The Market Bull – October 30, 2019
The major averages finished with small gains after the Fed cut rates for a 3rd time as expected. The impeachment process continues.
The Mortgage Bankers Association reports that mortgage activity gained .6% last week as refi’s slipped .5% and purchase apps advanced 2.3%. The 30-year contract rate for a jumbo loan increased fractionally to 4.01%.
Preliminary 3rd quarter Gross Domestic Product or GDP advanced an anemic 1.9% as economic growth continues to slow. Real disposable income growth improved to 2.9% from 2.4%. The saving rate rose to 8.1% from 8%. The primary culprits for slower growth include fading fiscal stimulus as last year’s deficit-financed tax cuts have largely played out. The second was the negative impact of tighter monetary policy imposed by the Federal Reserve and many other central banks last year. Lower interest rates and a dramatic expansion in the Fed’s balance sheet will likely reverse this process next summer and push the assorted bubbles to new record highs.
As expected, the Fed cut interest rates for a 3rd time this year reducing them by .25%. Given that the official narrative is that the economy is doing great this is odd to say the least. Then again so is the idea of using even more debt to solve the problems caused by too much debt in the first place. With the Fed also flooding the Repo market with 120 odd billion a day the asset bubbles should reach new bubbelicious highs, and in fact the stock markets have already done so. I hope to god it’s different this time as reckless doesn’t even begin to describe this.
Standard and Poors 500 Index closed at: 3,046.77 up 9.88
NASDAQ finished the day: 8,303.98 up 27.12
Gold ended trading at: $1,497.20 up $6.50