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 Registered Investment Adviser Caleb Lawrence

Assets prices continue their melt up despite what is at best mixed economic and business cycle data and considerable geo-political instability.

The Richmond Fed manufacturing survey slipped 2 points to 20 in April as a large decline in the average workweek overcame a small gain in new orders.

New home sales handily beat expectations in March with a 5.8% increase to 621,000 units annualized, this is the second large gain recorded for the first quarter. On a regional basis, large gains were seen in the Northeast and West. Month’s supply slipped to 5.2, the median price jumped 7.1% to $312,800 erasing the previous month’s decline. That said the median price has been little changed now since April 2016.

You have got to give the Fed credit for reflating both the real estate and stock bubbles, lets hope it’s different this time. Real estate bubbles usually take about 6-years to form and based on the Case/Schiller Home price index were right on track as the National, 10, and 20 city indexes are all 5% or better over their mid 2006 highs. On a seasonally adjusted basis all of the metropolitan statistical areas in the 10 City Index are above their previous high by at least 3.2% and as much as 8.5%, San Francisco is about in the middle, 6.3% higher than its May 2006 peak.

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