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“Don’t dream it, be it” – Dr Frank-N-Furter, Rocky Horror Picture Show
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Heading into this morning’s PPI and jobless claims reports, equity futures were all up less than 0.05% while the 10-year yield was unchanged. The July PPI report came in much higher than expected, though, and equity futures have moved lower, but not necessarily by as much as you would expect given the magnitude of the miss. While we’ll have to look further into the report for details, jobless claims remained subdued and came in lower than expected. It’s also worth pointing out that interest rates have barely budged higher.
Quick question. Which group has done better over the last month? Megacaps or housing stocks? Most people would instinctively say the megacaps, but as the numbers show, the housing-related stocks have really surged over the last four weeks. The chart below compares the performance of the eight trillion-dollar megacap tech-like stocks to a group of eight housing-related stocks over the last month. For the housing basket, we’ve chosen a few homebuilders (Pulte, DR Horton, and Lennar), a couple of home improvement stocks (Home Depot and Lowe’s), housing retailers (RH and Williams Sonoma), and a mortgage company (Rocket Companies).
Of the eight megacap stocks, their performance over the last month has ranged between a decline of 0.5% and a gain of 11.1% for a median gain of 9.4%. Under any environment, 9.4% is impressive, but it pales in comparison to what the housing-related stocks have done. All eight of the stocks shown are up at least 10%, and their median gain has been nearly twice the gain of the megacaps (18.5%). HD is also the only stock in the group that isn’t outperforming all eight of the megacaps.
