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A Trillion In Excess Bank Reserves
The Market Bull 2019

 
 
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The Market Bull – October 16, 2019

The major averages closed with small losses. A trillion in excess bank reserves and still the Fed has to fire up the Repo market in a big way.

The California Association of Realtors reports that year ago sales figures continued south in September with an 11.6% decline. Inventory for sale increased to 3.5 month’s fairly low by historical standards. Despite lower interest rates sales continue to struggle.

The Mortgage Bankers Association reports that its Mortgage Activity Index advanced .5% last week as refi’s increased 3.6% and purchase apps fell 4.1%. The 30-year contract rate for a jumbo loan was unchanged at 3.9%.

Retail Sales missed expectations falling .3% in September on broad based weakness. On a year ago basis sales have increased a decent 4.1%. The one real bright spot was clothing and accessories that advanced 1.3% for the month. Building materials -1%, motor vehicles and parts -.9% and gasoline stations -.7% all lagged.

The Fed’s Beige Book on regional economic conditions during October showed continued growth but at a slower pace as some districts came in flat. The re-escalation in the U.S.-China trade war weighed significantly on business and consumer confidence. As did financial market volatility, and a slowdown in global growth. Items the Fed’s latest pair of rate cuts was designed to address.

The August Treasury International Capital or TIC report showed foreigners to be significant net sellers of securities, with the worst figure in 8 months. Treasury bonds and notes, corporate bonds and equities all sold off materially. Agency bonds were the only security type to show net purchases for the month. This marked a 3rd significant month of sales in the last 9-months.

Standard and Poors 500 Index closed at: 2,989.69 down 5.99
NASDAQ finished the day: 8,124.18 down 24.52
Gold ended trading at: $1,493.80 up $10.30

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