The Housing Industry Is In A Recession

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In his podcast addressing the markets today, Louis Navellier offered the following commentary.

Bargain Hunting

Both Microsoft and Google missed analysts’ second-quarter earnings estimates, but both stocks resurged in the wake of their lower-than-expected results as institutional investors went bargain hunting.

Institutional Buying Reemerges

Bespoke Investment Group documented that the bull/bear spread has dropped below 20% for only the fifth time since 1990. The S&P 500 has posted median returns for the next month, three months, six months and year of 2.7%, 9.19%, 14.73% and 20.37%, respectively, when the bull/bear spread has dropped below 20%. This may explain why institutional buying pressure has reemerged so strongly.

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Q2 2022 hedge fund letters, conferences and more

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Housing Recession

Interesting economic news on Tuesday was that new home sales declined 8.1% in June to a 590,000 annual pace, which is below pre-pandemic levels. In the past 12 months, new home sales have plunged 17.4%. Even worse, the inventory of new homes for sale rose to a 9.3-month supply at the current annual sales pace. At the peak of the housing bubble, new home sales hit a 1.4 million annual sales pace, so new home sales are now running at only 42% of peak annual sales. Due to higher mortgage rates, demand for new homes has clearly fizzled and the housing industry is in a recession.

The Commerce Department announced on Wednesday that durable goods orders increase a healthy 1.9% in June, due largely to a 5.1% surge in transportation from the automotive industry. Excluding transportation, durable goods orders rose 0.3%. Unfilled orders rose 0.7%, so order backlogs continue to grow. May durable goods were revised up to a 0.8% increase. In the past eight months, durable goods orders have risen 8 of the past 9 months, so the manufacturing sector remains healthy.

At 2 pm EST today, the Fed will increase key interest rates 0.75% and the Federal Open Market Committee (FOMC) will be scrutinized for any hint when the Fed tightening will be winding down at its September 21stFOMC meeting.

Coffee Beans

This week, the U.S. had become the world's largest LNG exporter over the first six months of 2022 - 71% of which ended its journey in Europe.In 2021, Australia, with an export volume of 108.1 billion cubic meters, was the most significant LNG exporter. Qatar ranked second, followed by the United States. Source: Statista. See the full story here.