Housing Market Updates, Retail Comes Back Toward Earth, and Follow-On Stock Offerings Hit 25-year High

As the eviction moratorium comes to an end in the U.S. following a 6-3 vote in the Supreme Court, we’re seeing fewer renters making the transition to homeowners—though competition and price increases don’t seem to be cooling in either market. Durable goods, like those used to furnish homes, are up, but retail as a whole is slowly moderating from record highs to return toward its pre-pandemic trendline. Consumer sentiment meanwhile has taken a hit as the Delta variant spreads across the globe in a development that may moderate retail activity even further. S&P 500^® Index companies revenue surprises learned largely positive in Q2 as earnings remained fairly strong, and companies look to be taking advantage of bullish sentiment as follow-on stock offerings climb to their highest level since 1996. Finally, as investors digest the news out of Jackson Hole today, just how much of our federal debt does the Fed own and how have P/E ratios and equity returns historically reacted during a rate hike cycle?

1. The Covid-induced surge of Americans moving out of an apartment and into a house is back down to normal levels:

Source: The Daily Shot, from 8/27/21

2. Yet limited availability and price increases have not normalized:

Source: The Daily Shot, from 8/27/21

3. While overall manufacturing is moderating, durable goods—largely driven by the housing market—are still going strong:

Source: The Daily Shot, from 8/26/21

4. Shipping rates and containers continue to see massive price increases. A reference on the topic:

Source: The Daily Shot, from 8/26/21

5. Earnings have been strong, but year-over-year comps and prior-year guidance during a pandemic have provided quite a tailwind:

Source: The Daily Shot, from 8/26/21

6. Not only are companies “hoarding cash”, they are also taking advantage of the apparent “unlimited’ appetite of investors to snap up new shares:

Source: The Daily Shot, from 8/26/21

7. Who owns our federal debt? Well, depending on the maturity, the Fed owns 25-55%. Tapering into the teeth of our ~$1 trillion operating deficit, $1.5 trillion on infrastructure.

Source: New York Fed, from 8/26/21

8. Worth a counter observation? What happens in the following year or two?

Source: The Daily Shot, from 8/26/21

9. Certain countries are seeing significant inflation:

Source: The Daily Shot, from 8/26/21

10. The U.S. is back over 1 million new cases /week and ~7,500 Americans die from Covid each week. Our outrage is being misdirected. Most of this was preventable!

Source: JHU CSSE, as of 8/27/21