ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Introduction The U.S. housing market follows a seasonal pattern. The spring selling season represents the year’s peak of home sales. During this time, households try to settle into a new home before summer travel or well ahead of the Fall start to the next school year. The stocks of home builders also approximate a seasonal … Read more
The National Association of Home Builders (NAHB) was just about as bearish on the housing market as it allows itself to get. In its latest press release on the NAHB/Wells Fargo Housing Market Index (HMI), the NAHB declared “…the housing market is now slowing.” The HMI plunged from 77 to 69 in a sign that … Read more
I doubted the ability of Freddie Mac to forecast the housing market once. Never again. In the immediate wake of the pandemic, Freddie Mac insisted that housing would recover rapidly. I was highly skeptical. Freddie Mac turned out to be too conservative! Fast forward two years and Freddie Mac has delivered a surprisingly solid housing … Read more
Two recent studies from the Federal Reserve say a lot about its core concerns for inflation. These studies were released back-to-back just one week following Fed Chair Jerome Powell confirming the new religion at the Fed for (aggressively) fighting inflation. Researchers at the St. Louis Federal Reserve identified housing services (aka rents) as a core … Read more
Housing Market Intro and Summary An aggressively hawkish Federal Reserve has changed the game for the housing market. After falling behind the curve and failing to start the rate hike cycle last year, America’s central bank is now desperately scrambling to catch up without causing a recession. The housing market is ground zero for the … Read more
Housing Market Intro and Summary A hawkish Federal Reserve has changed the game for the housing market. At first, I thought the normalization in monetary policy would generate a “settling in” for the housing market. However with inventories tight, a scarcity in available labor, rising material costs, and a dysfunctional supply chain, higher rates may … Read more
Stock Market Commentary The stock market indices benefited from a strong 2021. year. However, under the surface, declining market breadth betrayed the bullish narrative for a wide swath of stocks. A disappointing start to the new year for the indices was even worse for those stocks already limping into the end of last year. The … Read more
Stock Market Commentary The stock market indices enjoyed an impressive year. However, weak and declining market breadth produced numerous exceptions to the strong performance of indices and ETFs. A number of important and well-known individual stocks corrected, collapsed, and crashed in 2021. For some, the tailwinds of the pandemic ran out. For others, investors tired … Read more
Housing Market Intro and Summary The story of housing remained relatively steady for most of the year: low inventory, rising prices, strong demand, low interest rates, and the desire for more space, especially in the suburbs. In my last Housing Market Review, I explored the market as a nexus of economic recovery and inflation. In … Read more
Stock Market Commentary It was a close call. The technical deterioration of the previous week put the Santa rally in peril. At the start of trading last week, the Grinch roasted Santa enough to ignite oversold trading conditions. Santa’s revenge came in the form of a sharp rebound out of the 1-day oversold period. Subsequently, … Read more