Caleb Lawrence – KPIG-KPYG Radio – Share the Wealth – February 22, 2017
The markets struggled in early trade despite generally positive data. Existing home sales gained a larger than expected 3.3% in January to 5.69 million units annualized on strength in the West and North East. On a year ago basis sales advanced 3.8%. Month’s supply was unchanged at a very low 3.6. The median price slipped 1.9% to $228,900 for the month, a figure 7.1% higher than a year ago.
Mortgage activity fell again last week down 2% as per the Mortgage Bankers Association activity index. Refi’s slipped 1%, purchase applications dropped 2.8% continuing the decline in activity began in September of last year as interest rates jumped. The 30-year contract rate increased fractionally to 4.36% for a conforming loan.
With the markets and optimism continuing to rise on hopes of a corporate tax cut funded with a Border Adjustment Tax aka an import tax and calls to deregulate everything in sight including trade. I’ll note that the history of tax cuts and deregulation isn’t pretty, or very effective and import tariffs are an outright disaster. The problem with the economy both domestically and abroad is debt saturation and a lack of earned income. 1st quarter economic growth is tracking 1.9% and looks to make another anemic showing. Data on global trade shows that it has struggled for 5 straight years with 2016 increasing just 1.9% a second annual decline. Trade in services has fallen for a second consecutive year. Trade, corporate profits, economic growth, and rapidly expanding debt both public and private all point to an economy that is at best struggling despite considerable stimulus and at worst is an accident waiting to happen ala 2007 as debt levels reach unsustainable peaks.