1. Happy 4th of July….God Bless American Entreprenuers and their Employees
2. Two Charts that Sum Up 2023 Market from Callum Thomas….Technicals vs. Fundamentals
Technical Check: This one’s interesting because not only did we end up clearing the lower resistance line, and then go on to break the upper line, but now in fact its gone on to retest that breakout and even chalked up a new high. So again, just on technicals, without knowing anything else, that looks bullish.
What About the Rest of Tech? It really is just a case of big tech carrying the market, if we look at the percentage of Nasdaq stocks with negative earnings, it has just reached a new all-time high. If you argue that it is a fundamental driven rally, it ain’t showing up in the numbers (at least not yet?).
3. Summary of Historical Top 10 Stocks Contribution to Returns
Marketwatch As an aside, Kostin(Goldman) and the team address the whole narrow market issue, saying that in any given year, returns have been concentrated on a group of outperformers. Observe the below chart: “Excluding the top 10 contributors in each year, the S&P 500 would have delivered an 8% average annual return since 1990 (vs. 12% for the full index),” they said. The top 10 contributors account for roughly 12 percentage points of the S&P 500’s 15% year-to-date return.
4. High Yield Spreads and Stock Market Performance
Dorsey Wright Of course, the economy is not our primary focus, but there is a strong relationship between the economy and US equities, so we wanted to see what high yield spreads might be able to tell us about stock performance. To answer that question, we looked at the quarterly change of the CBUS 10 Year Spread (CBUS10YRSPREAD), which measures the spread between US Treasuries and high yield corporate bonds, for each quarter since Q2 1987 and compared it to the quarterly returns of the S&P 500 (SPX). What we found is that SPX performs significantly better in quarters when high yield spreads are narrowing, and that the magnitude of the change is also significant as SPX performed better in quarters when spreads narrowed significantly and worse when they widened by a large amount. The results are shown in the table below.
5. Apple Sets Price to Sales Record High
Purple Arrow is 2007 Iphone Introduction
6. Homebuilders and Lumber??
XHB Homebuilder ETF close to 2021 highs
But Lumber close to lows….This chart shows lumber versus homebuilder stocks …It is down close to -80% from highs.
7. The Other Real Estate Charts Forming Bases
Regional Bank ETF KRE forming base since March?
Vanguard REIT ETF forming base since October 2022 low?
8. Here is Homebuilders vs. REIT ETF
Straight up since mid-2022
More vivid in point and figure chart….massive move higher? Reversion?
9. The Real “Carrying Cost” of Homeownership…NY Times
NY Times By Michael Kolomatsky
Lurking Beneath Home Prices: Hidden Costs Insurance, taxes, maintenance and utility costs vary by region, driving up the true cost of homeownership.
Frustrated home hunters have watched U.S. home prices surge from a median of $327,100 in the fourth quarter of 2019 to $436,800 in the first quarter of 2023. With the focus on rapidly rising prices, it’s easy to forget the “hidden” costs of homeownership, including property taxes, homeowner’s insurance, utility payments and maintenance.
According to a recent Zillow study of housing costs in the first quarter of 2023, the median amount of these auxiliary expenses in 39 large U.S. metro areas was $14,155 a year. Among those metros (where sufficient data was available), San Francisco had the highest annual hidden costs (a median of $22,791), while Las Vegas had the lowest ($9,886).
Overall, maintenance was found to require the greatest median outlay ($6,413 a year), followed by utilities ($3,216), property taxes ($2,827) and homeowner’s insurance ($1,699). Taxes varied the most, from an annual median of $9,145 in New York City to just $1,055 in Pittsburgh.
To build the list, researchers used each metro’s median real estate tax and home value, as drawn from the Zillow Home Value Index. Insurance costs were calculated at 0.5 percent of value. Utility costs were derived from 2022 state averages, while phone bills and streaming-service costs were sourced from Forbes reporting. Zillow collaborated with Thumbtack, a site connecting contractors with homeowners, to determine local costs of maintenance and essential repairs, such as fixing appliances, house cleaning (including carpets, chimneys, gutters, grout and windows), lawn care, roof maintenance and yard work, among others.
10. Farnum Street Blog
A few gems from my remarkable conversation with Dr. Julie Gurner:
Victim or survivor mindset
“I think that there are two ways of looking at things that have happened to you. You can be a victim or you can be a survivor. Those are two very different cognitive positions. You can’t control what happens to you in either circumstance, but one is very powerful. You have overcome. One is you have had something happen to you and you are under that thing for quite some period of time. For me, if I hear someone and I hear that helplessness, one is that I want to reframe that experience. I want to tell a different story. I want them to tell a different narrative to themselves. I want them to rewrite that. In some ways, you want them to rewrite that narrative to survivorship and overcoming and what it took. You ask the right questions to get them to see that their own throughway in that case is based on their strength and ability. You want them to see those things rather than seeing the helplessness and powerlessness.”
“When people are telling me that “I’m doing this because of my childhood” or “I’m doing this because of this,” I think you’re giving up some amount of power. You’re giving up a lot of power to something outside of yourself, and also how you’re interpreting that event is not useful to you. There may be a lot of truth to the terrible things that have happened, but those terrible things—you have to shut the door at some point and say, “I am my own man or woman, and I move forward. … if you are somebody who uses other events as a reason to self-destruct, you’re ceding power… We see that even in companies—“I’m doing this because so-and-so made me angry. I’m doing this because…”—and you end up making some poor decisions and ceding power because of someone else. You’re willing to make a poor decision. You’re willing to give up. Sometimes people are willing to give up their entire future dreams because of X, Y, and Z, and it’s a tragedy. You want people to really understand the power they have to create their own lives at some point, and that creation is not given to anyone else but you.”
“It’s one thing to create. The other is you have to choose. ‘What are we going to do, and what are we not going to do?’ This is a gigantic aspect of show-business survival. It’s kind of unseen, what’s picked and what is discarded, but mastering that is how you stay alive.”
Your life is designed to get the results you are getting right now.
For the trajectory to change, the approach must change.