Meet Kevin: The Major Stock & Housing Market Reset
Signs show the economy is continuing to slow. We’re coming off of the end of earnings season, and overall, things have been well. Many companies have beat on expectations – but that’s something they do most quarters.
While some investors see the market as having bottomed in June, most are looking at the current market as a bear market rally. That view is reinforced by rising interest rates.
With two quarters of negative GDP growth, the economy is in a recession, whether it’s technical or not. Yes, consumers are spending more overall. However, they’re not spending more relative to inflation.
Meanwhile, commodity prices are dropping, which should take some inflationary pressure off the table. However, home prices are starting to show some signs of declining.
That drop could lead to a market swing lower. Most Americans have the majority of their net worth tied up into home equity, and a drop there could lead to more fear.
Housing starts data shows a steep 9.6 percent drop lower, as developers are slowing down new home production now.
With rising interest rates, that makes sense. That suggests the housing market may soon face a valuation reset similar to the stock market valuation reset of the past year. Investors may want to stay cautious, as the mixed economic data doesn’t paint a clear picture right now.