Dow pulled back 103 (above session lows), decliners over advancers 2-1 & NAZ fell 29. The MLP index dropped 3+ to 250 after yesterday's big gain & the REIT index lost 2+, falling to the 368s. Junk bond funds fell & Treasuries remained weak. Oil slid lower in the 56s (more below) & gold sank 19 to 1328, its biggest drop since last Aug.
AMJ (Alerian MLP Index tracking fund)
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Americans are diving deeper & deeper into the red. As of this month, outstanding consumer debt exceeded $4T for the first time, according to the Federal Reserve. Relatively strong holiday spending, particularly in Nov, & increasing credit card debt added more than $41B in outstanding balances at the end of 2018. In addition, a steady rise in student loan balances, as well as an increase in the cost of automobile financing in Q4, contributed another $80B. The average American has a credit card balance of $4293. Total credit card debt is also at its highest point ever, surpassing $1T, the Federal Reserve found. Now, more than 1 in 3 (86M Americans) said they're afraid they'll max out their credit card when making a large purchase (most of those polled considered a large purchase as anything over $100). At the same time, credit card interest rates have never been higher. The average card interest rate is currently 17.4%, up from 16.1% one year earlier & 15.2% 2 years ago. And still, credit card delinquency rates, or late payments over 90 days past due, remain relatively low even though rates have been slowly rising in the last few years. Meanwhile, outstanding student loan debt has tripled in the last decade & is now $11,5T. A college education is now the 2nd-largest expense an individual is likely to make in a lifetime, right after purchasing a home.
Consumer debt hits $4 trillion — a record high
The Philadelphia Fed manufacturing index in Feb dropped sharply into negative territory. The index fell to a seasonally adjusted reading of -4.1 from 17 in the prior month. This is the first negative reading since May 2016. Any reading below zero indicates worsening conditions. The forecast called for a reading of 14. Below the headline, the indices for new orders & shipments dropped sharply into negative territory. The employment indicator remained positive & firms were generally optimistic about the outlook for the next 6 months. The sharp drop fits with other manufacturing data suggesting the US is now succumbing to the global industrial downturn. The Empire State index rebounded in Feb but remained close to a 2-year low. The flash US manufacturing PMI fell to the worst level in 17 months.
St Louis Fed Pres James Bullard said he thinks the economy is slowing but he's not too worried about the risk of a recession. "It does seem the economy is slowing down some - not terribly - but some," Bullard said. He expects the economy to slow to a 2.25% annual rate this year from 3% in 2018. "That's not a terrible outcome," he added. Bullard, who is a voting member of the Fed's interest-rate committee this year, said recession probabilities have "ticked up" in economic models, but added "I don't really think we're in any trouble." The St Louis Fed Pres said an interest rate cut this year was possible but was not his "baseline case." "I think you'd have to see some inflation decline or inflation expectations decline...possibly with some economic weakness to get a rate cut," he continued.
Crude-oil futures finished lower after a gov report revealed that domestic supplies climbed for a 5th straight week as production jumped to a record level, but overall signs of declines in world-wide output capped price losses for the session. Oil prices for both benchmarks yesterday had marked their highest settlements since Nov on signs of tighter global crude inventories. Apr West Texas Intermediate crude on its first full day as a front-month contract, lost 20¢ (0.4%) to settle at $56.96 a barrel. Mar WTI had climbed for 6 consecutive sessions to settle at a roughly 3-month high of $56.92 yesterday, the day the contract expired. Global benchmark Apr Brent was little changed, inching lower by a penny to end at $67.07 a barrel. The Energy Information Administration reported that domestic crude supplies rose a 5th straight week, up 3.7M barrels for the week ended Feb 15. That was almost 3.5M-barrel rise (that was expected).
Stocks took a breather, so there was profit taking by the bulls. Sluggish economic data was their excuse for selling. OK! Trade talks remain the center of attention for investors & those guys are still working out details. The Dow is down 30 this week. It's entitled after its long run.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
US home sales fell in Jan to their lowest level in more than 3 years & house prices rose only modestly, suggesting a further loss of momentum in the housing market. The
National Association of Realtors said on existing home sales
dropped 1.2% to a seasonally adjusted annual rate of 4.94M
units last month. That was the lowest level since Nov 2015 &
well below expectations for a rate of 5.0M units. Dec's sales pace was revised slightly higher. The
drop in Jan came after months of weakness in the housing
market. Existing home sales were down 8.5% from a year ago. The housing market has been stymied by a sharp rise in mortgage rates
since 2016 as well as land & labor shortages which has led to tight
inventory & more expensive homes. At the same time, the 30-year fixed mortgage rate has dipped in recent months & house price inflation is slowing. The
median existing house price increased 2.8% from a year ago to
$247K, the smallest increase since 2012. Last month, existing home sales fell in 3 of the country's 4 major regions, rising only in the Northeast. There were 1.59M previously owned homes on the market in Jan, up from 1.53M in Dec. At
the Jan sales pace, it would take 3.9 months to exhaust the current
inventory, up from 3.7 months in Dec. A supply of 6-7
months is viewed as a healthy balance between supply & demand.
US existing home sales fall sharply to 3-year low
Americans are diving deeper & deeper into the red. As of this month, outstanding consumer debt exceeded $4T for the first time, according to the Federal Reserve. Relatively strong holiday spending, particularly in Nov, & increasing credit card debt added more than $41B in outstanding balances at the end of 2018. In addition, a steady rise in student loan balances, as well as an increase in the cost of automobile financing in Q4, contributed another $80B. The average American has a credit card balance of $4293. Total credit card debt is also at its highest point ever, surpassing $1T, the Federal Reserve found. Now, more than 1 in 3 (86M Americans) said they're afraid they'll max out their credit card when making a large purchase (most of those polled considered a large purchase as anything over $100). At the same time, credit card interest rates have never been higher. The average card interest rate is currently 17.4%, up from 16.1% one year earlier & 15.2% 2 years ago. And still, credit card delinquency rates, or late payments over 90 days past due, remain relatively low even though rates have been slowly rising in the last few years. Meanwhile, outstanding student loan debt has tripled in the last decade & is now $11,5T. A college education is now the 2nd-largest expense an individual is likely to make in a lifetime, right after purchasing a home.
Consumer debt hits $4 trillion — a record high
The Philadelphia Fed manufacturing index in Feb dropped sharply into negative territory. The index fell to a seasonally adjusted reading of -4.1 from 17 in the prior month. This is the first negative reading since May 2016. Any reading below zero indicates worsening conditions. The forecast called for a reading of 14. Below the headline, the indices for new orders & shipments dropped sharply into negative territory. The employment indicator remained positive & firms were generally optimistic about the outlook for the next 6 months. The sharp drop fits with other manufacturing data suggesting the US is now succumbing to the global industrial downturn. The Empire State index rebounded in Feb but remained close to a 2-year low. The flash US manufacturing PMI fell to the worst level in 17 months.
Philly Fed manufacturing index slumps into negative territory in February for the first time in nearly three years
St Louis Fed Pres James Bullard said he thinks the economy is slowing but he's not too worried about the risk of a recession. "It does seem the economy is slowing down some - not terribly - but some," Bullard said. He expects the economy to slow to a 2.25% annual rate this year from 3% in 2018. "That's not a terrible outcome," he added. Bullard, who is a voting member of the Fed's interest-rate committee this year, said recession probabilities have "ticked up" in economic models, but added "I don't really think we're in any trouble." The St Louis Fed Pres said an interest rate cut this year was possible but was not his "baseline case." "I think you'd have to see some inflation decline or inflation expectations decline...possibly with some economic weakness to get a rate cut," he continued.
Fed's Bullard says economy is slowing down but doesn't see recession
Crude-oil futures finished lower after a gov report revealed that domestic supplies climbed for a 5th straight week as production jumped to a record level, but overall signs of declines in world-wide output capped price losses for the session. Oil prices for both benchmarks yesterday had marked their highest settlements since Nov on signs of tighter global crude inventories. Apr West Texas Intermediate crude on its first full day as a front-month contract, lost 20¢ (0.4%) to settle at $56.96 a barrel. Mar WTI had climbed for 6 consecutive sessions to settle at a roughly 3-month high of $56.92 yesterday, the day the contract expired. Global benchmark Apr Brent was little changed, inching lower by a penny to end at $67.07 a barrel. The Energy Information Administration reported that domestic crude supplies rose a 5th straight week, up 3.7M barrels for the week ended Feb 15. That was almost 3.5M-barrel rise (that was expected).
Oil ends lower as U.S. crude supplies show 5th straight weekly rise
Stocks took a breather, so there was profit taking by the bulls. Sluggish economic data was their excuse for selling. OK! Trade talks remain the center of attention for investors & those guys are still working out details. The Dow is down 30 this week. It's entitled after its long run.
Dow Jones Industrials
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