The Market Bull – July 1, 2019
Despite disappointing data, the major averages closed with modest gains to begin the week. The current economic expansion hit the record books today at 121 months, longest ever. The previous record ended with the Dot-Com crash after 120 months.
Financial crises have odd triggers, seemingly innocuous events that barely warrant any consideration. Yet with the benefit of hindsight turn out to be the straw that broke the proverbial Camels back. Recently a small regional bank in China collapsed sending shockwaves through the Chinese banking system, forcing the government to bail out the system with 125 billion in emergency funding after interbank lending froze. Other fallout from this includes a handful of hedge funds that have blown up, shades of the 2007 crisis that began when two Lehman Brothers hedge funds failed. With GAM Greensill Supply Chain Finance Fund, in Switzerland, imploding in early June, followed in short succession by Neil Woodford’s Equity Income fund in the U.K. Then came French asset manager H20 Asset Management. Isolated incidents that mean nothing, or the beginnings of the next crisis?
Construction spending missed expectations substantially in May falling .8%. All classes of construction spending went backwards as the series fell for the first time in 6-months. On a year ago basis total construction spending is 2.3% below its May 2018 level.
The Institute for Supply Management Manufacturing Index slipped .4 points to 51.7 June on weakness in new orders, inventories and price data. This series has been declining steadily since late last year and is getting uncomfortably close to negative territory below 50, 42.9 is generally considered a recession. Tariffs and trade wars are the culprit once again.
CoreLogic reports that home prices continued to advance in April, though the rate of increase slipped further dropping to 3.6% following its downward trend began last year. Chicago up 1.2%, Philadelphia +1.1% and Dallas up .9% were the top 3 performing metro areas. At the other end of the scale New York slipped .9% while Atlanta was unchanged.
Standard and Poors 500 Index closed at: 2,964.33 up 22.57
NASDAQ finished the day: 8,091.16 up 84.92
Gold ended trading at: $1,387.00 down $26.70