first meeting in two years where the risk sits on the hike side.

For Texas the 10 year is the number:
At 5 percent the 30 year mortgage stays above 7, and that rate is the reason Texas inventory is at 5.5 months and Austin permits are down 13.6 percent this year. Oil at $101 is the offset. Every month at this price is roughly $70 million more in severance tax than the state budgeted.

What to watch going forward:
Wednesday's Fed statement for the word "patient." It appeared at the last hold and its absence would be the hawkish signal the bond market is already half pricing.

[San Jacinto Capital @SanJacintoCap]

Brazil's stock market fell 15 percent and its currency 9 percent this morning after Sunday's presidential runoff went against the result the market had priced. The exchange delayed the open on a circuit breaker and the Treasury canceled two bond auctions.

Texas is on the other side of that trade. Brazil is the world's largest exporter of soybeans, beef, and now cotton, the three crops Texas farmers and ranchers compete on, and a 9 percent cheaper real makes every one of them cheaper to foreign buyers this week. Brazilian pre salt crude also competes with Gulf Coast exports for the same Asian refiners.

What to watch: whether the real holds 5.40 to the dollar through the week. If it does, the discount on Brazilian beef and cotton is permanent for this season.

[Archer @flyarcher]

Choosin Texas.

[San Jacinto Capital @SanJacintoCap]

San Jacinto Capital está considerando publicar en español además de inglés. Si usted leería análisis de los mercados de Texas en español, díganoslo aquí.

San Jacinto Capital is considering publishing in Spanish as well as English. If you would read Texas market coverage in Spanish, say so here.

[San Jacinto Capital @SanJacintoCap]

Texas at 29.5 percent Spanish speakers is the business story on this map.

The Latino Donor Collaborative puts the Texas Latino economy at $820 billion and the US Latino economy at $4.4 trillion, which would be the fourth largest economy in the world on its own. Latinos were about 20 percent of the population and 28 percent of US economic growth in 2024.

The wealth side is moving faster than the income side. The Fed's Survey of Consumer Finances showed Hispanic median net worth up 47 percent from 2019 to 2022, the largest gain of any group, driven by homeownership that is now near half of Hispanic households. Hispanic adults also start businesses at more than twice the national rate.

The gap is in who serves that money. Hispanic households are still unbanked at more than twice the national rate, Mexico receives over $60 billion a year in remittances mostly from the US, and almost no financial research or market commentary in this country is produced in Spanish.

The customer is here, is in Texas, and is being underwritten by nobody right now.

[San Jacinto Capital @SanJacintoCap]

Texas at 29.5 percent Spanish speakers is the business story on this map.

The Latino Donor Collaborative puts the Texas Latino economy at $820 billion and the US Latino economy at $4.4 trillion, which would be the fourth largest economy in the world on its own. Latinos were about 20 percent of the population and 28 percent of US economic growth in 2024.

The wealth side is moving faster than the income side. The Fed's Survey of Consumer Finances showed Hispanic median net worth up 47 percent from 2019 to 2022, the largest gain of any group, driven by homeownership that is now near half of Hispanic households. Hispanic adults also start businesses at more than twice the national rate.

The gap is in who serves that money. Hispanic households are still unbanked at more than twice the national rate, Mexico receives over $60 billion a year in remittances mostly from the US, and almost no financial research or market commentary in this country is produced in Spanish.

The customer is here, is in Texas, and is being underwritten by nobody right now.

[San Jacinto Capital @SanJacintoCap]

The spread went from about 0.75 to 1.6 points in a matter of weeks, which is the part to study.

France's debt at 116 percent of GDP and a deficit near 5.5 percent were both known a year ago. What changed is that the market stopped assuming an adequate plan would arrive.

That is the usual sequence. The number sits there for years, then the premium reprices in a quarter.

Italy at 135 percent of GDP now borrows at roughly the same yield as France because Italy runs a primary surplus and France does not.

Direction gets priced before level.

[San Jacinto Capital @SanJacintoCap]

The number is worldwide and about half of it is China, where gas-only cars are already a minority.

In the United States, gas-only vehicles were still roughly three quarters of new sales this year, and most of the shift has gone to hybrids, which burn gasoline too.

The fleet matters more than the sales mix. The average American car is nearly 13 years old, so even if gas-only fell to zero tomorrow, the fleet on the road stays majority gasoline past 2040.

Texas refineries run about a third of US capacity, and Valero($VLO), the largest of them, just posted the highest quarterly profit in its history at $6.8 billion on a $39.24 per barrel margin. Gasoline demand is not what is shrinking yet. The share of new cars is.

[San Jacinto Capital @SanJacintoCap]

CCC and lower yields hit 18 percent this week, the highest since 2020, and the spread over Treasuries is the widest since July 2020. A neocloud with one customer, leased chips and no other revenue is exactly the borrower that market just repriced.

The dividing line is the one named: revenue from somewhere else. SpaceX's connectivity segment earned $2.4 billion of operating income last quarter on $5.2 billion of revenue before any compute is counted. That is what a lender underwrites. A neocloud has the chips and the hope.

For Texas this is not abstract. Several of the largest neocloud campuses in the country are under construction here, Abilene and Denton among them, and county tax bases have been budgeting against them. Consolidation means the buildings get finished by someone else, or not at all.

What to watch: who refinances in November. The neoclouds with public debt have maturities and the price of that paper will say which ones the market expects to survive.

[San Jacinto Capital @SanJacintoCap]

The housing read on this:
Married couple households own their homes at roughly 80 percent, against about 65 percent for all households and under 50 percent for single parent households, per Census data.

A neighborhood where fewer than one in four families with children is married is a neighborhood where most of the housing stock is rented.

[San Jacinto Capital @SanJacintoCap]

Toyota sells roughly six times as many vehicles as Tesla and is worth a seventh as much.

The market is not pricing Tesla as a car company, and has not been for years. The useful comparison is what the other eleven would be worth if they were priced the same way, which is why none of them trade near it.

[San Jacinto Capital @SanJacintoCap]

Texas is missing from the arriving list for an arithmetic reason, not a migration reason.

The chart divides by population and Texas divides by 31 million people. In absolute dollars Texas has been second only to Florida in net income gained from interstate moves every year since 2020 in the IRS data.

The per resident gap with Florida is also about who is moving. Florida takes retirees with large incomes and no job. Texas takes workers in their thirties with a job offer and a smaller return. The second group pays taxes for forty years.

[San Jacinto Capital @SanJacintoCap]

The data supports the Dallas claim.

BLS puts DFW second only to New York in financial activities employment, ahead of Chicago, and the Texas Stock Exchange's first listings this month were all handled from Dallas.

Austin's piece is different and smaller. Virtu taking two floors is a market maker putting engineers near the talent, not a headquarters move.

The split that is forming is Dallas for the institutions, Austin for the trading technology, and Houston for the energy capital that pays for both.

[San Jacinto Capital @SanJacintoCap]

These are the city's 88 Super Neighborhoods, the planning units Houston uses instead of zoning.

Houston is the largest city in the country without a zoning code. Deed restrictions and these boundaries do the work the code does elsewhere.

Worth noting the map is the city limits only, about 2.3 million people. The metro is 7.8 million, so roughly 70 percent of greater Houston lives outside this map.

[San Jacinto Capital @SanJacintoCap]

Ranking debt in dollars mostly ranks economies by size. Here's a better read:

Japan's $8.66 trillion is about 230 percent of its GDP, and almost all of it is owned by Japanese savers and the Bank of Japan, which is why it has carried that load for thirty years.

The United Kingdom's $4.35 trillion is near 100 percent of GDP, but about a quarter of it is inflation linked, so every inflation print raises the interest bill directly. That is why gilts have been the most volatile major government bond market.

France's $4.21 trillion is about 116 percent of GDP with a deficit still near 5.5 percent and no budget majority to cut it. Its bonds have at times traded at yields level with Italy's, which was unthinkable five years ago.

Italy's $3.73 trillion is about 135 percent of GDP, the worst ratio on this list after Japan, yet it runs a primary surplus and its credit rating has been going up, not down. Direction matters more than level.

Singapore's $1.11 trillion is issued so its pension system has something safe to buy and is matched by assets, so its net debt is roughly zero.

Norway owes $261 billion against state holdings worth several times that.

The United States at $41.39 trillion is about 120 percent of GDP, with roughly a quarter held abroad.

The cost for the U.S. is the part to watch. Net interest now runs above $1 trillion a year, more than the defense budget, and every refinancing at current rates adds to it.