Bipolar behavior

Is bipolar the best way to describe the stock market the past two days? Likely as should we be concerned with Delta or not. I happen to think we power thru it because we have no choice as life is not stopping again, we have to live with it, and we have weapons to fight it with effective vaccines and defenses for those who choose to use it in the form of masks. Also, the speed at which Delta is spreading will just quicken the planet to some form of herd immunity or at least in the US as it gets to the areas that are the least vaccinated.

After last week’s rebound in mortgage applications with the caveat of the July 4th holiday timing, they fell back this week. Purchase applications gave back almost all of last week’s gains with a 6.4% w/o/w drop. They are lower by 18% y/o/y. A cash buyer like private equity, a flipper or an investor of course doesn’t need a mortgage but the average family does and they are getting priced out and outbid for whatever inventory is available. Refi’s fell by 2.8% w/o/w but held on to most of last week’s 20% increase. They are still down 18% too y/o/y.

PURCHASE APPS

I’ve said many times that wholesale price pressures are a global phenomenon with the ability to pass it on however more idiosyncratic. Today South Korea said its PPI in June jumped 6.4% y/o/y after a 6.6% increase in May. Ag, forestry, and manufactured product price increases in the double digits led the way. As the market focuses on consumer prices and this increase is not a surprise there was not an interest rate bond response.

The other data of note in Asia was on the trade side. South Korea said its exports in the 1st 20 days of July rose 33% y/o/y after a 29.5% rise in June. They can’t ship enough semi’s and auto’s. Exports of petro products and telecom equipment also helped. Imports jumped by 46% y/o/y after a 41% increase in June.

Exports out of Taiwan in June rose 31.1% y/o/y, just above the estimate. Taiwan also can’t make and ship enough semi’s. Japanese exports in June spiked by 49% y/o/y vs the estimate of 46% led by auto’s, steel and semi equipment. Imports grew by 46%, well more than the forecast of up 29%. The world is swimming in empty pools with respect to inventory needs and the scramble for product continues.