The Market Bull – May 29, 2019
The major averages closed off their lows for the day, but still finished with large losses. Spooked by China’s threat to cut rare earth exports. Something that would have a severe impact on our modern technology driven economy.
The Mortgage Bankers Association reports that its mortgage activity monitor fell 3.3% last week as refis dropped 6% and purchase apps slid for a 3rd consecutive week with a 1.4% decline. That said the uptrend remains intact for now. The 30-year contract rate for a jumbo loan fell 6-basis points to 4.18%.
The Richmond Fed regional manufacturing index gained 2-points in May to 5 on improvement in new orders and the average workweek. That said the internal data points remain weak.
Its been said that for every action there is an equal and opposite reaction, and this of course applies to trade wars as well. China, unable to retaliate with tariffs effectively because of a huge trade imbalance. Has signaled a willingness to curtail exports of rare earth minerals to the US, something that will cripple our technology dependent economy. A game of brinksmanship to be sure, Trump is about to find out that trade wars are not as easy to win as he likes to think. Especially when your adversary is determined and who’s nationalistic fervor will see sharp reductions in the purchase of US made goods, something there is already considerable evidence for. With a population over 4-times the size of the US it represents a huge consumer market that US companies can’t afford to lose access to. With both sides digging in for what is increasingly looking like a protracted affair, the next 6-months will be very telling and a full-blown global recession won’t come as a surprise.
Standard and Poors 500 Index closed at: 2,783.02 down 19.37
NASDAQ finished the day: 7,547.31 down 60.04
Gold ended trading at: $1,279.40 up $2.30