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Registered Investment Adviser Caleb Lawrence

Another choppy session sends the major averages into the final hour about even on little real news. The Mortgage Bankers Association or MBA reports that mortgage activity increased 7.1% last week as refi’s gained 3% and purchase apps jumped 10% to hit a 7-year high. The 30-year contract rate for a conforming loan was unchanged at 4.17%.

Society General Analyst Albert Edwards perennial winner of the Extel Survey of analysts in the Global Strategy category took first place for a 14th consecutive year. Mr. Edwards noted that at long last performance of 10-year sovereign bonds has been convincingly matched by global equites for the first time since 2006 aside from a very brief stint in 2015. Aside from the far higher risk profile of equities over bonds. Equity valuation is painfully high in the USA and despite all the Fed chatter about raising interest rates they will have a tough time doing so based on macro-economic data at present. This leaves equites more than a little vulnerable going forward especially in light of the rapidly rising year ago earnings comparisons.

Spain’s Banco Popular, imploded under the weight of bad loans primarily real estate and got bailed out by Banco Santander for the princely sum of 1-Euro wiping out some 3.3 billion of investor capital in the process. I’m surprised Italy’s Banco de Monte Paschi hasn’t suffered the same fate already. Just another example of the “ahem” debt doesn’t matter theme.



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