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Bank Indices Set Multi-Year Highs Pre-Earnings

NEW YORK (TheStreet) -- My headline from Friday's trading is the 21.5 basis point rise in the yield of the U.S. 30-year bond yield to 3.708%, the highest since August 2011. Home builder stocks declined, while banking indices set new multi-year highs.

The catalyst for this dynamic is what Wall Street called an improving jobs picture. I disagree with this interpretation and continue to call the labor market, the 'Obamacare Job Market', or the shift to part time employment from full time employment so that employers do not have to pay for health care insurance under the mandate of the Affordable Care Act.

How else would you describe a rise of 360,000 part time jobs and a decline of 240,000 full time jobs? Because of this quickly changing labor market the real unemployment rate, known as U6 rose to 14.3% in June from 13.8% in May. The percent of full time jobs fell to 47%.

A related problem I recently read about is that real seasonally adjusted median household income declined from just above $56,000 when the recession began at the end of 2007 to $51,500 in today's part time labor market. This is another way to say that the cost of living is rising on Main Street USA.

Meanwhile on Wall Street I recently viewed a chart that showed NYSE margin debt at levels not seen since before the tech bubble burst in March 2000 and in mid-2007 before massive stock market decline that lasted into March 2009.

With the 30-year yield at 3.708% the ValuEngine valuation warning intensified with 73.0% of all stocks overvalued, 37.1% by 20% or more.

Against this backdrop, home builder stocks have shifted from a leadership role to being stock market laggards. The PHLX Housing Sector Index (175.14) ended last week below its 200-day simple moving average at 179.85.

Home builder stocks had been in an upside leadership roll in 2013 with the housing index testing a multi-year high at 210.01 on May 20, up 22.6% year-to-date at that time. Since then the housing index declined to a low of 168.79 into June 24. As U.S. Treasury yields began to rise mortgage rates spiked, which is a potential cloud for the housing market. At the low on June 24, this index dipped into the red for the year. On July 5, the housing index is up just 2.2% year-to-date and is 16.6% off the high.

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