The trade that's not working

Kelly Evans's afternoon commentary & top market stories

VIEW IN BROWSER | SUBSCRIBE WED, JUN 30, 2021 YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC AS OF WED, JUN 30, 2021 • 10:38 ET DJIA 34440.51 +0.43% +148.22 S&P 500 4296.99 +0.12% +5.19 NASDAQ 14511.00 -0.12% -17.34   EDITOR'S NOTE It's late April, early May. Prices are spiking everywhere. Lumber has soared. Food costs more. Everything costs more! Interest rates are rising. TikTokers are passing around terrifying charts of the M1 money supply. BUY CRYPTO!!! they warn. It's a commodities supercycle!! the experts say.    Just as you put the inflation trade on--it's over. This has been a dramatically different market over the past six weeks or so, one that's much more reminiscent of the pandemic-driven 2020. And in fact, the spread of the Delta Covid variant may well have something to do with it.    What do I mean? Lumber has plunged. It's wrapping up its worst month in history--down 42%. Prices are actually now down 13% on the year, the first time since 2015 they've been negative this far into the year. It's still about doubled from pre-pandemic levels, but at the peak of the trade this year--in early May--prices were up more than fourfold. It's been a huge about-face.    What about copper? Jeff Currie of Goldman may absolutely be right that it will be one of the biggest beneficiaries of the electrification of everything--the "new oil," he dubbed it. But it's still down 10% this month, its worst month since last March. Freeport-McMoRan, the big copper miner, is down 15%. "The trade is not working!!!" I hollered to Kristina yesterday.    There's more. Obviously, crypto has collapsed (Bitcoin is down by more than half). It was, in retrospect, the first sign not that the markets were about to roll over--stocks have been holding up fine--but that the inflation trade was about to hit the skids.    What's been supporting stocks is the resurgence of the growth trade that was the hallmark of 2020. Cathie Woods' ARK-K exchange traded fund is up more than 35% from its mid-May lows. Interest rates, of course, have gone completely the other way. The 10-year Treasury yield is stubbornly back below 1.5%.    The reversal has been so strong that for the quarter as a whole, tech is up about 12% (same goes for the Russell 1000 Growth) while the worst performing ETFs include JETS, down 11%, and the banks, which started out as the best-performing industry in the market this year.    And the two things clouding this otherwise clear picture of a role reversal in terms of inflation and growth are housing, and oil. Both of which are still seeing surging prices. But what do they both have in common? Problems with supply. As this fascinating interview with Coldwell Banker yesterday made clear, we have a shortage of four to six million homes in the U.S. On the oil front, we have both a global cartel and an "ESG" one that are curtailing supply.    So the real question, and the only one, is whether this role reversal has run its course. Heck, if I'm writing about it, it has to be just about done with. Right?    See you at 1 p.m!   Kelly Kelly Evans Twitter: @KellyCNBC Instagram: @realkellyevans KEY STORIES  Stocks making the biggest moves in the premarket: Virgin Galactic, Bed Bath & Beyond, MongoDB & more The stocks making the biggest moves in premarket trading include Virgin Galactic, Bed Bath & Beyond, MongoDB, and more. As housing boom begins to fizzle, weekly mortgage demand falls nearly 7% Weekly mortgage demand fell to the lowest level in almost a year and a half, as home prices sideline more buyers. Private payrolls rise 692,000 in June, easily topping expectations The gain of 692,000 was well above the 550,000 Dow Jones estimate though it fell short of May's 886,000. May home sales rebound to highest level since 2005, shocking even the Realtors In a surprising rebound, pending home sales jumped to the highest level since 2005. Trump Organization expects to be charged Thursday in Manhattan criminal case The Trump Organization has been told to expect that criminal charges will be filed against the company belonging to former President Donald Trump. Lumber prices dive more than 40% in June, biggest monthly drop on record Lumber futures have tanked 42% in June alone, on pace for its worst month on record back to 1978. Europe wants to stop the Covid delta variant. But experts say it may already be too late The coronavirus delta variant first discovered in India has now spread around the world, prompting further waves of infections in countries like the U.K. A top designer wants to build an air-purifying Tesla rival that you can sleep and eat in British designer Thomas Heatherwick tells CNBC that IM Motors is planning to build around 1 million Airo vehicles. 7-Eleven and Yum Brands franchisee buys bakery-cafe chain Au Bon Pain Franchisee Ampex Brands announced Wednesday that it bought the bakery-cafe chain Au Bon Pain. Digital ad firm Taboola's shares rise 2% in first day of trading after SPAC merger Taboola sees its opportunity in the tens of billions of dollars spent on sites outside of the "walled gardens" of Google or Facebook.      IN CASE YOU MISSED IT This analyst breaks down the bull case for Biogen's Alzheimer's drug Behind the U.S. ammo shortage as gun sales hit new records Coldwell Banker CEO on surging home prices: 'Fundamentals are strong'   Unsubscribe Manage Newsletters Terms of Service Join the CNBC Panel Digital Products Feedback Privacy Policy   © 2021 CNBC LLC. All rights reserved. A property of NBCUniversal. 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes and Market Data and Analysis. Data also provided by THOMSON REUTERS