The Market Bull – June 12, 2019
The major averages closed with small losses on generally positive but not overly significant economic data.
Record mortgage debt, much of it sub-prime was a significant cause of the previous crisis. This time around it will be corporate debt that per data from the Federal Reserve’s Financial Accounts of the United States reached a record high of 9.913 trillion dollars in the first quarter, following an 8.1% year over year gain. Looked at from a percentage of Gross Domestic Product of GDP perspective and it works out to 46.8% of nominal GDP.
The Mortgage Bankers Association reports that mortgage activity surged 26.8% last week as refi’s jumped 46.5% and purchase apps gained 10%, driven by lower interest rates. The 30-year contract rate for a jumbo loan fell 5 basis points to 4.04%.
The May Consumer Price Index or CPI increased .1%, on a year ago basis the CPI slipped to 1.8% a 3-month low on falling energy prices. Much of the outlook for inflation hinges on the trade war and if a solution can be found with the Chinese later this month.
The Cleveland Fed’s Median CPI was running 2.3% annualized, trimmed-mean CPI was just 1.3% during May. Once again, the various inflation measuring metrics struggle to hold the Fed’s desired 2% target without a push from the energy sector.
Standard and Poors 500 Index closed at: 2,879.84 down 5.88
NASDAQ finished the day: 7,792.72 down 29.85
Gold ended trading at: $1,337.20 up $6.00