Note to Readers from Larry: The latest high-profile meeting between Secretary of State Antony Blinken and China’s President Xi is potentially a step in the right direction in resetting the U.S-China relationship. My latest Youtube video discusses this more in detail.
Hope you’re all doing good as always!
Key Investing Resource: Strategist Larry uses Interactive Brokers as his core brokerage. Feel free to check out IB. I currently park excess cash (yielding 4.5%+ on idle cash) at Interactive Brokers
In our emails, we will provide the following coverage points:
Over 100% of all the gains this year in the S&P Index have been driven by seven stocks. Three of those seven stocks account for 68% of the S&P’s entire yearly gains. Year-to-date, the unweighted S&P Index, has climbed by +9.1%, thanks to a +30% rise in technology, while the Russell Index is -1.0%, and the equal-weighted S&P 500 Index is -1.1% lower.
Macro Chart In Focus
Analyst Team Note:
Short sellers are increasing their bets against U.S. stocks, leading to paper losses exceeding $100 billion, despite the S&P 500 Index's continued rise.
Data from S3 Partners indicates that the total U.S. short interest, which represents the amount spent by traders betting against U.S. equities, surpassed $1 trillion this month, the highest level since April 2022, before experiencing a minor pullback due to a three-day stock market dip.
According to Redfin, the number of homes for sale in the U.S. hit a record low in May, largely due to high mortgage rates preventing people from moving. On a seasonally adjusted basis, active listings declined by 7.1% in May and were 38.6% lower compared to pre-pandemic levels. The total homes up for sale in May stood at just 1.4 million, the lowest number since 2012.
Rising interest rates, which pushed the average 30-year-fixed rate to 6.43% in May, compared to 2.65% in May 2021, have also contributed to homeowners deciding to stay in their current properties to maintain their cheaper mortgages.
The scarcity of listings has led to price surges in some markets, with about half of Redfin's offers encountering bidding wars in May and more than two-thirds of homes sold going for above the list price. However, an unexpected increase in U.S. housing starts to their highest level since 2016 could help to offset high prices and listing shortages.
Chart That Caught Our Eye
Analyst Team Note:
110 of the S&P 500 companies cited the term “AI” during their earnings call for the first quarter. This number is well above the 5-year average of 57 and the 10-year average of 34.
In fact, this is the highest number of S&P 500 companies citing “AI” on earnings calls going back to at least 2010 (using current index constituents going back in time). The previous record was 78 in the prior quarter (Q4 2022).
Sentiment Check
Make sure to check Larry’s most recent market updates via his personal newsletter.
