The Market Bull – September 18, 2019
After spending most of the day in the red the Fed’s ¼% reduction in interest rates helped the major averages into the close mixed.
The Mortgage Bankers Association reports that mortgage activity slipped .1% last week as purchase apps jumped 6.4% and refi’s slipped 4.3%. The 30-year contract rate for a jumbo loan increased sharply to 4.01%.
Snapping a string of declines construction activity jumped in August. Starts increased 12.3% to 1.364 million units annualized while permits gained 7.7% to 1.419 million units annualized to mark a second solid month. All regions saw increased construction activity except the West.
As was widely expected the Fed cuts rates ¼% at the conclusion of the latest Federal Open Market Committee or FOMC meeting this morning. A clearly disappointed President Trump was quick to voice his dissatisfaction saying Fed Chairman Jerome Powel lacked guts and vision. Once again, the president demonstrates immature behavior. Additionally, the race to the bottom with interest rates, while great for speculators and the heavily indebted, leads to well documented economic booms and busts. While I suspect another bust is both very likely and due soon. Another unwelcome side effect of zero interest rates is that it crucifies savers, retirees and others living on a fixed income, whilst all but guaranteeing the destruction of every pension fund in existence. A subject studiously avoided by the lamestream media, perhaps because it hasn’t happened yet. While pension fund managers continue to play all manner of ridiculous games with assumed rates of return upwards of 10% in many cases. The math is irrefutable, and it is a question of “when” not “if” with the “when” arriving sooner, rather than later with zero interest rates.
Standard and Poors 500 Index closed at: 3,006.73 up 1.03
NASDAQ finished the day: 8,177.39 down 8.62
Gold ended trading at: $1,501.60 down $11.80