After opening higher on little economic data the major averages enter the final hour about even. Earnings season is underway with some notable hits and misses but seems to be off to a good start, despite a few trade war induced negative surprises.
The Richmond Fed regional index was unchanged at 20 in July. The details were unremarkable save for prices paid as they hit a 6-year high.
The California Association of Realtors reports that home sales fell 7.3% in June from a year ago. Inventory for sale marked a 3rd consecutive increase with an 8.1% jump. While inventory remains very low, 3-month trends of increasing inventory are notable events, and if it continues could well mark the end of the latest real estate boom.
Trump’s poorly considered debt funded tax cuts for the 10% and corporations provided an initial economic boost, their far to narrow focus is showing up in the data. While Social Security tax collections are increasing on a year ago basis, the rate of increase trails that of wage gains, implying less employment. Add higher interest rates and an attempt at reducing the Fed’s bloated balance sheet, it’s not surprising that liquidity issues are cropping up. First with emerging markets and now with real estate. New home sales come out tomorrow, expectations are for a small decline to 666,000 units annualized, I won’t be surprised if this figure misses to the down side.
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