The Market Bull – May 7, 2019
With the trade war with the Chinese looking to go all out, the major averages tanked and closed with very large losses. Consumer Credit disappoints.
Consumer Credit advanced just 10.3 billion in March, a nine-month low and far below expectations for a 17 billion Dollar gain. Credit card debt slumped 2.2 billion, the 3rd largest post crisis drop. Non-Revolving credit essentially student and auto loans continued apace with a 12.5 billion Dollar advance. On a year ago basis credit growth advanced an anemic 3.1%.
The Federal Reserve’s latest report on financial stability noted excessive corporate debt levels and bloated asset prices as threats to the financial system. The report went on to note the ratio of debt to assets among publicly traded, nonfinancial firms is near a 20-year high, and the share of new loans going to the most indebted companies is near peaks reached in 2014 and just before the 2007 to 2009 financial crisis. Also noted, with stocks back near their records, prices are high, the expected future price-to- earnings ratio for the S&P 500 is above its 30-year median, though well below the levels hit during the 1990s tech bubble. Not mentioned was that stock valuations are the 2nd highest ever. Also missing was a discussion of grossly overvalued real estate markets particularly in coastal communities.
Standard and Poors 500 Index closed at: 2,884.05 down 48.42
NASDAQ finished the day: 7,963.76 down 159.53
Gold ended trading at: $1,285.70 up $1.90