The Market Bull – July 10, 2019
The major averages finished with small gains on generally positive but not overly significant data. FOMC minutes got their usual dissection.
The Federal Open Market Committee Meeting or FOMC minutes were very dovish as expected and revealed some interesting information. With seven members voting for a 50-basis point cut in June, you have to wonder just how scared they are. Or perhaps Fed Chairman Jerome Powell is caving to political pressure. While the incoming economic data has softened a little, it is certainly nothing to panic over. That said failing to deliver a 50-basis point cut isn’t going to be received well by the markets. At the same time the Fed continues to steadily reduce its bloated balance sheet. Personally, I think they have made a huge mistake. Fail to deliver a large cut in interest rates and the market could have a fit. Deliver the cut and watch the leveraged speculation light up again, with the inevitable consequences at some point in the future.
The California Manufacturing Survey was unchanged in the 3rd quarter at a respectable 63.3. Bucking the trend of its brethren that have posted sharp declines of late to about even. The details were unremarkable and showed solid numbers.
The Mortgage Bankers Association reports that mortgage activity fell 2.4% last week as refi’s fell 6.5% and purchase apps gained 2.4%. The 30-year contract rate for a Jumbo Loan advanced fractionally to 4.03%, still very low by historical standards.
Wholesale Inventories advanced .4% in May as expected. Sales increased just .1%, pushing the inventory to sales ratio up to a relatively high 1.35%. The only notable details from the report include a 10.8% advance in year ago inventory for durable goods, and a .4% decline in non-durable sales for the month. Trade tensions were noted as a concern going forward.
Standard and Poors 500 Index closed at: 2,993.07 up 13.44
NASDAQ finished the day: 8,205.53 up 60.80
Gold ended trading at: $1,421.10 up $8.60