Five interesting things that Hodges Capital research analysts discovered this week...

#1 NO LOVE FOR ENERGY? Strategas highlighted a remarkable contrarian statistic this week that the XLE, an exchange-traded fund (ETF) that tracks the energy sector, is up 45.5% this year and has experienced year-to-date outflows of $23 million. In contrast, the 3X leveraged long QQQ ETF, designed to triple the return of the NASDAQ, is down 62.0% this year and has seen year-to-date inflows to the tune of $7.7 billion. (Data as of 5/16/22)      

#2 AMERICAN MIDDLE CLASS: According to Pew Research, the share of American adults living in midclass households has remained steady over the past decade. However, the percentage of aggregate income attributed to the middle class is estimated to have declined to 41% in 2020 from 62% in 1970, entirely due to larger gains in income among upper-income households.    

#3 HOUSING: “We continue to believe that the U.S. housing market is significantly underbuilt. And while I acknowledge higher mortgage rates will likely represent a near-term headwind to satisfying that demand, we continue to see tremendous momentum and long-term growth for the industry. – David Flitman, CEO of Builders FirstSource

#4 MORE CREDIT: Recently released data from the Federal Reserve has indicated that the use of revolving credit increased to more than $30 billion through the end of March. As a percentage of disposable income, revolving credit amounted to 5.9%, which is still below the pre-pandemic levels of 6.6%, suggesting that consumers have room to spend.

#5 USED CAR PRICES: “We clearly have returned to vehicles depreciating again. That’s a good news story for both inflation and for consumers looking to buy a vehicle,” Jonathan Smoke, chief economist at Cox Automotive, recently told CNBC. The drop-off in pricing comes as Manheim estimates that used retail sales declined 13% in April from March but remain up 15% from a year ago.  

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