Registered Investment Adviser Caleb Lawrence
The major averages enter the final hour about even on mixed but not overly significant data.
Mortgage activity gained 4.8% last week as per the Mortgage Bankers Association index. Refi activity jumped 7.3% while purchase apps increased 3.1%. The 30-year rate for a jumbo loan hit a 5-week high of 4.6%.
Final 4th quarter GDP or Gross Domestic Product was revised up to 2.9% on gains in Consumer Spending. Real disposable income grew a disappointing 1.1% after rising 0.7% in the third quarter. The saving rate fell to 2.6%, its lowest since 2005. For all of 2017 GDP grew a decent 2.6%. Given that the improvement in GDP was attributable to credit card funded consumer spending and a 12 year low in the savings rate, neither of which are sustainable. This hardly qualifies as a positive development.
Wholesale inventories gained 1.1% in February a 4th consecutive advance. Retail inventories increased .4% over the same period. Climbing inventories without commensurate gains in sales is a negative trend.
The trade deficit increased again in February with a .1 billion Dollar gain to 75.4 billion. Exports increased to 136.5 billion while imports advanced to 211.9 billion. Large trade deficits will continue to weigh on GDP growth.
Pending home sales index increased 3.1% in February erasing some of January’s decline on a 10.3% advance in the Northeast. The West snapped a string of losses with a .4% gain. On a year ago, basis this index marked a 2nd negative month down 4.1%.
Agricultural prices fell 6.2% in February erasing the previous 2-months gains. Large drop in commercial vegetables -10.3%, and dairy products -6.4% led to the decline.