Today’s macro data did little to calm investors’ fears of a potential recession. 😱
S&P Global’s flash Composite Purchasing Managers’ Index (PMI), a measure of the services and manufacturing industries, fell to 51.8 in May, its lowest level since February 2021. Investors focused primarily on the weakening U.K. data, which may be a signal that a recession is on the horizon for the country. 🏭
In the U.S., April’s new home sales data fell 16.6% MoM and 26.9% YoY.
April’s annualized sales of 591,00 were well below analyst expectations of 750,000. The report also revised March’s data about 7% lower. 🏘️
The slowest sales pace since April 2020 is primarily driven by a significant pullback in demand, not new supply, as consumers face record-high home prices and the highest mortgage rates in over a decade. Builders are also starting to see cancellation rates tick up. ❌
Amid the weakness in recent housing data, investors also heard from Toll Brothers’ which beat earnings ($1.85 vs $1.60) and revenue expectations ($2.2 billion vs. $2.12 billion).
In its press release, the company noted, “While demand is still solid, over the past month it has moderated from the unprecedented pace of the past two years as buyers adapt to higher mortgage rates and other macro-economic conditions. However, the many fundamental drivers of housing demand remain firmly in place.“
Given the company operates in the luxury market, their view may not be the best read on the entire housing market. Nonetheless, things appear strong in their view. 💪
The economic/earnings news has been bad for a while, and market sentiment is not good. We heard *very bearish* perspectives from two of the world’s most prominent players today. 🐻
At Davos, George Soros said, “Indeed, the Russian invasion may turn out to be the beginning of World War III, and our civilization may not survive it.“
Meanwhile, Bill Ackman took to Twitter with a *hot* take on inflation: “Inflation is out of control. Inflation expectations are getting out of control. Markets are imploding because investors are not confident that the Federal Reserve will stop inflation. If the Fed doesn’t do its job, the market will do the Fed’s job…”
Can y’all believe it’s only Tuesday? 🙃