The Market Bull – January 30, 2019
Dovish comments from the Fed with respect to interest rates and it’s Quantitative Tightening or QT program helped the major averages close with large gains on mixed economic data. I always figured the Fed would arrive at this point sooner, rather than later. Having hooked the economy on cheap debt and economically ruinous asset bubbles for the last 20-years, the Fed has painted itself into a corner. As the period has shown that without prodigious credit growth and emergency level interest rates the economy struggles to maintain a decidedly subpar 2% or so annualized Gross Domestic Product or GDP growth rate. With record, or nearly so, levels of debt public, corporate and private, higher interest rates are a recipe for disaster. Then again so is blowing one economically destabilizing asset bubble after another. So it’s dammed if they do and dammed if they don’t. A shame that we will all end up paying the price for their short-sightedness.
The Mortgage Bankers Association reports that its weekly activity index fell 3% last week with refi’s down 5.5% and purchase apps off 2.3%.
The 30-year contract rate for a Jumbo Loan increased fractionally to 4.6%.
The Pending Home Sales Index took another tumble in December falling 2.2% and marking a 5th decline in the last 6-months. All regions fell for the month except the West as it advanced for a 2nd time.
On a year ago basis this series is showing sharp trend declines across the board with the South and West both down double digits.
Payrolls company ADP reported a better than expected 213,000 new private sector jobs in January on strong broad-based growth. The official Bureau of Labor Statistics report for January will be released Friday, and the consensus is for 158,000 new jobs.
Standard and Poors 500 Index closed at: 2,681.10 up 41.10
NASDAQ finished the day: 7,183.08 up 154.79
Gold ended trading at: $1,319.00 up $10.10