One major economic trend of the past several months has been supply chain constraints including logistics issues. Now in the throes of earnings season, earnings of companies related to supply chains and logistics (whether that be people or parcels) are beginning to roll in with four such names reporting in the past day alone: Kansas City Southern (KSU), United Airlines (UAL), Marten Transport (MRTN), and Knight-Swift Transportation (KNX).  In the table below, we show all the S&P 1500 Transportation Industry stocks that have reported since late September.  Most of these stocks have beaten estimates on the top and bottom line with a few exceptions. While it is the one furthest in the rearview now, FedEx (FDX) was perhaps the worst of these missing EPS estimates and lowering guidance.  KNX, on the other hand, reported a triple play this morning; one of the first companies to do so thus far in earnings season.

Two more transportation names, CSX (CSX) and Landstar System (LSTR), are also set to report earnings after the closing bell today, and over a dozen other names will follow up in the next week alone. These names could potentially be interesting areas to look for anecdotes regarding broader supply chain issues pressuring the economy, but turning to the stock price reactions, Saia (SAIA) has averaged the largest single-day gain on earnings averaging a 2.5% move across its 60 past earnings reports.  Old Dominion (ODFL), Echo Global Logistics (ECHO), Hub Group (HUBG), and XPO Logistics (XPO) are the only others that have averaged greater than 1% gains in reaction to earnings. C.H. Robinson (CHRW) and Avis Budget (CAR), on the other hand, have historically averaged the worst reactions to earnings of this industry.

While there are still plenty of companies within the industry left to report providing plenty of catalysts for moves, since the closing low on September 30th, the transports have seen solid performance with an 8.79% gain through today.  That move has not only lifted the industry above its 50 and 200-DMAs but it has also broken the downtrend that has been in place since the spring.  Currently, the group is still down 6.1% from its 52-week high. Click here to view Bespoke’s premium membership options.

This morning the Mortgage Bankers Association (MBA) released their weekly read on mortgage activity. Whereas most of the past year has seen purchase applications trending lower, the reading bottomed out in late July indicating positive signs for other economic releases like new and existing home sales. Over the past month, though, as interest rates have been rising, the index has been erasing the late summer gains with this week’s 4.86% decline the largest for a single week since July 16th. With that said, the current level of purchase applications remains solid at the high end of the pre-COVID range.

Purchase applications are generally following the normal seasonal pattern as well this year.  Last year (dark blue line in the chart below) as the pandemic came about, purchase applications took a huge hit during what is normally the strongest point of the year for activity.  That resulted in a later than normal seasonal peak (light blue dots).  This year’s peak occurred in the spring as has been the norm over the past decade. While purchases have seen their usual seasonal decline since the spring, that does not mean purchases have been weak. Albeit not as strong as 2020 levels, purchase apps have been running at a clip similar to, if not stronger than, 2019 levels.

Refinance activity has also rolled over after moving higher in the summer.  In fact, this week marked the fourth week in a row with a decline. In that span, this week and two weeks ago marked the largest declines of 7.12% and 9.58%, respectively.  Those now leave the index just off recent post-pandemic lows set in early July.

Mortgage rates are certainly one factor contributing to the recent rollover in mortgage activity.  As shown below, the national average for a 30-year fixed-rate mortgage is still at historic lows but is now off the lows. This rate bottomed in early August, and the end of last month saw a particularly significant leap higher.  Currently, the rate stands at 3.18% versus 3.00% one month ago. Click here to view Bespoke’s premium membership options.