The Market Bull – February 19, 2020
The major averages close with new record highs on generally positive economic data. The Coronavirus seems to be losing its pandemic status.
While the media constantly pushes the narrative that the economy is doing great and everything is ok. The available data continues to cast shade over this narrative contradicting the official story. The latest example being wages. While they have risen .6% on a real or inflation adjusted basis during 2019, an ok but not great figure. Adding hours worked to the picture and we find that on net wages went nowhere in 2019 because average weekly hours worked fell by .6% negating the wage gain. Per data from the Bureau of Labor Statistics or BLS and Mish’s Global Economic Trend Analysis.
The Mortgage Bankers Association reports that mortgage activity fell 6.4% last week. Refi’s slipped 8%, while purchase apps dropped 3.4%, a 3rd consecutive decline. The 30-year contract rate for a jumbo loan increased again to 3.79% a 4-week high, still very low by historical standards.
Construction activity was mixed in January with starts falling 3.6% to a still very respectable 1.567 million units annualized. Permits increased 9.2% to 1.551 million units annualized. While real estate is a significant component of Gross Domestic Product or GDP residential construction only accounts for 3% of GDP.
Wholesale or producer prices jumped .5% in January per the Producer Price Index or PPI. A figure some 5-times expectations, the annualized rate increased to 2.1% its first 2%+ reading since April of 2019. Large gains in services and clothing led the advance. Supply chain disruption caused by the Coronavirus is likely to add a short-term boost to imported goods prices in the coming months.
Standard and Poors 500 Index closed at: 3,386.15 up 15.86
NASDAQ finished the day: 9,817.18 up 84.44
Gold ended trading at: $1,614.60 up $11.00