The Market Bull – May 23, 2019
Disappointing data and the realization that the trade war will hit the economy hard sent the major averages into the close with large losses. While it will take a few more months for the data from the dramatic escalation in the trade war to find its way into various economic reports. Initial indications suggest that the collateral damage will not be trivial due to the interconnectedness of the global supply chain.
Credit card charge-offs at smaller US and commercial banks stayed above 7% for a 6th consecutive quarter despite slipping to 7.37% in the first quarter of 2019. The credit-card charge off rate at the largest 100 banks rose to 3.78%, the highest since the first quarter of 2013. For all commercial banks combined, the charge-off rate rose to 3.83%, the highest since the fourth quarter 2012.
These data points that the Federal Reserve Board of Governors reported recently are another warning from consumers carrying record debt loads where serious auto-loan delinquencies, driven by subprime loans, have reached Q3 2009 levels. Just another example that the everything is great narrative, is in fact not so great.
Despite meeting expectations new home sales fell hard in April down 6.9%. All regions fell noticeably except the Northeast. Gains in higher priced home sales helped to push the median price up 8.8% for the month to $345,900. Month’s supply increased to 5.9. Notable weakness just like the existing home sales report. Revisions to previous month’s sales take a lot of the sting out of this report, but it is far from positive.
The Kansas City Fed regional index slipped a point in May to a barely positive 4. Large declines were seen in production and new orders, employment was mixed. Price data was mixed as well and remains moderate.
Standard and Poors 500 Index closed at: 2,822.24 down 34.03
NASDAQ finished the day: 7,628.28 down 122.56
Gold ended trading at: $1,283.30 up $9.10