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Market factors for April 2024. A down month for all segments. Things should improve in May after the "dovish" Fed meeting last week. Rate cuts are back on the table for the second half of the year.

Market factors for March 2024. What outperformed?
Mid-Caps (in all 3 categories).
Mid-Cap Growth (+5.81%), Mid-Cap Blend (+5.58%), Mid-Cap Value (+5.38%).
The S&P 500 (our benchmark) was up 3.27% for March.

Existing home sales for December 2022 declined again for an eleventh straight month. Sales remain pressured by high mortgage rates and higher prices. Read more at:

https://www.briefing.com/in-depth-analysis/bond-market-update/2023/1/20/existing-home-sales-contract-again-in-december

https://www.yardeniquicktakes.com/2023-the-year-of-living-dangerously/?ref=yardeni-quicktakes-newsletter

2023: Another Year of Living Dangerously? With the benefit of hindsight, the title of this QT certainly applied to 2022. It was a tough year for investors. The consensus view is that 2023 could be as tough: (1) A December NYT opinion piece by Peter Coy is titled, "A Strong Signal That Recession Is Looming." He

Housing Starts Weaken Again in September

Higher interest rates continue to take their toll on the housing market (the national average for a 30-year mortgage is currently 7.16%). Housing starts declined 8.1% month-over-month in September. The continued weakness in starts was in both single-family units and multi-family units, down 4.7% and 13.2% month-over-month, respectively. The West and Midwest regions saw the biggest declines.

Read more at:

https://www.briefing.com/in-depth-analysis/bond-market-update/2022/10/19/housing-starts-and-building-permits-lack-singlefamily-strength

Gerald Appel, inventor of the MACD, wrote the book "Power Tools for Active Investors" in 2005. Sadly Mr. Appel passed away in 2020, but most, if not all, of his concepts from that book remain relevant today.

Early in his book Appel discusses two market mood indicators for identifying high and low-risk investing climates. One of which is the NASDAQ/NYSE relative-strength model.

The NASDAQ/NYSE model is a weekly chart of the relative strength of the two composite indexes. The relative strength line is plotted against its 10-week simple moving average (dashed line in chart). In a nutshell, when the relative strength line is above the moving average the NASDAQ is leading (risk-on), and when it's below the 10-week average the NASDAQ is lagging (risk-off).

The market is currently in a "risk-off" environment and for the most part it has been since late 2021, early 2022. There was a brief change in late June '22, which lasted 8-weeks. But since late Aug. the stock market has reverted back to a "risk-off" environment (meaning "stay out").

July Housing Starts and Building Permits Down (Again).

Housing starts are at their lowest level since early 2021. Read more at:

https://www.briefing.com/in-depth-analysis/bond-market-update/2022/8/16/housing-starts-and-building-permits-down-in-july

The University of Michigan Index of Consumer Sentiment came in at 51.5 (the final July reading). One year ago (July 2021) the reading clocked in at 81.2. Consumer sentiment remains close to record lows due to persistent concerns related to inflation and a weakening job market.

In the attached chart notice that the current reading is below the low set in 2008 during the financial crisis (55.3). The July 2022 reading (51.5) reflects extreme pessimism amongst consumers. Hopefully that pessimism is already baked into the equity markets pricing. If not, this week’s market rally may be head fake with more potential downside.

Read more at:
https://www.briefing.com/in-depth-analysis/bond-market-update/2022/7/29/consumer-sentiment-remains-near-record-low

Consumer Confidence and New Home Sales Miss Estimates

The Consumer Confidence Index declined to 95.7 in July from 98.7 in June. This is the 3rd consecutive monthly drop. For perspective, in July 2021 the index clocked in at 128.9. The takeaway from the report is a weakening outlook for growth going into the 3rd quarter of CY2022.

New home sales for June declined to an annual rate of 590,000 units from 642,000 units in May (a 8.1% drop). New home sales were down 17.4% year-over year. Sales were weakest in the South and West due to higher mortgage rates and affordability issues. The West was down 36.7% on a month-over-month basis (May to June).

Read more at:

https://www.briefing.com/in-depth-analysis/bond-market-update/2022/7/26/consumer-confidence-and-new-home-sales-miss-estimates

Existing Home Sales Decline in June.

Existing home sales (home resales) fell 5.4% in June from May, and declined 14.2% year-over-year from June 2021. The inventory for existing homes still remains tight, but rising mortgage rates and affordability issues are contributing to a decrease in buyer demand. The median sales price for all housing types increased 13.4% (year-over-year) to $416,000.

Sales Breakout by Region:
Northeast (unchanged); Midwest (-1.6%); South (-6.2%); and West (-11.1%).

Median Home Prices by Region (year-over-year):
Northeast (+10.1% to $453,300); Midwest (+10.2% to $306,900); South (+16.8% to $374,900); and West (+9.6% to $624,000).

88% of homes sold in June were on the market for less than a month. Read more at:

https://www.briefing.com/in-depth-analysis/bond-market-update/2022/7/20/existing-home-sales-fall-again

Housing Starts and Permits Weaken in June.

Housing starts in June were down 2% month-over-month from May. Building permits for June were down 0.6% from May. Permits for single-family homes declined across all U.S. regions. Starts for single-family homes declined across all regions, except for the Midwest (+2.1%).

Change in starts by region:
Northeast (-12.7%); Midwest (+2.1%); South (-2.9%); and West (-25.4%).

Change in permits by region:
Northeast (-14.8%); Midwest (-9.8%); South (-5.0%); and West (-13.2%).

Read more at:
https://www.briefing.com/in-depth-analysis/bond-market-update/2022/7/19/housing-starts-and-building-permits-weaken

"The thing that got lost on so many people after the Fed's announcement was that their tightening of monetary policy is a reflection of a strong economy."

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