6-Chart Saturday (5/22/21)

By Charlie Bilello

22 May 2021

This week’s post is sponsored by YCharts. Mention Compound to receive 20% off your subscription when you initially sign up for the service.

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6 charts from the past week that tell an interesting story in markets and investing…

1) $3 Gas

Gasoline prices in the US are back above $3 per gallon, at their highest levels since 2014…

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The beneficiaries?

Oil & Gas stocks, representing 8 out of the top 25 performers in the S&P 500 this year…

2) Home Improvement

Americans spent more of their stimulus money on their homes than anywhere else.

One of the largest beneficiaries: Home Depot.

Sales were up 33% over the last year, its highest growth rate since 1995.

Data via YCharts

3) The Golden Age for Bonds Is Over

For 40 years (1980-2019), bond investors in the US earned a rate of return that outpaced inflation, and often by a wide margin…

But that was the past. It’s hard to fathom such lofty returns as we find ourselves in a very different environment today.

With a 10-year Treasury yield of 1.6% and inflation at 4.1%, the current real yield of -2.5% is the lowest since 1980 (real yield = nominal yield minus inflation).

4) Housing Boom 2.0

The median price of existing homes in the US was up over 19% in the last year, the highest rate of increase ever.

Over the last 10 years, median home prices in the US have more than doubled, from $161,100 in April 2011 to $341,600 today…

Meanwhile, the Fed continues to buy mortgage bonds at a clip of $40 billion per month in an effort to hold down mortgage rates and throw fuel on a housing market that’s already on fire.

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5) Crypto Correction

It was a tough week for Crypto, with 50-70% declines across the major assets…

For Bitcoin, high volatility and large drawdowns are par for the course. We’ve seen declines larger than this many times throughout its history…

The current correction is being blamed on fears of increased regulation from China (who pledged to “crack down on bitcoin mining and trading behavior”) as well as Tesla saying they will stop accepting Bitcoin for car purchases due to environmental concerns.

6) Vaccines Up, Covid Down

48% of Americans (over 158 million people) have now been vaccinated with at least one dose…

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Covid-19 cases in the US continue to decline, now down 89% from their peak in January.

Hospitalizations are now at the lowest levels since the start of the pandemic.

And that’s it for this week. Thanks for reading.

Have a great weekend!


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