The Market Bull – February 24, 2020
A resurgence of Coronavirus fears sent the major averages skidding into the close with substantial losses despite generally positive economic data.
The Chicago Fed National Activity Index or CFNAI gained .1 points in January to -.25, December was revised down to -.51, this series covers about 85% of total economic activity. Improvement was broad based, a volatile series the 3-month moving average improved markedly to -.09 a gain of .14 points and a 5-month high. Minus .7 for this series indicates recession, while 7 of the last 12-months have come in negative for the series it continues to show weak economic growth.
The Texas regional manufacturing index missed expectations in February it gained 2 points to 1.2 showing expansion once again. Although production increased dramatically and reached a 6-month high, employment, new orders and price data were all mixed. While a partial resolution to the trade war has certainly helped, headwinds remain from Boeings shutdown of the 737 Max production line and of course the Coronavirus as yet unquantifiable negative economic effects, though I doubt they will be trivial.
Sub-Prime credit cards have become the latest distressed credit sector after delinquencies spiked to a record high 7.05% in the 4th quarter. This exceeded the previous record high set in 2008 and joins auto loans with record delinquencies as well. The real surprise here is that employment remains strong with 50-odd year lows in the unemployment rate. As delinquencies such as these generally tend to go hand in hand with employment and suggest that consumers are in much worse shape than the macro economic data would suggest. Additionally this data, like a number of other series, shows the increasing stratification of the American economic landscape with those at the top doing very well, while those in lower quintiles increasingly struggle to make ends meet as the cost of living spirals out of control in the face of little if any net earned income growth for your average worker.
Standard and Poors 500 Index closed at: 3,225.89 down 111.86
NASDAQ finished the day: 9,221.28 down 355.31
Gold ended trading at: $1,663.00 up $14.20