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Market Bull

A Trillion In Excess Bank Reserves

A Trillion In Excess Bank Reserves
The Market Bull 2019

 
 
00:00 / 2:40
 
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The Market Bull – October 16, 2019

The major averages closed with small losses. A trillion in excess bank reserves and still the Fed has to fire up the Repo market in a big way.

The California Association of Realtors reports that year ago sales figures continued south in September with an 11.6% decline. Inventory for sale increased to 3.5 month’s fairly low by historical standards. Despite lower interest rates sales continue to struggle.

The Mortgage Bankers Association reports that its Mortgage Activity Index advanced .5% last week as refi’s increased 3.6% and purchase apps fell 4.1%. The 30-year contract rate for a jumbo loan was unchanged at 3.9%.

Retail Sales missed expectations falling .3% in September on broad based weakness. On a year ago basis sales have increased a decent 4.1%. The one real bright spot was clothing and accessories that advanced 1.3% for the month. Building materials -1%, motor vehicles and parts -.9% and gasoline stations -.7% all lagged.

The Fed’s Beige Book on regional economic conditions during October showed continued growth but at a slower pace as some districts came in flat. The re-escalation in the U.S.-China trade war weighed significantly on business and consumer confidence. As did financial market volatility, and a slowdown in global growth. Items the Fed’s latest pair of rate cuts was designed to address.

The August Treasury International Capital or TIC report showed foreigners to be significant net sellers of securities, with the worst figure in 8 months. Treasury bonds and notes, corporate bonds and equities all sold off materially. Agency bonds were the only security type to show net purchases for the month. This marked a 3rd significant month of sales in the last 9-months.

Standard and Poors 500 Index closed at: 2,989.69 down 5.99
NASDAQ finished the day: 8,124.18 down 24.52
Gold ended trading at: $1,493.80 up $10.30

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Repo Market and QE 4

The major averages closed with modest gains despite some disappointing data, seemingly unconcerned with the Repo Market and QE 4.

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Trade Talks Collapse Again

The major averages close with large losses as trade talks collapse again. Given how far apart and intransigent both sides are, I’m not surprised.

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Solid Gains

With the impeachment theatre in play the major averages closed with solid gains on generally disappointing data after jobs growth missed expectations.

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Political Infighting Rages

The major averages fell hard after the open, recovered late, closing with modest gains. Economic data heads south, as political infighting rages.

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Caleb Lawrence

Registered Investment Adviser

5321 Scotts Valley Drive
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Local: (831) 334-5318

After nearly 19 years of live radio it was time to move on to new projects. My daily economic update can still be found on my Blog and the I-Tunes and Google Play stores as a podcast. Or you can call my office 831-334-5318 and take advantage of my still “free” after 20+ years initial consultation.  Usually about an hour, will have an opportunity to get to know each other better and address your specific concerns on a one to one basis.