7 charts from the past week that tell an interesting story in markets and investing…
1) The Greatest Jobs Comeback in History
During the pandemic shutdowns in March and April of 2020, 22 million jobs were lost in the United States. Since then, 20.4 million have been added back. In the next few months, we should see a new high in jobs, completing the greatest jobs comeback in history.
Why am I so optimistic that jobs growth will continue? There’s now 5.3 million more job openings in the US than unemployed persons. That’s a new record. If you’re looking for new job, there’s never been a better time than today.
With jobs moving up, the US unemployment rate continues to move down. At 3.6%, it’s at the lowest level since the start of the pandemic and only 0.1% above the 50-year low reached in February 2020.
2) The Wage Growth Mirage
Average hourly earnings in the US moved up to $31.73 in March. That’s a 5.6% increase over the last year and 10.1% increase over the last 2 years.
These are the biggest wage gains we’ve seen in recent history and normally would be a sign of increasing prosperity.
The only problem: consumer prices in the US have increased by 7.9% over the last year and 9.7% over the last 2 years (CPI report, through February). And these numbers will likely move higher when the March inflation figures are released.
What that means: all of the wage growth since the start of the borrowing/spending/printing binge has been a mirage, a byproduct of the inflationary spiral that has taken hold. Initially, you feel richer because we think in nominal terms and prices always move higher with a lag. Only with the passage of time are the ravages of inflation fully understood.
3) Housing Boom Continues
The housing boom continues with US home prices hitting a record high for the 36th month in a row. Prices have increased 19% over the last year and more than doubled over the last 10 years.
Every major metro area in the US has seen a double-digit % increase in home prices over the last year, led by Phoenix and Tampa which are up over 30%. All 20 cities in the 20-city Case-Shiller index hit record highs for the 3rd month in a row.
What about rents? They’re rising as well, up 17% over the last year.
Here are the metro areas with the highest percentage increases…
4) The King of Twitter
Two weeks ago, Elon Musk ran two polls asking his followers whether Twitter a) adheres to free speech principles and b) whether its algorithm (directing what users see in their feeds) should be open source.
The results: no and yes…
This week we learned that at the time of the polls, Musk had already taken a 9.2% stake in Twitter ($TWTR), making him the largest outside shareholder of the company.
The stock advanced a record 27% in a single trading day on the news with its highest volume day ever. Twitter’s market cap increased over $8.5 billion, moving back above $40 billion. Musk’s gain? $783 million. Not bad for a day’s work.
5) Concentrated Apples
Apple’s 7.1% weight in the S&P 500 today is the largest weighting we’ve seen for any individual company going back to 1980. $AAPL
Here are the largest companies in the S&P 500 by market cap, net income, revenue, and number of employees.
Apple is not only the largest company in the world but also the most profitable with net income of over $100 billion in the last 12 months.
6) Unaffordable Care
The average family health insurance premium in the US has more than tripled since the “affordable” care act was signed into law back in 2010.
The biggest beneficiaries? Health insurers.
United Health Group (the largest US insurer) is up 1,750% vs. a 389% gain for the S&P 500.
7) Lions and Tigers and Yield Curve Inversions: Oh My!
The US Yield Curve (10s minus 2s) inverted last week for the first time since August 2019.
Why is this significant?
It tends to portend economic weakness ahead. The last 6 recessions in the US were all preceded by an inversion with the 2-year Treasury yield moving above the 10-year Treasury yield.
It’s important to remember, however, that the yield curve has been a LONG leading indicator in the past, with an average of 19 months from the first inversion to the start of a recession.
And that’s it for this week.
Have a great week everyone!
-Charlie
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