The Market Bull – June 26, 2019
The major averages couldn’t hold their early gains finishing about even on disappointing data. It would seem odds of resolving the trade war are slim.
The Mortgage Bankers Association reports that mortgage activity gained 1.3% last week. Refi’s jumped 3.2% but purchase apps slipped .9%. The 30-year contract rate for a jumbo loan fell to 4.00%. That said the yield curve continues to invert and is almost completely so at this point.
Durable Goods Orders missed expectations substantially in May falling 1.3%. A large decline in non-defense capital goods was the culprit. The proxy for business spending non-defense capital goods ex-aircraft advanced .4%. A volatile series, that said it has posted 3 material declines in the last 4-months.
The International Trade Balance deficit increased to 74.5 billion in May. Exports rose 3%, not enough to keep up with a 3.7% increase in imports. Increasing trade volumes is always a good sign.
Advance Wholesale Inventories increased .4% in May. Retail Inventories gained .5%. Nondurable inventories led the advance for a second month, up .8%. Fear of increasing tariffs once again drove the increases.
With substantial gains seen in real estate prices in the post crisis period since 2009 one could easily believe that real estate is booming once again. And for many markets it is, though not all, and once again the devil is in the details. Looking at the Case/Schiller National Index and it shows prices 12.9% above the pre bust peak. This figure is nominal, or before inflation, adjusting for inflation and the National Index needs to gain another 7.9% to break even. Wages show a similar pattern but over a much longer time frame. The composite 20, in real terms, is still 14.7% below the bubble peak.
Another day another scandal, this time its Merrill Lynch after they settled for 25 million in criminal fines, restitution, forfeiture of trading profits, and a deferred prosecution agreement with regulators. After they got caught rigging the Precious Metals Market “Thousands Of Times” over 6 years. In case you’re wondering what a “Deferred Prosecution” agreement is, it means that if they promise to behave themselves nobody goes to jail or gets a criminal conviction. Where it not for these the banksters would have criminal convictions left and right. Not just the 3 felony convictions JP Morgan Chase has. Oh, and if you’re a garden variety criminal, don’t go looking for a Deferred Prosecution Agreement as you not going to get one.
Standard and Poors 500 Index closed at: 2,913.78 down 3.60
NASDAQ finished the day: 7,909.97 up 25.25
Gold ended trading at: $1,412.40 down $6.30