With Manufacturing PMI at multi-year lows and trending lower, why would anyone be surprised that, amid plunging profits in retailers and weakness in restaurant performance indices, Markit's preliminary Services PMI for April would bounce for the 2nd month in a row to 52.1. However, as Markit notes, despite th emodest pickup, "growth is clearly far more fragile than this time last year."
Dead cat bounce?
As Markit details,
Moments ago, in its latest update, Case Shiller pointed out that for another month "Home prices continue to rise twice as fast as inflation." Actually that is an understatement: in two-third of the tracked metro areas, the pace of home appreciation over the past year was 6% or higher, or equivalent to three times as fast as inflation. And with rents continuing to soar across the country, in many cases at a double digit clip, not to mention exploding healthcare costs, one wonders just what the BLS "measures" with its monthly CPI update.
For the 5th month in a row (and 10th of last 11), S&P Case-Shiller Home Price growth YoY missed expectations. February saw prices rise 5.38% (below 5.5% exp) which is the weakest annual growth since September 2015. Seattle and San Francisco rose the most MoM as Cleveland and New York saw the biggest drops MoM.
Weakest home prices appreciation since September 2015 and the misses continue...
One week ago we were surprised to learn that no matter what the market was doing, whether it was going up, down or sideways, Bank of America's "smart money" (institutional, private and hedge funds) clients, simply refused to buy anything, and in fact had continued to sell stocks for a near-record 12 consecutive weeks. In fact, the selling continued despite what we said, namely that "at this point it was about time for the selling to stock, if purely statistically, otherwise said "smart money" would be sending the clearest signal yet that the market rally from the February lows is nothing b
Is the stock market setting up for a Crash?
For the first time since the 2009 bottom, Earnings Per Share (EPS) have diverged sharply to the downside from stocks.
There are a lot of reasons why investors buy stocks… but at the end of the day, they all boil down to earnings: the company is only a sound investment if it actually makes money.
The above chart shows us that earnings recently peaked and have diverged sharply from stock prices. Here’s a close up of the last three years: