The Market Bull – March 25 2019
The major averages finished the day about even as the yield curve inverts out to 10-years. Mueller’s report hits the wires disappointing many.
The Chicago Fed National Activity Index improved to -.29 in February, a 3rd consecutive month below zero. This index covers about 75% of total economic activity and -.7 indicates recession. A volatile series the 3 and 6-month moving averages also went negative. 3 of the 4 sub categories were negative for the month as economic data increasingly comes in soft.
The Texas manufacturing index fell 4.8 points to 8.3 in March on weakness in new orders and capital expenditure plans. Price data was mixed.
The previous financial crisis was primarily the result of reckless mortgage lending with a generous assist from derivatives, or financial weapons of mass destruction as Warren Buffet called them, to spread it worldwide. This time round the crisis is likely to be centered around corporate debt as it has ballooned to new record highs nearly across the board in developed economies. US nonfinancial corporate debt-to-GDP ratio has ballooned to the highest ever: reaching 73.9% of GDP or Gross Domestic Product. Putting the US in 25th place. China on the other hand, the world’s 2nd largest economy sports a debt to GDP ratio of 152.9% putting it in 7th place. Japan infamous for its debt to GDP ratio’s is in 16th place with a corporate debt to GDP ratio of 101.2% far lower than it’s early 90’s peak. It is the tax haven countries that sport truly eye-popping corporate debt to GDP ratios of which tiny Luxemburg is number 1 at 222.9%.
Standard and Poors 500 Index closed at: 2,798.36 down 2.35
NASDAQ finished the day: 7,637.54 down 5.13
Gold ended trading at: $1,321.90 up $9.60