The Market Bull – August 7, 2019
The major averages closed mixed despite some surprise data. New Zealand, India and Thailand all cut interest rates, as the Treasury curve reinverted. In the every action has an equal and opposite reaction, China reiterated its refusal to buy American agricultural products as it expects tariffs to jump from 10% to 25% and also to be expanded to nearly all Chinese imports into the US. Here at home the Treasury market is pricing in a small chance of an emergency ¼% rate cut this week. My how things change, and it would appear that things are rapidly going from bad to worse as the hubris of Trump and our foreign policy comes back to bite us.
The Mortgage Bankers Association reports that mortgage activity increased 5.3% last week as refi’s surged 11.8% and purchase apps slipped 2%, a 4th consecutive decline. The 30-year contract rate for a jumbo loan fell to 3.96%.
Consumer Credit missed expectations in June with a 14.6 billion advance. Credit cards or revolving credit snapped a string of gains falling .1 billion. Non-revolving debt essentially student and auto loans jumped 14.7 billion, its best showing in 6-months.
Despite the everything is great meme, global chip sales plunged 16.8% in June from June last year, to $32.7 billion, on a three-month moving average basis, and are down 22% from the peak in October 2018, according to the World Semiconductor Trade Statistics. As the deepest and most relentless plunge in semiconductor sales since the Financial Crisis continues. In percentage terms, while noteworthy the 22% drop from the peak pales compared to the 39% plunge during the Financial Crisis and the 45% plunge during the long dotcom bust. Sales fell in all major geographic regions in June (three-month moving averages compared to the same period last year), with the Americas down 29.5%, followed by China -13.9%, Asia Pacific/Other -13.7%, Japan -12.8% and Europe -10.9%.
Standard and Poors 500 Index closed at: 2,887.246 up 5.47
NASDAQ finished the day: 7,868.88 up 35.61
Gold ended trading at: $1,515.10 up $30.90