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Rumored Settlement
The Market Bull 2019

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The Market Bull – May 15, 2019

Despite mixed economic data the major averages closed with large gains as the rumored trade war settlement melt up continues.

The Mortgage Bankers Association reports that its mortgage activity index slipped .6% last week as refi’s dropped .5% and purchase apps declined .6%. The 30-year contract rate for a jumbo loan slipped fractionally to 4.24%.

The New York Fed regional manufacturing activity index smashed expectations with a 7.7-point gain to 17.8 in May. Despite some pretty weak internal numbers. Price data slipped a little but remains fairly high.

Retail sales missed expectations in April with a .2% decline. A 3rd fall in the last 5-month’s with large drops seen in building materials, electronics, appliances, automobiles and parts. Given that consumer spending accounts for some 70% of total economic activity a slowing trend for this series is particularly troubling.

Industrial Production substantially missed expectations with a .5% drop in April. Large declines were seen in utilities, business equipment, motor vehicle and parts. Capacity utilization slipped substantially to 77.9% a 10-month low.

The National Association of Home Builders or NAHB housing market index gained 3 points in May to 66 on strength in the Northeast and west, traffic remained negative at 49. Falling mortgage interest rates continue to boost housing activity.

Business Inventories were unchanged in March following 3-months of solid gains. Sales jumped 1.6% as the inventory to sales ratio fell to 1.37, still relatively high by recent standards.

The Treasury International Capital flows or TIC report was negative for a 3rd time in the last 4-months falling 28.4 billion as foreign investors sold equities and Treasury issues. Corporate and agency bonds saw small net purchases.

Standard and Poors 500 Index closed at: 2,850.96 up 16.55
NASDAQ finished the day: 7,822.15 up 87.65
Gold ended trading at: $1,296.60 up $.30


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