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Registered Investment Adviser Caleb Lawrence

The major averages struggled into the final hour about even after yesterday’s drubbing on disappointing data. Existing home sales missed expectations in February falling 3.7% to 5.48 million units annualized, month’s supply increased to 3.8 so inventory remains very tight. The median price advanced fractionally for the month to $228,400 a figure 7.7% higher than a year ago. Most regions reported weaker sales except the South that managed a small gain.

Ally Financial visited the confessional to report an earnings miss blaming the recent sharp declines in used car prices. Jamie Dimon CEO of JP Morgan Chase chimed in saying that pricing was weak but not systemic, another way of saying its contained ala sub-prime back in 2007. With loan origination slowing of late and bank capital tightening as well some have blamed Trump’s erratic behavior. The primary cause is likely the standard excessive debt and lack of earned income syndrome. Unlike the 2007-2009 financial and real estate crisis that was largely caused by reckless sub-prime residential real estate lending. This crisis will feature several catalysts auto, student, and commercial real estate loans will likely prove the initiators but, I seriously doubt it will be contained to these three areas as recklessly used debt while not the match is certainly the fuel for the fire that once started will no doubt take on a life of its own as it did the last time round.


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