Registered Investment Adviser Caleb Lawrence
The signing of the Republican tax bill and generally positive data failed to inspire the major averages in early trade as opening gains turned into small loses with an hour to go.
Mortgage activity fell 4.9% last week as per the Mortgage Bankers Association or MBA. Refi’s dropped 3.2%, purchase apps slipped 5.5%. The 30-year contract rate for a jumbo loan increased fractionally to 4.14%. This series continues to trend lower per its pattern of the last two months.
Existing home sales beat expectations in November with a 5.6% gain to 5.81 million units annualized. All regions advanced nicely save the West that slipped a little. Month’s supply fell to just 3.4, while the median price increased to $248,000 a figure 5.8% higher than a year ago.
Personal income gained .7% in the 3rd quarter. On a regional basis the additions were fairly well distributed with the exception of the Midwest that managed just a .5% advance and the southwest with a .8% increase.
With the Republican Tax Bill signed some of the early takeaways include. The personal net deduction increasing just $2,000. Mortgage interest deduction getting capped at $750,000, while HELOC’s and such interest gets excluded. 529 plans can’t be used for private school tuition. Businesses get to expense a greater share of equipment in year 1. Pass through income from LLC’s and S-Corps get a much lower tax rate, but there are many qualifiers. State and local tax deductibility has apparently been eliminated something that will hit high tax jurisdictions along the coasts hard including California. There’s a ridiculously generous handout for the hedge fund crowd. The Affordable Care Act penalty disappears in 2019, and last but not least. All the stuff about corporations repatriating their overseas profits leading to an investment and jobs boom seems to be a non-starter and the bill will very likely put a serious damper on debt funded corporate share buy backs as well, a mechanism that has driven the markets in the last several years. In a nutshell, more debt, growth that won’t appear and another handout for those that can afford to buy our political representatives at the expense of most everyone else.