On the heels of the continued turmoil in global markets, here is an important snapshot of bulls, bears, inflation, real estate and auto sales.
Bulls, Bears And Inflation
September 5 (King World News) – Here is a portion of what Peter Boockvar wrote today as the world awaits the next round of monetary madness: In spite of what is going on overseas and in a world that is so interconnected, the Bulls in the US see little risk according to Investors Intelligence. Bulls rose to 60% from 59.6%. That is the highest since late January and II said that when Bulls get to 60+ it “signals elevated risk and the need for defensive measures.”…
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Peter Boockvar continues: Bears meanwhile slipped down to 18.1% from 18.3% last week. That is the least since April 4th. The balance that are looking for a Correction is at the lowest level since late January. The bull-bear spread is the widest since January 31st. Bottom line, while the Bulls can certainly be right for a period of time, the current extreme both absolute and relative to the bears can’t be ignored. This year stocks have tended to top out and consolidate when getting to a Bull reading of 60+ and they’ve bottomed out and rallied after when they got into the 40’s.
With mortgage rates holding steady near 7 year highs, mortgage applications were little changed w/o/w. Purchase applications to buy a home rose .6% after falling by .9% last week week. The y/o/y gain is a modest 2%. Refi’s fell 1.4% w/o/w and are down by 37% y/o/y. Bottom line, the evidence seen this year is clear, home price inflation that has run more than 3x the pace of consumer price inflation along with the 7 year high in mortgage rates has combined to slow the pace of housing transactions as buyers have called a time out.
The same can be said for vehicle sales where yesterday’s SAAR for August totaled 16.6mm, 200k less than expected and that is the slowest pace of sales since August 2017. “Average transaction prices are up for the industry, as most manufacturers reported gains from the sales mix continuing to shift from cars to SUVs,” Tim Fleming, analyst for Kelley Blue Book, said in a statement. We can add the end of zero percent financing, higher interest rates and less incentives as automakers try to preserve profits.
Higher inflation is a deterrent to higher REAL growth, not a driver of it.
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