This is the video recording of the October 20th, 2022, Weekly Town Hall w/ Willie Delwiche.

10/20/22 2:00 PM ET

From the desk of Willie Delwiche.

Mortgage rates are soaring and housing market conditions are deteriorating. Sentiment is sour in both the financial markets and the economy.

The Numbers: Expectations for home selling conditions are at a level that have been seen leading up to, through, and in the wake of the financial crisis. This isn’t an isolated report and its both sides of the market. Data from the University of Michigan shows that the fewest survey respondents since the early 1980’s see this as a good time to buy a house (and that was prior to the most recent spike in mortgage rates).

From the desk of Willie Delwiche.

Over the past year, this old Wall Street saying has been more than an adage. It’s been a reality. Correlations across the ETFs that we use as proxies for various asset classes are overwhelmingly positive and on the rise. The exception has been Commodities (DBC), though many asset allocation conversations don’t even include commodities.   

Why It Matters: Elevated correlations have left investors with no places to hide as stocks enduring historic levels of volatility and weakness. 2022 has been a risk off environment where risk off assets have been as weak as risk on assets. Trying to navigate this backdrop has led to frayed nerves and impatience for the arrival of better times. Unfortunately this year has done little to show it deserves the benefit of the doubt so far.   

US industry group trends are at a new low for the year and are approaching washed out levels. Take out the Energy groups and virtually nothing is in an up-trend.  

The Details: The industry group trend indicator looks at 4 weekly trend metrics for each of the 72 industry groups in the S&P 1500 (24 each for small-caps, mid-caps and large-caps). The higher the number, the broader the strength at the industry group level.  

From the Desk of Willie Delwiche.

Labor Pressure Eases - Is Inflation Next?

The Chart: 

On the labor front, job openings turned lower in August and the Atlanta Fed’s Wage Growth Tracker for September seems to have followed suit. On the inflation front, the year change in the median CPI reached another new high (its 7th in a row) in September.

Why It Matters: 

This is the video recording of the October 13th, 2022, Weekly Town Hall w/ Willie Delwiche.

10/13/22 2:00 PM ET

From the desk of Willie Delwiche.

Young investors were swept away in the 2021 speculative bubble and came into 2022 with lofty expectations.

The Numbers: The University of Michigan Survey of Consumers shows that a record 70% of investors in the 18-34 age group came into 2022 expecting that stocks would rise over the course of the year. For the 35-54 age group it was 61% and for those 55+ it was 59%. As of August, all three groups were below 50%, with expectations among younger investors getting more in line with those who have been through more market cycles.  

From the desk of Willie Delwiche.

The trend for bonds has been lower for two years, the trend for stocks turned South earlier this year and the trend for commodities rolled over last week.

Why It Matters: If the past pattern holds, the next trend change will be for bonds to turn higher. It’s hard to envision that with so much upward pressure on yields (in US & around the world). But if there is an unloved and under-owned asset, its bonds. 

In taking a Deeper Look we look at why it may still be too early to get aggressive on bonds even though that is where we are likely to see leadership emerge.

A 14% rally in Energy last week (its 3rd best weekly gain in at least the past 30 years) was not enough to keep the long-term in the Energy sector from rolling  over last week. This follows the down-turn in the long-term trend in commodities that we discussed last week. 

The Details: The longest sustained up-trend in the Energy sector since prior to the Great Financial Crisis has ended. The trend for the Utilities sector also turned lower last week. For the first time since the COVID crisis none of the 11 sectors in the S&P 500 are currently in up-trends.  

From the Desk of Willie Delwiche.

Apple Floats, Small-Caps Skid

The Chart: 

Many areas of the stock market have undercut their June lows. The largest company (Apple) and an ETF of small-cap stocks (IWM) stand out as exceptions. When we look over 3+ years (rather than just 3+ months) we see that small stocks are back to pre-COVID levels, while Apple has been consolidating its gains.

Why It Matters: 

The post-COVID speculative bubble in small-caps has been unwound. For Apple, the work seems hardly to have begun. Apple’s resiliency could become a liability if stocks take another leg lower and investors look again for safe havens to sell. As it stands now, Apple  is larger than 5 entire sectors in the S&P 500. Bear markets don’t usually leave anything unscathed.

This is the video recording of the October 6th, 2022, Weekly Town Hall w/ Willie Delwiche.

10/06/22 2:00 PM ET

From the desk of Willie Delwiche.

This All Star Charts +Plus Monthly Playbook breaks down the investment universe into a series of largely binary decisions and tactical calls. Paired with our Weight of the Evidence Dashboard and our Playbook Chartbook, this piece is designed to help active asset allocators follow trends, pursue opportunities, and manage risk.

The S&P 500 just narrowly avoided finishing Q3 with the first back-to-back-to-back 3%+ weekly declines since 2009. It followed that up with the first back-to-back 2.5%+ gains since December 2008 to start Q4. Volatility isn’t showing up in the VIX but it is apparent in the daily and weekly price action.