Graph of Housing Market Index and S&P500, showing that correlation is .84 with a 1 year lag, since 1995. What happened in 1995 to increase the correlation, and is this a permanent change or just a fluke? The writer states that stocks have become more dependent on housing.
But housing has been a predictor of every recession, except for two. Housing has played a large role in our economy for decades.
If you believe this is a permanent change, then the S&P500 is poised for a large drop.
I have no convictions about this, but thought it was interesting.
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