Caleb Lawrence – KPIG-KPYG Radio – Share the Wealth – February 27, 2017
After opening lower the major averages ramped higher in early trade and enter the final hour with small gains on little real news ahead of Trump’s budget announcement tomorrow and the looming Federal cash crunch rapidly approaching with the March 17th budget deadline. The Dallas Fed regional index exceeded expectations with a 2.4 point gain to 24.5 in February on strength in production and employment.
Durable Goods orders beat expectations in January with a 1.8% gain on a big jump in aircraft orders. A volatile series one month means little, further this index has gone essentially nowhere for over a year now. December was revised from -.4% to -.8%, the proxy for business spending non-defense capital goods ex-aircraft fell .4% snapping a string of gains and casting a shadow over the recent surge in fracking activity, aka rig counts.
The January Pending Home Sales Index surprised to the downside with a 2.8% decline to 106.4 a figure just .4% higher than a year ago suggesting that higher interest rates are starting to catch up to real estate prices and activity. The Midwest down 5% and West off 9.8% showed notable weakness at the regional level. December’s 1.6% gain was cut by half to just .8%. The publisher of the index the National Association of Realtors or NAR figured the decline was due to tight inventory. New home inventory is about normal at just under 6-months supply, existing home inventory is tight but has been for a while so the rational is weak if you ask me but fits with the tortured logic popular with Lawrence Yun and the NAR.