Today's Charts & Ideas: What Markets Are Telling Us #29

06/27/2025 | Unsubscribe

Good Morning!

We send a newsletter every weekday morning.

This past week, some of our readers informed us that they have not been receiving our publication.

This is something that is outside of our control, and has to do with automated systems that scan emails.

To help improve the likelihood that you will receive our newsletter every time, please reply with the word YES to this email.

If we are not landing in your email inbox, please mark our email as a priority or move it to your inbox (from spam or promotions/updates tab) - otherwise you risk not receiving our next newsletter.

And now, onto today’s newsletter….

Here are some important charts and ideas capturing the latest trends in US markets to help you understand what is happening from multiple different perspectives:

Even though the S&P 500 is close to recovering its losses in US dollar terms, foreign investors have seen much steeper declines because of the weakening dollar. The same investment is worth less when converted back to their home currency.

📊 Explaining the Chart

• Top Panel (Green line): The DXY Dollar Index shows the strength of the US dollar. It has weakened notably since mid-2024.

• Bottom Panel (Blue vs. Red lines):

  • Blue: S&P 500 performance in US dollars — only down about 3.6% from the all-time high.

  • Red: S&P 500 performance adjusted for currency (DXY) — down 10.9%.

• The gap between the red and blue lines shows how foreign investors lose more than US-based investors when the dollar falls.

💼 What This Could Mean for You

• If you're a non-US investor, investing in US stocks may feel riskier now, not just because of stock price changes, but also due to currency losses.

• For everyday investors:

  • A falling dollar can affect your investment returns if you live outside the US.

  • You may feel like you're losing money even when the US markets seem okay.

• If you're in the US:

  • You might not feel this directly, but reduced foreign demand for US assets could impact stock prices over time.

🔄 Alternative Perspectives to Consider

• The Dollar Could Bounce Back: Currency trends are cyclical. A future rebound in the US dollar could reverse the pain for foreign investors.

• Hedging Is an Option: Investors worried about currency risk can explore currency-hedged ETFs or diversify across regions.

• US Equities Still Offer Strength: Despite currency concerns, many foreign investors may still favor US stocks for their innovation and leadership, especially in tech.

📌 Possible Investor Takeaway

• For Global Investors: Consider factoring in currency movements when investing internationally — a strong stock market may not mean strong returns after conversion.

• For US Investors: Be aware that foreign capital flows might slow if the dollar remains weak, which could add volatility to US markets.

Retail investors have shifted from buying to selling. In the past few weeks, retail flows have turned negative, meaning individuals are pulling more money out of the market than putting in. This could signal rising caution or fatigue after a long period of buying.

📊 Explaining the Chart

• The chart shows daily net flows from retail investors (buying vs. selling) in billions of dollars.

• Blue bars above zero = more buying than selling.

• Red bars below zero = more selling than buying.

• From early 2025 until mid-May, retail activity mainly was net buying, sometimes exceeding $5B in a day.

• Recently, however, there's been a cluster of red bars, suggesting retail selling pressure is picking up.

💼 What This Could Mean for You

• Retail investors pulling back may reflect growing uncertainty about the market’s direction.

• If you're still invested:

  • This shift could signal a short-term pause in momentum or rising fear.

  • It might be time to review your goals, not just follow the crowd.

• If you're on the sidelines:

  • A cooling-off of retail enthusiasm could open up more favorable entry points — but it also warns of potential volatility.

🔄 Alternative Perspectives to Consider

• Retail sentiment is fickle: Retail investors often exit right before markets stabilize or rebound.

• Some analysts view retail selling as a contrarian indicator — when average investors get nervous, it could be a setup for a rally.

• It’s also possible this is just profit-taking after recent gains, not a sign of deeper fear.

💡 One Possible Investor Takeaway

Retail investors may be stepping back from markets, but that doesn’t always mean it’s time to follow — instead, it’s worth asking: Are they seeing risk ahead, or just reacting to short-term noise?

The U.S. housing market has flipped dramatically: There are now 34% more sellers than buyers, the largest gap in over a decade. This means homes are harder to sell, and buyers have more negotiating power.

📊 Explaining the Chart

• Blue Line: Number of active homebuyers — now at a decade low, about 1.45 million.

• Red Line: The number of active home sellers is rising steadily, now at 1.94 million.

• Historically (since 2013), buyers outnumbered or closely matched sellers, but since 2021, that balance has reversed.

• The current gap (nearly 500,000 more sellers) is the largest imbalance on record.

💼 What This Could Mean for You

• If you're buying a home:

  • You may find better deals or more choices.

  • Sellers may be more willing to negotiate on price, repairs, or closing costs.

• If you're trying to sell:

  • It could take longer and you may face price pressure.

  • Staging, pricing strategy, and flexibility will matter more.

• For renters:

  • Slower home sales may increase rental supply if owners choose to rent instead of sell, which could ease rent pressure in some areas.

🔄 Alternative Perspectives to Consider

• Buyer fatigue and high mortgage rates might be artificially suppressing demand. If rates fall, buyers could return quickly, tightening the gap again.

• The data doesn't show regional differences — some markets (like parts of the South or Midwest) may not follow this national trend.

• Cash buyers and investors could step in to absorb excess inventory, especially if prices dip.

💡 One Possible Investor Takeaway

The housing market is tilting in favor of buyers — a rare setup that may offer opportunities for negotiation or investment, especially if you're well-capitalized and patient.

Global food prices have been rising steadily for eight months, and history shows that U.S. food inflation tends to follow with a lag — usually around nine months. This suggests U.S. grocery bills may start rising again soon, even if broader inflation looks under control.

📊 Explaining the Chart

• Black line (Left Axis): U.S. food inflation – annual change in food prices for American consumers.

• Teal line (Right Axis): Global food price index from the United Nations – reflects worldwide food price trends.

• Historically, the U.S. line lags behind the global line — when global food prices go up, U.S. food inflation tends to follow after a few months.

• Currently, the global food index has been positive for 8 straight months, and is now up ~9% year-over-year, suggesting U.S. food inflation could soon rise again.

💼 What This Could Mean for You

• Grocery prices may increase in late 2025 or early 2026, even if other prices (like rent or goods) stay flat.

• For families, this could mean:

  • Higher food bills ahead.

  • Tighter budgets or rethinking how and where you shop.

• If you're on a fixed income, it's worth planning now for higher food costs down the road.

• Investors may want to watch food-related stocks (grocers, ag-tech, fertilizers) or inflation-protected assets.

🔄 Alternative Perspectives to Consider

• Not all global food price increases are passed to U.S. consumers — domestic supply chains and harvests still play a role.

• Government food aid, subsidies, or competitive grocery markets could help limit price spikes.

• If tariffs are removed or supply chains ease, it could offset some of the price pressure.

💡 One Possible Investor Takeaway

Even if headline inflation slows, food inflation could quietly rise, creating ripple effects across households and sectors. This is a reminder to track specific inflation drivers, not just the overall number.

Credit markets — a key barometer of economic stress — are sending a cautiously optimistic signal. While spreads have ticked up slightly, they remain far below crisis levels. This suggests investors are not pricing in a recession and still trust corporate earnings prospects.

📊 Explaining the Chart

• The chart shows Credit Default Swap (CDS) spreads for two types of corporate bonds:

  • Blue line (Left Axis): Investment Grade CDS (lower risk).

  • Red line (Right Axis): High-Yield CDS (higher risk, aka “junk bonds”).

• CDS spreads represent the cost to insure against a company defaulting — the higher the spread, the greater the fear in the market.

• Major spikes occurred during the 2008 financial crisis, the 2011 Eurozone crisis, and early 2020 COVID panic.

• Currently (2025):

  • Investment-grade spreads are modestly elevated (~75 bps).

  • High yield spreads are around ~375–400 bps — well below panic levels.

• This means credit markets are not flashing warning signs of deep trouble.

💼 What This Could Mean for You

• If you’re an investor, modest spreads suggest:

  • Companies are seen as financially stable, with less risk of widespread defaults.

  • The current market isn’t pricing in a near-term economic crisis.

• For everyday consumers:

  • Stable corporate credit often leads to easier business lending and more job security, as companies aren’t seen as distressed.

  • It also lowers the risk of financial contagion, like bank collapses or credit crunches.

🔄 Alternative Perspectives to Consider

• CDS spreads are just one signal — they can lag or underestimate systemic risks, especially if investors are overly optimistic.

• Credit market complacency has sometimes preceded sharp downturns (e.g., in early 2007).

• A surprise shock (like geopolitical escalation or policy misstep) could rapidly widen spreads, even from these calm levels.

💡 One Possible Investor Takeaway

Credit markets reflect confidence in corporate health and economic resilience but can shift quickly. This is a moment to stay informed, not complacent.

That’s it for today!

Best Regards,

Ultimate Alerts Team

P.S. 📌 Did we land in your inbox? Please reply YES to this email to help make sure our emails arrive in your inbox where you can see them immediately.

Disclaimer

The content distributed by UltimateAlerts.com is for general informational and entertainment purposes only and should not be construed as financial advice. You agree that any decision you make will be based upon an independent investigation by a certified professional. Stocks/Assets featured in this newsletter may be owned by owners/operators of this website, which could impact our ability to remain unbiased. If you click on an affiliate link the website owner may receive compensation. Although we have sent you this email, UltimateAlerts.com does NOT specifically endorse this product nor is it responsible for the content of this advertisement. Please read and accept full disclaimer and privacy policy before reading any of our content: www.ultimatealerts.com/c/disclaimer/ and www.ultimatealerts.com/c/privacy-policy