Homebuilder sentiment from the National Association of Home Builders (NAHB) was updated this morning. As expected, the headline index rose from 44 in March to 45. Of the sub-indices, increases in both present and future sales drove the headline reading higher. While those readings remain relatively muted versus most of the past decade, it reiterates the modest improvement in sentiment we have seen this year. In fact, and as shown in the second chart below, homebuilder sentiment’s improvement over the past four months marks the longest streak of monthly increases since another streak lasting for four months that ended in December 2021.

As for the regional breakdown, sentiment in the Northeast and South was unchanged versus last month which leaves the indices in the middle of their historical ranges. The Midwest saw more substantial improvement rising by 3 points to the highest level since September. The West experienced an even more substantial increase of five points. That month-over-month increase ranks in the 85th percentile of all moves on record for that sub-index.

Although the NAHB’s reading on homebuilders has improved over the past few months, homebuilder stocks as proxied by the SPDR S&P Homebuilder ETF (XHB) have been trending lower since February.  Recently, XHB has run up to its 50-DMA (which has begun to roll over) and the downtrend line off the aforementioned early February high. So far, XHB has failed to break out.

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For an area of the world that couldn’t have been considered less attractive last summer, European equities have been on a tear since the October lows.  The Euro Stoxx 50 Europe ETF has now rallied more than 50% off its October lows and broke out to 52-week highs last week.

The S&P 500, meanwhile, hasn’t fared nearly as well.  While it has formed a gradual uptrend from its October lows, SPY currently has three prior highs (February 2023, August 2022, and April 2022) standing between it and 52-week highs.

Other parts of the global equity market spectrum haven’t been able to keep up with Europe either.  Emerging markets, as tracked by the iShares MSCI Emerging Markets ETF (EEM), rallied sharply off its lows in October, but that rally ran out of gas in early February and hasn’t been able to recover.  Like the S&P 500, EEM remains well below 52-week highs from last April.

Since Europe accounts for a major share of international equity market cap, the MSCI All Country World Ex US ETF (CWI) is much closer to 52-week highs than EEM, but it still has a number of resistance points to clear.

The chart below compares the relative strength of all three ETFs (FEZ, EEM, CWI) to the S&P 500 (SPY) over the last three years and provides a clear look at how Europe has led the global rally.  From April 2020 through April 2021, all three ETFs outperformed the S&P 500, but then they really started to underperform as the US economy reopened and the FOMC later started to hike rates.  Last October was the major turning point for global stocks, though, as the relative strength for all three ETFs made multi-year lows.  While they’ve all started to reverse, only Europe has managed to erase all of its underperformance from the post-COVID period and move into the black versus the S&P.

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Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

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Labor

‘Zero Interest in Doing Business’: TSMC Snubs Phoenix Construction Workers by Lee Harris (The American Prospect)

Unionized construction workers in Arizona are getting little interest from Taiwan Semi’s massive fab investment, as the chip giant prefers importing contractors from out of state. [Link]

Next Wave of Remote Work Is About Outsourcing Jobs Overseas by Konrad Putzier (WSJ)

With tight labor markets and strong wage growth, some traditionally localized, skilled service workers are being outsourced to emerging markets economies. [Link; paywall]

Tech Dystopia

They’re Selling Nudes of Imaginary Women on Reddit — and It’s Working by EJ Dickson (Yahoo!/Rolling Stone)

A pair of computer scientists are selling nude pictures of women that don’t exist, proving that machine learning algorithms like Stable Diffusion have leaped forward towards full realism. [Link]

The U.S. Cracked a $3.4 Billion Crypto Heist—and Bitcoin’s Anonymity by Robert McMillian (WSJ)

Since blockchain transactions are immutable, with enough hard work forensic efforts to track bitcoins and other crypto currencies have yielded an impressive list of criminals. [Link; paywall]

Discord Member Details How Documents Leaked From Closed Chat Group by Shane Harris and Samuel Oakford (WaPo)

A small group chat on the platform Discord turned into the source of one of the most damaging national security leaks in recent history, with hundreds upon hundreds of documents transcribed and later photographed and sent to the small group of gamers and gun enthusiasts. [Link; soft paywall]

People Are Sick and Tired of All Their Subscriptions by Rachel Wolfe and Imani Moise (WSJ)

Attrition among subscription models is rising, with streaming cancellations up 49% and a range of other services repeatedly getting the axe from cost-conscious consumers. [Link; paywall]

Corporate Culture

JPMorgan Calls Managing Directors to Office Five Days a Week by Hannah Levitt & Daniel Taub (Bloomberg)

Leadership will be pushed to show their face in person at the nation’s largest bank, setting a tone for JPM after years of remote work jump-started by the pandemic. [Link; soft paywall]

Your Email Does Not Constitute My Emergency by Adam Grant (NYT)

The ever-present nature of email creates pressure for rapid responses which in turn raise the stress of workers receiving what they perceive as high priority communiques. [Link; soft paywall]

Cars & Drivers

After a Boom, an Auto Profit Bust Looms by Stephen Wilmot (WSJ)

In the wake of three years with tight inventories, under-producing factories, and key component shortages, the American auto industry is eying rate hikes and financial stress nervously. [Link; paywall]

General Motors will stop offering Apple CarPlay and Android Auto connectivity by Car Dow (Top Gear)

In an effort to keep Apple and Alphabet out of their data and customer relationships, GM won’t be including popular phone-mirroring apps in future EVs (even as they continue to offer them in their ICE fleet). [Link]

E.P.A. Lays Out Rules to Turbocharge Sales of Electric Cars and Trucks by Coral Davenport (NYT)

Under new emissions standards, automakers would be obliged to convert roughly two-thirds of their new sales to EVs in less than a decade, with heavy trucks targeted at a perhaps more ambitious quarter. [Link; soft paywall]

Real Estate

Downtown San Francisco Whole Foods Closing a Year After Opening by Josh Koehn (The San Francisco Standard)

Whole Foods is shuttering a downtown San Francisco location, citing deteriorating street conditions including drug use and crime near the store, including high theft and hostile visitors. [Link]

What’s the Real Situation with CRE and Banks: Doom Loop or Headline Hype? By Kevin Fagan, Matt Reidy, Thomas Lasalvia, Blake Coules, and Victor Calanog (Moody’s)

Moody’s analysts think that while banks are heavily exposed to commercial real estate and CRE is dependent on banks, mitigating factors can keep the two from spiraling together into a major credit crunch. [Link]

Sports

Quinnipiac Shocked the College Hockey Universe in 10 Seconds by Jason Gay (WSJ)

A historic come-from-behind victory to earn a national championship may have looked like a lucky break, but to win its first NCAA title Quinnipiac bet on itself rather than relying on luck. [Link; paywall]

Michael Jordan’s signed trainers sell for record $2.2mn at Sotheby’s auction by Alexandra White (FT)

A pair of signed Michael Jordan sneakers worn during Game 2 of the 1998 NBA Finals were sold for $2.2mm in a record for a shoe transaction; an MJ jersey went for $10mm back in September. [Link; paywall]

Climate Change

Policies, Projections, and the Social Cost of Carbon: Results from the DICE-2023 Model by Lint Barrage & William D. Nordhaus (NBER)

An update to the giant cost-benefit model which was most recently updated in 2016 shows a significantly higher social cost of carbon and therefore more urgency for action on climate change. [Link; soft paywall]

The American West

Biden Administration Proposes Evenly Cutting Water Allotments From Colorado River by Christopher Flavelle (NYT)

Overuse and drought have left the mighty Colorado near dry, leading the federal government to propose pro-rata cuts to water distributions out of the river system. But that would flout legal precedent, which gives California first dibs on water and could almost eliminate drinking water supplies in Phoenix. [Link; soft paywall]

Peak Real Estate: This Tiny Wyoming Community Has Some of the Country’s Priciest Mountain Homes by Jessica Flint (WSJ)

A tiny town of 1600 people in the neighborhood of Jackson Hole is the second-most expensive mountain town real estate in the country, trailing only Aspen. [Link; paywall]

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