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Monthly Charts for April -2

10:43 19-May-26

Pending Home Sales rose 1.4% in April, at least a tenth less than the lowest estimates.  Perhaps more importantly, the increases in volume are highly regional, led by the Boston area where pricing has transitioned to an environment that realtors tend to euphemize as "buyer-friendly".  I correlate to a post-pandemic biotech/vaccine slump and efforts to simultaneously right size the industry and gain productivity via AI.  This seems like a step in what this service foresaw at the beginning of March:

temporary stabilization in a frozen labor market that is still at the beginning of a long term trend where companies are attempting to use increasingly focused AI to juice profitability by reducing low-skill jobs that don't currently involve hands on physical work.  However, over the medium to long term, the spread through manufacturing and then other industries should accelerate as automation increases, and this is likely to be seen in retrospect as the one of the early plateaus in a long series of labor market step downs

It now looks like that runway is shortening.  Don't be surprised to see this trend gradually spread, with falling home prices in conjunction with sticky inflation boding very poorly for overvalued stocks.

To come full circle, expect the House to pass its Build America 250 bill, which proposes an annual EV registration fee that will start at $130 and ramp by $5 per year to $150 as a means of propping up highway and transportation funds.  How such nonsense fairs in the Senate will be a major test, though; the midterms can't come soon enough.

April market leverage climbed back above 6x in another one of those rare instances when margin cash grew, albeit not fast enough to keep up with positions, while retirement cash dropped.  This service has long tracked the relationship of market deleveraging to home sales, which have seen some thawing in conjunction with a decline in median prices.  Thus the Pending Home Sales report on May 19th will be of interest, but today's expiration trading makes it look like that process still has multiple months to go.

American natural gas prices fell again, though by less than in March, while the cost of electricity rose by the most since June.  Our parent CrowdWisers service has written volumes on the individual companies involved in both the supply and demand sides, correctly anticipating both long term dynamics in the Permian and the recent to reactions Fluence earnings and subsequent corporate moves.  Consequently, it expects this graph to see marked convergence next year, while continuing to rise, especially while the data center boom continues.

For the record, Trump's visit to Beijing has concluded with no important details to report.

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