Rising Rent, S&P 500 Well Above Long Term Trend, and Delta Variant Momentum
July 12, 2021 | FIRESIDE CHARTS
The median rent has climbed in the first half of 2021, putting a strain on lower-income households as the federal eviction moratorium is set to expire. Now with concerns about the nation’s rental housing supply, we may see even steeper rent increases. Could this be a sign that the consensus on pandemic inflation fading is premature? Meanwhile, the ISM Manufacturing Index has ticked down so far in 2021 while the S&P 500® Index continued to hit new all-time highs well above its long-term channel. As we will remind readers in our quarterly market commentary (which will be published here later this week), the “market” is not the same as “the economy”…and stocks tends to be far less predictable. One factor that could halt this momentum is the proliferation of the delta variant. It’s dominating new Covid cases across Europe, and even though death rates remain low (so far), the U.K.—which has a higher vaccination rate than the U.S.—is recording the highest spike in new cases since November 2020. And it has also taken hold of some Midwestern states here in the U.S. As countries around the globe are beginning to implement new lockdowns and Covid restrictions, what will that mean for this economic recovery?
- Rents have already started to rebound, but will this 40% component of CPI take off with the end of the eviction moratorium and other “normalization”?
Source: The Daily Shot, from 7/12/21
2. The stock market is not the economy! Stocks tend to look forward, most economic measures look back. Here is the last 20 years:
Source: The Daily Shot, from 7/12/21
3. The S&P 500 is about 1,000 points above its long-term trend channel. Time for a rest?
Source: The Chart Store, from 7/12/21
4. YTD returns are converging:
Source: The Chart Store, from 7/12/21
5. Real junk bond yields are now negative!
Source: The Daily Shot, from 7/12/21
6. Where to from here?
Source: The Daily Shot, from 7/12/21
7. After declining ~2 million barrels a day during the pandemic, will U.S. shale recover in drilling/production as well as profits?
Source: The Daily Shot, from 7/12/21
8. The U.K. has 52% of their population vaccinated which is 4% more than the U.S. However, the delta variant will find those still unvaccinated and the cycle starts all over again. It is already rampant in the Midwest…
Source: The Daily Shot, from 7/12/21
9. It is not just the U.K.:
Source: The Daily Shot, from 7/9/21
10. And the delta variant goes after everyone, not just the elderly and sick:
Source: The Daily Shot, from 7/12/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.