Refis Rise
Mortgage rates have come off of recent lows with the 30-year national average from Bankrate.com currently at 6.53%. While rates are not making new lows, those are much more attractive levels than last fall when they peaked well above 7%. On a rolling 3-month basis, the decline in mortgage rates continues to rank as some of the largest since the late 1990s (after the largest increase since the 1990s).
Given the alleviation on the rates front, purchase applications have been rebounding. The Mortgage Bankers Association’s weekly purchase application index is currently 19.2% above the post-pandemic low put in place in the first week of the year.
When rates were rising rapidly, massively stifling demand last year, refinance applications had taken a much larger hit than purchase applications. At the worst levels during the holidays, refinance applications reached the lowest level since May 2000. Since the start of the year, though, refinance applications have surged. Although there is still plenty of lost ground still to make up as applications continue to run below the past two decades’ range, the 68% month-over-month increase in applications has been the largest jump since March 2020 when applications doubled. Of all weekly readings since 1990, the current one-month increase ranks in the top 5% of all month-over-month moves on record. Click here to learn more about Bespoke’s premium stock market research service.
The Closer – Powell Raises the Terminal Rate – 2/7/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start out with earnings recaps (page 1) followed by a look at stock correlations and volatility (page 2) and the contango in crude, copper, and natural gas (page 3). We then review the latest consumer credit and trade balance figures (page 4) before switching to a look at the latest readings on supply chain stress (pages 5 – 7). We close out with a recap of the historically bad 3 year note auction (page 8).
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Daily Sector Snapshot — 2/7/23
This content is for members onlyPeople All Over AI
In today’s Morning Lineup post, we compared Chat GPT’s rapid emergence into the mainstream to the rise of a number of other products. While Artificial Intelligence, or AI, has been a buzzword for some time now, this year it certainly has been in the spotlight more than in the past. Given the popularity of Chat GPT, some mega-caps like Alphabet (GOOGL) and Baidu (BIDU) have jumped in on the opportunity to announce their own versions. To quantify how in focus AI has become, below we show the Google Trends scores for a handful of related terms. Readings of 100 would indicate the peak in searches for a given topic globally.
Searches for “Artificial Intelligence” or its abbreviation have reached a new record while the field of “Machine Learning” has similarly seen searches rip higher and remain elevated in the past year. One interesting area which has not seen searches rise much is in regards to the automotive industry. Searches for “self-driving” have not picked up much within the range of the past few years. That is also well below the record from March 2018 when searches spiked due to a fatal incident involving Uber’s self-driving car. That being said, it is worth noting that even before the Chat GPT craze, these searches had been moving higher quite rapidly.
As we discussed earlier, although the broad topic of AI is in vogue, related stocks have not gotten much of a boost in reaction to this news. For those having made announcements regarding AI in recent days like Alphabet (GOOGL), Microsoft (MSFT), and Baidu (BIDU), relative strength versus tech more broadly (proxied by the Nasdaq 100 ETF (QQQ)) has not done anything too notable in terms of long term trends. For MSFT and GOOGL, relative strength has been sideways at best over the past year, and BIDU has been moving higher in recent months, but that follows a few rough years for the stock relative to US tech. The same can be said for a more encapsulating basket of AI-related stocks proxied by the Global X Robotics and Artificial Intelligence ETF (BOTZ). While the relative strength has been trending lower (meaning underperformance versus tech more broadly) the past few months have seen a rebound. Click here to learn more about Bespoke’s premium stock market research service.
