| | | | | | | Presented By Electric | | | | Axios Markets | | By Dion Rabouin ·Apr 26, 2021 | | Good morning! Was this email forwarded to you? Sign up here. (Today's Smart Brevity count: 991 words, 3.7 minutes.) 🎙 "Love yourself first and everything else falls into line. You really have to love yourself to get anything done in this world." - See who said it and why it matters at the bottom. | | | | | | 1 big thing: Investors are struggling to time 2021's magic market |  | | | Illustration: Aïda Amer/Axios | | | | The stock market's sell signals keep mounting but the prices keep rising, leaving investors wondering just what comes next. What's happening: Signs of euphoria abound, suggesting the market is getting overheated — a classic sell sign — but in a market underpinned by the Federal Reserve's limitless money printer dip buyers have continued to step in and markets are piling on risk. By the numbers: The S&P 500 has risen 87% since its low on March 23, 2020, adding $50 trillion worth of value to the index in just over a year, the best 12-month rally since the 1930s. - Investors have continued to lever up to plow money into the stock market, borrowing a record $823 billion against their portfolios as of March, according to data from the Financial Industry Regulatory Authority.
- That's a more than 72% year-over-year increase.
- The numbers have continued to climb further above January's record of $799 billion.
Where it stands: At the beginning of April, the amount of money that had flowed to stocks globally over the past five months had exceeded the inflow seen over the prior 12 years by well over $100 billion, according to data from Bank of America Global Research. The big picture: The sea change in psychology means more investors are making increasingly risky bets and putting more of their money into stocks. - Retail traders also are growing their influence in the market, another classic sign a bubble is about to pop.
- Mom and pop traders now account for almost as much trading as all hedge funds and mutual funds combined, FT reports.
Watch this space: Institutional investors, company insiders and hedge funds are all starting to sell. - BofA's data show last week its clients had the largest outflows in five months and the fifth-largest on record. Retail clients were the only net buyers.
- The ratio of company insiders, like CEOs and other top executives, who are selling versus buying stock in their companies is hitting extreme levels, as the insiders unload positions.
Yes, but: Selling has proved to be 2021's riskiest wager, Bloomberg notes. The S&P 500 has yet to decline by more than 5% this year and has now gone 211 days without such a decline, per Reuters. - Excluding the S&P's five best sessions, the index's 11% year-to-date gain has been only 2%.
- That's highly unusual: The S&P 500 has declined at least 5% every 177 calendar days, Sam Stovall, chief investment strategist at CFRA, told Reuters.
The bottom line: "To try to guess that this is the right time to be out of the market, you may as well go to Las Vegas," Mark Stoeckle, chief executive at Adams Funds, told Bloomberg. "Here's just as much risk doing that." |     | | | | | | 2. Catch up quick | | A bipartisan group of House lawmakers has endorsed raising the U.S. gas tax to pay for infrastructure spending. (WSJ) Executives from Facebook, YouTube and Twitter are to testify at a Senate Judiciary hearing this week on algorithms. (Politico) The global chip shortage is spreading to makers of smartphones, televisions and home appliances with Samsung and LG among the companies that say they're feeling the pinch. (FT) | | | | | | | | 3. Business sentiment and prices keep rising |  Data: IHS-Markit; Chart: Axios Both manufacturing and services businesses saw strong pickups in activity and owners' sentiment improved, according to the latest flash reading of the IHS-Markit composite purchasing managers index. - The index that combines the two readings touched a record high 62.2 in April.
What happened: Manufacturing outpaced expectations with a sharp rise in output and strong hiring. - The services index saw its fastest expansion on record, driven by stronger client demand and easing COVID-19 restrictions across the country
On the other side: Numerous respondents complained about extraordinarily high prices as input costs rose by the most on record for manufacturers, amid capacity issues at suppliers, difficulties sourcing raw materials and ongoing supplier delivery delays, which were the most extensive on record. - The survey's record high jump in prices paid by manufacturers also was attributed to "marked rises in transportation fees."
- Service sector companies also reported higher inflation but slower than March's big jump.
One level deeper: April's flash report is the latest to report spiking and record-high prices, a consistent theme seen in private sector PMI and Fed manufacturing surveys all year. | | | | | | | | A message from Electric | | Electric: Get lightning-fast IT support and a $100 gift card | | |  | | | | Electric helps small to medium-sized businesses upgrade their IT strategy while providing 105% ROI. Its benefits include: - IT management.
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Book a meeting with an Electric IT specialist and receive a $100 gift card. | | | | | | 4. New home sales surge as lumber prices skyrocket |  Data: FactSet; Chart: Axios Visuals New home sales jumped to the highest in more than 14 years last month as home prices continue to increase around the U.S. By the numbers: Single-family new home sales rose 20.7% from February to a 1.02 million seasonally adjusted annual rate. That was the fastest sales pace since September 2006. - Inventory fell to 3.6 months of supply, with just 307,000 new single-family homes for sale, 44.6% lower than March 2020.
One level deeper: The median sales price of a new home sale in March rose to $330,800, up from $328,200 a year earlier, when COVID-19 lockdowns began. What to watch: The price of lumber is soaring, making new home construction and do-it-yourself home projects even more expensive, as Axios Charlotte's Katie Peralta Soloff wrote Saturday. - Lumber costs have surged more than 300% over the last year, according to FactSet.
- The spike has added more than $24,000 to the average price of a new single-family home, according to the National Association of Home Builders.
The state of play: Lumber demand is far outpacing supply. During the pandemic, shutdowns forced sawmills to stop production. - At the same time, quarantining Americans embarked on all types of DIY projects, bolstering home-improvement companies like Lowe's.
- Lumberyards and homebuilders held off on buying lumber for months, hoping that prices would come down, Fortune reported.
Of note: Rent prices also are starting to rise. - Median asking rent rose 1.1% year over year in March to $1,463 a month in the 50 largest U.S. markets, according to a report from Realtor.com. That marked the first month where the pace of rent growth had increased since last summer.
- Real estate investors say the rental market is primed for another period of increased price growth, comparable to the years that followed the global financial crisis when effective rents outpaced inflation, WSJ reports.
- In some markets, like Nashville and Denver, they increased more than 10% for multiple years, Matthew Lawton, an executive in the capital-markets division at brokerage JLL, told WSJ.
| | | | | | | | A message from Electric | | How Electric provides lightning-fast IT support | | |  | | | | Electric is reinventing how businesses manage their IT support, security and devices. Why it's important: The platform helps companies streamline and simplify time-consuming IT tasks all while providing 105% ROI. Book a meeting with an Electric IT specialist and receive a $100 gift card. | | | | Thanks for reading! Quote: "Love yourself first and everything else falls into line. You really have to love yourself to get anything done in this world." Why it matters: On April 26, 1989, the world lost legendary comedienne Lucille Ball at the age of 77. ************** This newsletter is written in Smart Brevity®. Learn how your team can communicate in the same smart, clear style with Axios HQ. | | | | Axios thanks our partners for supporting our newsletters.
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