This morning, the Mortgage Bankers Association (MBA) released their weekly reading on mortgage purchase and refinance applications.  Although the composite index was up 1.2%, purchases of homes have been a bit lackluster likely on account of the short supply of existing homes and rising costs to build new homes which we discussed yesterday.  This week, the seasonally adjusted purchases index fell 4.2% and currently sits just above the recent low from the week of February 19th.

We would also note that seasonal tailwinds of mortgage purchases have now likely come and passed.  As shown through the blue dots in the chart below, the annual peak in non-seasonally adjusted mortgage purchases typically comes at some point in March through May.  The only exceptions of the past decade were last year and 2015.

While purchases have continued to decline, refinances have picked up a bit recently.  That index rose over 4% this week as it is now back to the highest levels since the first half of March.

That uptick in refinances comes as the national average of a 30-year fixed rate mortgage has been on the decline after the surge in February and March.  As of yesterday, the national average sat at 3.09% which is around similar levels to last fall.  Again, while refinances have benefited from that decline in mortgage rates, it hasn’t appeared to have impacted purchases as supply is likely the bigger issue at play.  Click here to view Bespoke’s premium membership options for our best research available.

After surging to 52-week highs at the very end of 2020 and into the new year, the Xtrackers CSI 300 ETF (ASHR) tracking China A-Shares collapsed back below its 50-DMA. The decline not only left the ETF in between its 50 and 200-DMA but also brought it back within the range between roughly $37 and $40 that traces back to the ETF’s range from November and December of last year. On Friday, that ended.  ASHR popped almost 3% to not only move out of that range but also to finally move back above its 50-DMA for the first time since late April when there was a false breakout only lasting for a day.  This time around, that breakout appears to be much less of a pump fake with a decent follow-through. Friday’s rally has continued into this week with ASHR up another 0.38% today following a 1.1% rally yesterday.  The ETF now trades 3.86% above its 50-DMA which is now trending sideways rather than downward as it has for the past few months.  Click here to view Bespoke’s premium membership options for our best research available.

Although there are still a decent number of reports scheduled to come out over the next few weeks especially from major retailers, the pace of earnings slows significantly as Walmart’s (WMT) results out this morning marked the unofficial end of earnings season.  With earnings season now more or less in the rearview, taking a look back at this past season, triple plays continued to come in at historically strong levels.  A triple play is when a company reports EPS and sales above analyst forecasts while also raising guidance, which indicates a strong fundamental background for a company.  In the chart below, we show the 3-month rolling percentage of stocks that are reporting triple plays.  The past year has seen this reading skyrocket whether it be on account of dour forecasts and/or business quickly bouncing back from the pandemic.  Even though the rate of triple plays did peak earlier in the year, currently, it sits around 14% which is still well above any reading prior to the past year.

In aggregate, elevated beat rates this earnings season have been met with a yawn in terms of stock price reactions, and that has especially been true of the gold standard of beats: triple plays.  As shown below, the average full-day performance on the earnings reaction day of those stocks that reported triple plays this season was only a 1.97% gain.  While positive and much better than the 48 bps average decline for all stocks reporting this season, it does set a record for the worst collective reaction to triple plays of any earnings season going back to 2001 when our Earnings Explorer data begins. The past two quarters have similarly been met with historically weak reactions, but this past quarter has blown those out of the water. On the bright side, the percentage of triple plays that rose on their earnings reaction day did rise to 62.94% from 61.25%.  That is the highest reading of the past few quarters, but again, is a historically muted reaction.

In the earlier days of this past earnings season, we had highlighted one other interesting trend regarding recent triple plays: it hasn’t been just one sector or group with strong beat rates, rather a high percentage of stocks are reporting triple plays regardless of their sector.  Even with the aggregate percentage of stocks reporting a triple play having peaked, that strong breadth was still evident through the end of the current earnings season. The percentage of stocks reporting triple plays within the Communication Services, Consumer Discretionary, Consumer Staples, Industrials, Materials, and Tech sectors were all at a record high or had pulled back but were still above any reading prior to the past year.  Some of the more remarkable readings came from Consumer Discretionary, Industrials, and Materials which have been well above any historical precedent. Even for sectors that did not necessarily see a large share of their stocks report triple plays compared to times in the past, like Energy or Financials, this quarter’s readings were still some of the strongest of the past several years. Click here to view Bespoke’s premium membership options for our best research available.