The Market Bull – November 21, 2019
Despite decent economic data and a reduction in rhetoric regarding the trade war with the Chinese. The major averages closed with small losses.
A piece in Bloomberg noted that the Chinese were basically out of ammunition with respect to the trade war and would soon be forced to compromise. Still the recent bill backing the Hong Kong protestors is bound to inflame tensions with the Chinese. While here at home farm income continues to plunge pushing many into bankruptcy, a figure up 24% for the year. More than a few pundits figured the Chinese would simply unload their sizable Treasury holdings causing considerable distress in financial markets. So far this has turned out to be a nothing burger despite a 25% reduction in their holdings to date. That said it is highly likely that Chinese farm product markets are gone for good, while international supply chains have suffered significant disruption, something that has figured prominently into the global economic slowdown this year as business have been hesitant to invest with all the uncertainty. Another supposed Chinese bargaining chip, withholding rare earth elements critical to the high-tech sector has also proven to be a non-starter. Leaving the Chinese with few options other than negotiation, or a hot war, which is highly unlikely.
The Philadelphia Fed regional index jumped 4.8 points in November to 10.4. Despite some significant declines in the sub-components. New orders plunged 17.8 points to 8.4. Employment dropped 11.4 points to 21.5, the average work week fell by more than half to 5.2, while capital expenditures and price data also declined. An odd set of numbers given the top line growth.
Existing home sales increased slightly in October to 5.46 million units annualized. Month’s supply fell to 3.9, a 7-month low. The median price slipped fractionally to $270,600 for the month, a figure 6.2% higher than a year ago.
Standard and Poors 500 Index closed at: 3,103.54 down 4.92
NASDAQ finished the day: 8,516.21 down 20.52
Gold ended trading at: $1,465.00 down $9.20