Investor and Consumer Sentiment Decline, Homebuyers Priced Out, and USD Benefits from Current Environment

Small option traders, the favored vehicle of many “meme” investors, are becoming less bullish as investor sentiment continues to worsen. Consumer sentiment continues to fall as well, despite confidence in the job market. Higher mortgage rates and housing prices are finally starting to put a damper on demand. One beneficiary of this odd economic environment is the U.S. Dollar, which has surged recently. In a poor year for technology companies, large-cap technology companies have outperformed smaller more speculative technology companies significantly. How will Elon Musk finance his bid for Twitter?

1. Retail investors are getting demoralized as buying the dip hasn’t paid off lately:

Source: Deutsche Bank Research  

2. Investor sentiment is at the worst level since 2009:

Source: The Daily Shot from 4/28/22

3. Inflation continues to put a damper on consumer sentiment:

Source: https://www.conference-board.org/topics/consumer-confidence

4. But confidence in the labor market remains high:

Source: The Daily Shot from 4/26/22

5. Falling homebuyer demand suggests many potential buyers have been priced out of the market:

Source: Redfin

6. The U.S. Dollar Index has reached it’s highest level in 20 years:

Source: Bloomberg

7. Many think of the “FAAMG” stocks (Facebook, Apple, Amazon, Microsoft, and Google) as technology companies, but only Apple and Microsoft are constituents of the Information Technology sector:

Source: Bloomberg

8. Just over 70% is financed or secured against Musk’s personal fortune, with the remainder coming from outside debt financing:

Source: @WSJ   Read full article