The Market Bull – May 14, 2019
Despite a lack of real news, the major averages managed to recover all of yesterday’s losses and then some on yet another rumored trade war settlement.
With a 50-year low 3.6% unemployment rate, booming asset markets fueled by cheap debt, little inflation, near record low interest rates, and a constant narrative of how great the economy is. You have to wonder why the implied probability of a Federal Reserve rate cut by the end of the year is approaching 75%. So far, the media and the markets remain convinced that the trade war is a nothing burger. While it would appear that the sky is the limit for real estate and stock prices as traditional valuation metrics just don’t seem to matter anymore.
Trade price data continues to show that inflation is largely absent, particularly outside of the energy complex. Import prices increased .2% in April as the year ago rate came in at -.2%. Excluding energy prices and import prices dropped .6% in April. Export prices advanced .2% for the month, while the year ago rate slipped to .3%.
The Mortgage Bankers Association or MBA reports that the mortgage delinquency rate ticked up to 4.42% in the first quarter, on a notable jump in adjustable rate mortgage delinquency. Mortgages starting the foreclosure process slipped to just .22% during the same period.
According to data from the National Association of Realtors or NAR home price appreciation, while still positive, continues to slow. On a year ago basis appreciation decreased to 3.9% in the first quarter considerably below the 1st quarter 2018 gain of 5.6% on a year ago basis. The top 3 metro areas with price gains during the first quarter include Denver up 1.9%, Las Vegas up 1.3% and Chicago with a .9% gain. At the other end of the spectrum Los Angeles slipped 4.8%, San Francisco fell 2.4% while New York declined 1.8%.
Standard and Poors 500 Index closed at: 2,834.41 up 22.54
NASDAQ finished the day: 7,734.49 up 87.47
Gold ended trading at: $1,298.10 down $3.70