• The U. Michigan 1-year consumer inflation expectations index edged lower this month…

 

 

  • … as gasoline prices eased.

 

 

  • The GDPNow model continues to show an economic contraction in Q2.

 

 

  • The Treasury curve remains heavily inverted.

 

 

  • Economists have sharply downgraded their forecasts for US GDP growth in 2023. Inflation projections continue to move higher.
  • Homebuilder sentiment is crashing as demand deteriorates.

 

 

  • Consumers now expect price declines over the next 12 months.

 

 

  • The average mortgage size has been falling as buyers shift to lower-price homes
  • Refi activity continues to shrink.
  • It could take roughly a decade for first-time homebuyers to save up for a 10%-20% downpayment as affordability deteriorates.
  • More sellers are cutting their listing prices.

 

 

  • This has been the second longest housing boom since 1976.
  • Price gains have been unusually broad.
  • More housing deals are falling through.
  • Container shipping costs continue to moderate.
  • Domestic shipping activity is slowing.
  • The NY Fed’s regional service-sector report showed business activity stalling.

 

 

  • About half of the economists surveyed by The Wall Street Journal expect a recession in the next 12 months.
  • General merchandise stores are now sitting on bloated inventories.

 

 

  • Restaurants are no longer facing shortages.
  • Various models continue to show elevated recession probabilities.

 

 

  • The Philly Fed’s regional factory activity index plummeted this month, …

 

 

  • … as demand evaporated.

 

 

  • The combined Philly Fed and NY Fed manufacturing CapEx indices signal dwindling business investment at the national level.
  • Supply bottlenecks are gone as demand deteriorates
  • Price pressures are easing.
  • The manufacturing sector appears to be entering a recession.
  • The index of leading economic indicators declined more than expected last month.

 

 

  • Here is the breakdown.

 

Source: Wells Fargo Securities

 

  • The yield curve inversion deepened.

 

 

Market Data

 

  • Will we see a pause in the commodities selloff as the US dollar rally slows?

 

 

  •  US natural gas is rebounding as the heatwave broadens.

 

 

  • This bear market has been a grinding misery, and many sentiment indicators are showing excessive pessimism. Over the past 100 days, Dumb Money Confidence has almost never been lower since its inception. Only October 2008 exceeded this level of negativity. Professional fund managers have joined them, throwing in the towel on stocks.
  • Analysts continue to downgrade next year’s earnings projections.
  • BofA’s survey of fund managers shows extreme risk aversion.

 

 

  • Cash levels:

 

 

  • Equity allocations:

 

 

  • The S&P 500 and the Nasdaq 100 rallied above the 50-day moving averages amid extreme market pessimism
  • US corporate earnings downgrades have accelerated.

 

 

Quote of the Week

 

“Very little is needed to make a happy life, it is all within yourself, in your way of thinking.” – Google quote

 

Picture of the Week

 

The white spots on the back of tiger’s ears are called “eye spots” or “predator spots”. These spots are believed to function as false eyes as well as to make it look larger to any predator approaching from behind. This is particularly helpful in keeping cubs safe.

 

 

 

All content is the opinion of Brian J. Decker