The Squeeze Moves to Main Street

Builders just hit a 14-year low. Here's who still has pricing power when costs are up, demand is up, and rates are slipping. Not everyone gets squeezed.

October 21, 2026

Something shifted last week, and most of the dashboards haven't caught up. Home builders just posted their gloomiest reading in 14 years.

Brent is hovering near $110 on the US-Iran standoff. And the 10-year Treasury yield is still parked above 5%. If you own businesses that can't pass higher costs along, read this one twice.

Musk’s Next Move (Sponsored)

What Elon is doing in AI is exactly what he’s done his entire career.

He took over mobile payments with PayPal. Electric cars with Tesla. Commercial space launches with SpaceX.

Now he’s doing it with Artificial Intelligence… and James Altucher believes the shift could be significant for investors who position early. Nothing here is assured.

According to James Altucher, there’s one company sitting at the dead center of his plan… and it's still trading for less than $100.

James compiled the details into this FREE Millionaire Maker Masterclass.

What You're Really Looking At

This isn't a market story anymore. It's a cost story.

The NAHB/Wells Fargo builder index fell three points to 29 in October, the lowest since June 2012, and builders blamed it on three things: mortgage rates well above 7%, higher energy and material costs, and weaker buyer traffic.

That's the same mix every business is staring at: financing costs higher, input costs higher, and a customer who's starting to flinch.

Companies with pricing power pass it through; everyone else eats it. That's the sort you want to be on the right side of.

How The Setup Built Itself

Pull the thread, and you'll see this didn't come out of nowhere. The Fed hiked in September, and the 10-year hit a 52-week high of 5.31% in early October. That pushed mortgage rates well past 7%, right as buyers were already stretched.

Oil added the second punch. Brent is up more than 80% this year on the US-Iran standoff, so diesel, freight, asphalt, and plastics all cost more.

Builders said as much: materials and diesel sat right next to rates on their complaint list. The regime changed, and if your portfolio didn't, that's your problem.

Would you rather the Fed permanently target a higher 3% inflation rate, or stick rigidly to its current 2% target even through a weak economy?

Login or Subscribe to participate in polls.

Short-Term Focus (Sponsored)

A newly released report highlights seven stocks chosen for their near-term potential.

Selections are based on a mix of technical and fundamental indicators.

While past picks have performed well, future results are uncertain.

The report is available for a limited time.

*This free resource is being sent by Zacks. We identify investment resources you may choose to use in making your own decisions. Use of this resource is subject to the Zacks Terms of Service.

*Past performance is no guarantee of future results. Investing involves risk. This material does not constitute investment, legal, accounting, or tax advice. Zacks Investment Research is not a licensed dealer, broker, or investment adviser.

Why This Sticks Around

Don't expect this squeeze to fade on its own. Here are four reasons you can't wait it out.

  1. Rates aren't coming down soon: The Fed raised rates in September, the next decision is October 28, and nothing in the data argues for relief before year-end.

  2. Oil has no clear off-ramp: The US-Iran standoff keeps a risk premium in Brent, and every week it lasts feeds straight into transport and materials costs.

  3. Housing is the transmission belt: A 14-year low in builder sentiment means fewer starts, and fewer starts ripple into lumber, appliances, furniture, and local tax bases.

  4. Bond buyers want to be paid: Wednesday's $13 billion 20-year Treasury auction is the next test of how much extra yield it takes to clear long-dated supply.

What Actually Breaks

If this drags into year-end, the pain doesn't show up where you're looking. Long-duration growth names, the ones you own for 2028 earnings, get repriced first, because every basis point on the discount rate hits them hardest.

Levered small caps lose access to cheap refi. Builders and anything tied to new-home volumes feel it next. And any AI name you own without a visible revenue path becomes a candidate for the kind of multiple compression we got in 2022.

The flip side is cash-generative businesses with pricing power, and that's where your attention belongs.

How To Position

You don't have to tear up your whole book to get on the right side of this. Here are four moves you can make this week.

  • Rotate inside tech, not out of it: Favor names turning AI capex into actual revenue. Avoid the ones still hunting for a business model.

  • Add real-asset cash flow: Grid, pipeline, and infrastructure businesses get it from both sides. AI power demand and the energy backdrop.

  • Trim your long-duration speculative sleeve: If something you own is unprofitable and refinances in 2027, lighten up now.

  • Lean on pricing power: Insurance brokers and materials businesses with locked-in local markets keep raising prices regardless of where yields go next.

Top Picks

Quanta Services (NYSE: PWR)

The grid-build guy. Every AI data center needs transmission capacity before it needs chips. Backlog has been climbing, yet the stock has pulled back hard from its early-October high as the AI-infrastructure trade cooled.

Earnings land October 29 before the open. You get grid exposure without the AI valuation risk bolted to it.

What to watch: If yields keep climbing and utility clients slow their project pipelines, the backlog story compresses faster than consensus thinks.

Emerson Electric (NYSE: EMR)

Sells the automation guts going into reshored factories and the mechanical side of data centers. Those capex cycles don't vanish just because AI multiples compress. That's the whole point. Results are due November 4 after the close.

What to watch: A China demand air pocket or softer industrial production pushes the inflection two quarters right. You wait.

Vulcan Materials (NYSE: VMC)

Boring aggregates. Local pricing power. Infrastructure spend that's still ramping. Even after a bounce this month, the stock sits roughly 20% below its 52-week high, so you're not paying peak-cycle prices.

What to watch: Residential construction cracking harder than NAHB at 29 already suggests. Aggregate volumes take a real hit into 2027.

Arthur J. Gallagher (NYSE: AJG)

Your insurance broker trade. Brokers earn commissions on premiums, so rising insurance costs show up as organic growth. Zero direct AI or oil exposure. Right now, that's a feature, not a flaw. Earnings land October 29 after the close.

What to watch: A sudden softening in property and casualty rates ends your organic growth story faster than most of the Street models.

Setup Scorecard

Thesis: Rotate toward real-asset cash flow and pricing-power compounders. Trim unprofitable long-duration tech.

Entry Zone: Scale in over the next two weeks on any further weakness in PWR, EMR, VMC, and AJG. Don't chase green days.

Target: 15% to 25% outperformance versus the Nasdaq 100 over the next 6 to 12 months, assuming the yield and oil regime holds.

Stop Loss: Reconsider the rotation if the 10-year drops back below 4.50% and Brent falls under $90. That tells you the squeeze is unwinding.

Catalyst Timeline: Wednesday's 20-year Treasury auction. FOMC decision October 28. PWR, VMC, and AJG earnings October 29. Ongoing US-Iran headline risk.

Confidence Level: High on direction, medium on timing. The macro setup is clear. But the Fed meeting can jolt either side of the trade for a day or two.

Where This Leaves You

The Setup: You're watching a regime change in slow motion. The names that led you here aren't the names that lead you out.

What It Means: Financing costs and oil are both up, and long-end yields won't budge, so growth multiples give before anything else does.

How To Play It: Rotate incrementally toward real-asset cash flow and pricing-power compounders. Keep your tech exposure. Just tilt it toward the companies turning AI into actual cash, not the ones still hunting for a business model.

Hidden Metals Link(Sponsored)

No household name. No presence on the big financial networks. At this moment, hardly anyone knows this company is out there.

Who is this company?

Behind Elon Musk's rockets, satellites, batteries, and robots sits a brief roster of metals America is short of. This company is sitting on that supply.

Send me the name and ticker.

Small company, share price still around $5. Wall Street is still missing the link.

I'll take the free report.

*This ad is sent on behalf of Guardian Financial Publishing LLC, doing business as Stable Financial Publishing, 1013 Centre Road Suite 403-D, Wilmington, DE 19805. Nothing here is investment, financial, legal, or tax advice, and it is not a recommendation or solicitation to buy or sell any security. Investing involves substantial risk, including loss of principal; small-cap and low-priced stocks carry particular risk, including the possible loss of your entire investment. Past performance does not guarantee future results. Stable Financial Publishing, its owners, employees and contributors may hold positions in securities mentioned and may trade them at any time. References to Elon Musk and SpaceX are for informational purposes only; Stable Financial Publishing is not affiliated with, endorsed by, or sponsored by Elon Musk or SpaceX. Privacy: https://guardian.pub/privacy-policy/ · Terms: https://guardian.pub/terms-of-service/

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes