Indice S&P 500Short
SPX Trending Towards 13 Year Support
Mis à jour
Macro headwinds are at levels that are realistically unprecedented. I will list some of the most important Data points that I feel are very relevant to the current market climate.
Here is the 30-Year Fixed Mortgage Average in the US. This is usually the point where the housing market breaks.
Here is the 10-Year Treasury Yield, historically this has proven to be a significant point of interest.
This is the Average Sales Price of One Family Homes in the US. As you can see there has been a sharp rise, clearly deviating from the trend.
In relation to this, here is the New One Family Houses Sold, which is starting to potentially show signs of a slow down in demand.
One of the most important facts in relation to the above two points is that statistically Millennials own less property than every other generation ever. Currently, at 47.9%, millennials have the lowest homeownership rates of any other generation. By comparison, gen-X's homeownership rate is 69%, while 77.8% of baby boomers and 78.8% of the silent generation owns their home.
If everyone who is over 30-40 years old has been accumulating property since the 2008 Crash, who buys up all this Real-Estate? Who leads the demand over the next decade and beyond? Millennials also hold the least amount of wealth by an unimaginable level.
Now I will focus on Food, more specifically Wheat. We are seeing one of the sharpest rises seen since the 1970s. Wheat accounts for roughly 20% of the world's protein/calorie intake. With the War raging in Ukraine, not only does this limit exports now but they are not able to sow seeds during the season to prepare for harvest next year. Realistically, Wheat from Ukraine/Russia is potentially cut off for another year.
To touch on this further, Fertilizer has seen an unprecedented impact since the 2020 Boom and Prices for Fertilizer continues to climb exponentially. You can not see by the chart but the only rise in comparison to now was seen in 2007-2008.
This leads us to the Energy Sector and more specifically US Oil, Each time there has been a significant deviation from the trend, it has resulted in a recession. This has happened 3 times since the 1990s. 6 times since the 1970s.
Just a small side note on the FED and Interest Rates. Last time CPI was above 8%, Volcker who was FED Chair at the time, had Rates as high as 20%. In comparison, Powell did just a .25% Hike on March 16th. Stating the potential of .50% in the future as of Monday, March 21st.
If anyone is spinning this as things are completely normal and on track, I would simply show them this. Inflation was "Transitory" for almost the entirety of 2021, but has anyone noticed that word is unheard of now? Big Banks, Hedge Funds, and Retail all calling for new highs. Strange times are here and the direction is uncertain.
Here is the 30-Year Fixed Mortgage Average in the US. This is usually the point where the housing market breaks.
Here is the 10-Year Treasury Yield, historically this has proven to be a significant point of interest.
This is the Average Sales Price of One Family Homes in the US. As you can see there has been a sharp rise, clearly deviating from the trend.
In relation to this, here is the New One Family Houses Sold, which is starting to potentially show signs of a slow down in demand.
One of the most important facts in relation to the above two points is that statistically Millennials own less property than every other generation ever. Currently, at 47.9%, millennials have the lowest homeownership rates of any other generation. By comparison, gen-X's homeownership rate is 69%, while 77.8% of baby boomers and 78.8% of the silent generation owns their home.
If everyone who is over 30-40 years old has been accumulating property since the 2008 Crash, who buys up all this Real-Estate? Who leads the demand over the next decade and beyond? Millennials also hold the least amount of wealth by an unimaginable level.
Now I will focus on Food, more specifically Wheat. We are seeing one of the sharpest rises seen since the 1970s. Wheat accounts for roughly 20% of the world's protein/calorie intake. With the War raging in Ukraine, not only does this limit exports now but they are not able to sow seeds during the season to prepare for harvest next year. Realistically, Wheat from Ukraine/Russia is potentially cut off for another year.
To touch on this further, Fertilizer has seen an unprecedented impact since the 2020 Boom and Prices for Fertilizer continues to climb exponentially. You can not see by the chart but the only rise in comparison to now was seen in 2007-2008.
This leads us to the Energy Sector and more specifically US Oil, Each time there has been a significant deviation from the trend, it has resulted in a recession. This has happened 3 times since the 1990s. 6 times since the 1970s.
Just a small side note on the FED and Interest Rates. Last time CPI was above 8%, Volcker who was FED Chair at the time, had Rates as high as 20%. In comparison, Powell did just a .25% Hike on March 16th. Stating the potential of .50% in the future as of Monday, March 21st.
If anyone is spinning this as things are completely normal and on track, I would simply show them this. Inflation was "Transitory" for almost the entirety of 2021, but has anyone noticed that word is unheard of now? Big Banks, Hedge Funds, and Retail all calling for new highs. Strange times are here and the direction is uncertain.
Note
Finally approaching that support! I hope anyone who stumbled upon this analysis really tried to take it in at the time because it would have saved you a world of pain!
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