The Market Bull – March 22 2019
The major averages crashed badly Friday closing with large losses on a raft of negative data. The yield curve continues to invert, an unstable geo-political situation in Asia, while Europe goes from bad to worse economically. Since Monday the Standard and Poors 500 Index has fallen 22 points or .78%, while the NASDAQ slipped 53 points or .69%.
With no end to the trade war in sight and the potential for sharply higher tariffs. Wholesale trade jumped again in January with a 1.2% gain. Sales produced their best showing in 5-months with a .5% advance. The inventory to sales ratio inched up to 1.34 months.
Lower interest rates helped existing home sales to a considerable beat to expectations in February after they surged 11.8% to 5.51 million units annualized on huge gains in the Western and Southern regions. Month’s supply slipped to 3.5, the median price advanced slightly to $249,500.
The Chinese economy is rapidly going south, ours is turning down as well, while Europe goes from bad to worse. Recent cuts to the European economic growth rate for 2019 shaved .6% off the top line figure as it hit just 1.1%, risks were noted to the downside. With growing social unrest and the Brexit fiasco even 1.1% growth may turn out to be overly optimistic. With the USA joining Europe in a return to monetary stimulus the implication is that heavily indebted western economies can’t function anymore without it anymore as the central banks have painted themselves into a corner. With inflation sinking back towards 1.5% once again we are reminded that credit busts are inherently deflationary. Worse a harsh lesson in the problem cannot be the solution is on tap. Or to put it another way, you cannot solve the problems caused by too much debt with even more debt. I would have thought they knew better, they certainly should have.
Standard and Poors 500 Index closed at: 2,800.71 down 54.17
NASDAQ finished the day: 7,642.67 down 196.29
Gold ended trading at: $1,313.00 up $5.70