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

#1 ENERGY EMPLOYMENT: Although oil prices have doubled from a year ago, employment levels for energy companies within the S&P 500 are down by roughly 1/3 from the level experienced in 2019, according to Strategas. Such a reduction in labor could impact the ability of energy companies to increase production quickly.  

#2 HOUSING: Last week, mortgage purchase applications fell to their lowest level since May 2020. As measured by the Redfin Homebuyer Demand Index, the number of homebuyers touring and offering homes posted its most significant annual decline since April 2020.

#3 STEEL DEMAND: The World Steel Association forecast for 2023 steel demand is to grow 2.2% to 1,881.4 million tons. Domestic steel demand is expected to see support from infrastructure projects receiving federal funding and require 100% US-made iron, steel, and construction material. Such infrastructure projects are projected to make up about 10% of domestic steel demand.

#4 EARNINGS GUIDANCE: According to data provided by FactSet, 70% of the S&P 500 companies that have issued EPS guidance for the second quarter of 2022 have issued negative guidance. This is above the 5-year average of 60% and above the 10-year average of 67%.

#5 WHAT’S A WATCH WORTH? As a gauge for luxury discretionary spending, Grant's Interest Rate Observer recently pointed out that 30 frequently transacted Rolexes compiled by WatchCharts.com have recently demonstrated a pronounced loss of momentum, with average prices slipping to $15,126 this week from just under $16,000 on April 2. That rapid decline is particularly striking considering the pace of appreciation before the reversal: Average used Rolex prices raced higher by 21% from late November through that early Spring high-water mark.

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