The Market Bull – May 28, 2019
The major averages couldn’t hold their early gains, closing with large losses despite generally positive data. Indirect fallout from the trade war accumulates.
The yield curve took another step towards inverting after the mid and long part of the curve saw yields plunge. Pushing large portions of it out to 15-years upside down or inverted. While an inverted yield curve doesn’t guarantee a recession, it is a good indicator. Various other data points are also suggesting that economic activity is slowing sharply in the face of dramatically higher tariffs as the trade war escalates and produces numerous unintended consequences, such as Chinese consumer boycott of American goods from Apple, GM, Tesla and others.
The Case-Schiller CoreLogic home price index continues to show rising real estate prices and that the rate of increase is slowing, as this marked a 12th consecutive month of slowing price gains. In March the National Index gained .6% for the month and 3.7% from a year ago. The top 3 metros to report price gains include Boston +1.1% while San Francisco and San Diego both advanced .7% for the month. At the other end of the scale the 3 worst metros are Chicago -.2%, Los Angeles and Dallas -.1%.
The Texas regional manufacturing index continued its downward trend from last summer falling 7.3 points in May to -5.3. Weakness was noted in production and new orders. Employment was mixed but remains positive. Price data fell again and is fairly low. Once again, the trade war was cited as a major uncertainty.
Standard and Poors 500 Index closed at: 2,802.39 down 23.67
NASDAQ finished the day: 7,607.35 down 29.66
Gold ended trading at: $1,278.70 down $4.90