This morning, the NAHB updated their monthly reading on homebuilder sentiment, and like most other recent economic data, the results were not good.  Homebuilder sentiment fell below 50 for the first time since June of 2014 (readings below 50 are considered contractionary).  The index plummeted to its lowest reading since June of 2012 falling from 72 in March down to 30 in April.

As shown in the table below, that 42 point decline in just one month was the largest ever recorded in the data going back to 1985.  The same can also be said for every one of the sub-indices as well which are now at multi-year lows.  That stands in stark contrast to where things were just one month ago.  In March, the headline index, as well as several other sub-indices, were in the 95th percentile or better of all readings.  In other words, before the COVID-19 pandemic homebuilders’ outlook was historically optimistic.

One interesting thing to note in this month’s survey was the declines in homebuilder sentiment were broad across geographic regions but the areas of the country most affected by the virus saw larger declines and are now at lower levels.  Namely, sentiment in the Northeast is the lowest of the four regions at 19 compared to the next lowest, 25, in the Midwest.  That is as the bulk of US COVID-19 cases can be found in the Northeast, particularly in the tri-state area. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

Last month, the New York Fed’s monthly manufacturing index fell to its weakest level since March of 2009. Fast forward one month and the headline reading has collapsed even further and more dramatically for the US region hit hardest by COVID-19.  The April reading was forecasted to come in at -35 which would have been the lowest level ever recorded.  Instead, it surpassed that by more than two fold coming in at -78.2 and experiencing its largest monthly decline on record in the process. While a net of over three-quarters of the region’s businesses reported declining current conditions, the outlook picked up slightly from last month.  Conditions six months out rose to 7 from 1.2 last month.

With expectations and current conditions heading in opposite directions and the index for current conditions reaching such an extreme low, the spread between the two is now at its highest level ever.

Given the massive decline in the headline number, many of the individual categories of the report were equally as bad. In addition to the headline number, New Orders, Shipments, Number of Employees, and Average Workweek all are at record lows and experienced their largest m/m declines on record.  While there were no record lows for the categories on expectations, most of those same ones are around the 1st or 2nd percentile.  Additionally, plans for Capital Expenditure and Technology Spending fell by their largest amounts ever.

Demand has been in absolute free fall.  The indices for both New Orders and Shipments have experienced record declines to record lows; surpassing even those from the last recession.  More than half of responding businesses have reported that New Orders and Shipments are weaker.  Businesses do not appear to see much light at the end of the tunnel yet either. While not at absolute lows, the readings for New Orders and Shipments six months out are both in the bottom 2nd percentile of all readings and at their lowest levels since the financial crisis.

With business grinding to a halt, it appears focus has shifted from investment to simply staying afloat and cutting costs as the indices for capital expenditure, technology spending, and all tanked. For the first time since June of 2013 for Technology Spending and May of 2009 for Capital Expenditures, the NY Fed indices have tipped negative.  Both now stand at -11 indicating fewer companies are looking to expand on capital expenditures or technologies that would benefit operations.

Looking purely at recent jobless claims numbers, the employment side of this month’s Empire Fed report could not be expected to show much strength.  This month’s report showed 58.6% of responding employers reporting smaller workforces while only 3.3% saw an increase in employees.  Additionally, 64.7% of companies reported lower employee workweeks compared to 3.1% with longer workweeks. Those readings for Number of Employees and Average Workweeks at -55.3 and -61.6, respectively, are both record lows for current conditions.  As for expectations six months out, employers do not appear overly optimistic either. Although the reading on average workweek rose to 8.4, which is in the middle of the past few years’ range, expectations for number of employees fell to 5.2 which is its lowest level since August of 2016. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

With the S&P 500’s rally off of the 3/23 low continuing yesterday, a handful of stocks in the index actually made new 52 week highs!  Other than yesterday’s new highs, there are only 19 stocks in the index that have reached a 52 week high at some point since the beginning of March.  Regeneron (REGN) was one of the few stocks that rallied in that time frame on hopes that the company would develop a treatment for COVID-19.  Other than REGN, stocks in this group seem to be plays on the COVID economy including consumer staples retailers like Walmart (WMT) and Dollar General (DG) as well as plays on Americans staying at home like Netflix (NFLX) and Amazon (AMZN).

With that outperformance during the worst of the sell-off and solid gains since the March 23rd low, most of these stocks are currently mid to high single digits above their February 19th levels except for Regeneron (REGN) and Newmont (NEM) which are 30.94% and 29.72% above, respectively.

As shown in the table above, which can also be seen in the charts from our Chart Scanner below, the COVID collapse that lasted from February into March only resulted in Amazon (AMZN) reaching a 52-week low. AMZN’s 52 week low occurred on March 16th; one week before the rest of the market’s bottom.  Every other stock of those that made a new 52-high yesterday saw its 52-week low at some point in 2019.

As shown below, several of these stocks reaching 52-week highs means that they have cleared some form of significant resistance. Dollar General (DG) and Netflix (NFLX), for example, unsuccessfully tested resistance multiple times within the past year before these most recent breakouts. As for trends, each one is currently in a rough uptrend over the past six months to a year putting aside some disruption from the volatility of the recent sell-off.  Start a two-week free trial to Bespoke Institutional to access our Chart Scanner and much more.