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Share the Wealth – May 23, 2018

 
 
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Registered Investment Adviser Caleb Lawrence 

The major averages managed to recover their early losses to enter the final hour about even despite disappointing news. Mortgage activity fell 2.6% last week as per the Mortgage Bankers Association or MBA. Refis slipped 3.7%, purchase apps fell 2%. The 30-year contract rate for a jumbo loan increased to 4.81%.

New home sales missed expectations in April, falling 1.5% to 662,000 units annualized on a 7.9% sales decline in the western region. Month’s supply increased to 5.4, the median price fell 6.5% to $312,700.

Silicon Valley’s legendary Unicorns, pre-IPO companies with a valuation north of 1 billion dollars. Are struggling to survive this year with the total number falling by 5 to 139, while just 11 new Unicorns have been created so far in 2018. Also of note prior to the Dot-Com bust in 2000 your average tech company went public after just 4-years, now it takes 11-years. Per a recent study by the National Bureau of Economic Research. Data from Villanova and St Gellen Universities also noted that your average Unicorn was overvalued by 49%. But then Silicon Valley never saw a valuation it didn’t like, and in general, the higher the better.

On the subject of valuations it seems that high priced real estate is leading to a spike in foreclosures per a report by Attom Data Solutions. While foreclosures fell 17% in the 12-month period ending in April of 2018. A number of markets have seen notable jumps of late, despite still low overall numbers. From the report, the top 12 markets seeing foreclosures increase include #1 Tucson, Arizona +157%, #5 Sacramento +76%, #8 San Jose, +31%, #9 Riverside, +24% and #12 San Francisco-Oakland, +17%. If memory serves, Florida, Arizona and Las Vegas were ground zero in the previous bust.

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