As the market was gyrating, D.C. was spinning news from the New York Federal Reserve on household wealth and debt levels.

Household debt is at an all-time high, more than $536 billion above the previous peak; right now, the situation is more than manageable.

During the first quarter, household debt increased by $63 billion to a total of $13.21 trillion. Student loans continue to surge, climbing 2.1% to $1.41 trillion. In addition, auto debt, which has been growing for six straight years, increased the most (+0.7%) to $1.23 trillion; credit card debt had the largest pre-recession non-household debt level, which declined 2.3% to $815 billion.

 

Household Debt & Credit Developments 1Q 2018	QUARTERLY	ANNUAL	TOTAL
MORTGAGE DEBT	+ $57 BILLION	+ $312 BILLION	$8.94 TRILLION
HOME EQUITY LINE OF CREDIT	- $8 BILLION	- $20 BILLION	$436 BILLION
STUDENT LOAN DEBT	+ $29 BILLION	+ $63 BILLION	$1.41 TRILLION
AUTO LOAN DEBT	+ $8 BILLION	+ $62 BILLION	$1.23 TRILLION
CREDIT CARD DEBT	- $19 BILLION	+ $51 BILLION	$815 BILLION
TOTAL DEBT	+ $63 BILLION	+ $486 BILLION	$13.21 TRILLION

 

Household Debt and Credit Developments as of Q1 2018

Delinquency improved dramatically as student debt edged up slightly for autos and remained the same in other debt categories.

Mortgage delinquency at 1.1% is impressive as median credit score edged higher to 761 from 755.  Median credit for auto loans was unchanged at 708. 

 

Serious Delinquency (90 days or more delinquent)	Q4 2017	Q1 2018
MORTGAGE DEBT	1.1%	1.1%
HOME EQUITY LINE OF CREDIT	0.9%	1.0%
STUDENT LOAN DEBT 2	9.3%	8.9%
AUTO LOAN DEBT	2.3%	2.3%
CREDIT CARD DEBT	4.6%	4.7%
ALL	2.3%	2.3%

 

Highlights

 

"While housing wealth is at an all-time high, it has shifted into the hands of older and more creditworthy borrowers, in part because of tight mortgage lending standards, an increased amount of available home equity should make the household balance sheet more resilient in the event of a financial shock, though that may not be an option for lower-credit-score borrowers."

About 192,000 consumers had a bankruptcy notation added to their credit reports in 2018Q1, the lowest observed in the 19-year history of the data.

The number of credit inquiries within the past six months—an indicator of consumer credit demand—declined in the first quarter to 146 million, the lowest level seen in the history of the data.

Message Of The Market

Thursday was a very interesting session where stocks seemed more preoccupied with the avalanche of news, gossip, and speculation out of Washington, D.C. than economic data and corporate news. The three major indices were all lower, but market breadth was positive.

NYSE

There were more advancers than decliners and more up volume to down volume on the NYSE, as 151 stocks hit new 52-week highs versus 53 new lows.

NASDAQ

Also, we saw more advancing issues than decliners with down volume, only fractionally more than up while there were 171 new 52-week highs against 51 names hitting new lows.

Trends

Certain trends remain in place, including:

The Russell 2000, which extended its new all-time record. 

Energy stocks continue to gush higher, led by refiners and names with exposure to the Permian Basin.

• (EOG) EOG Resources
• (CXO) Concho Resources
• (PXD) Pioneer Natural Resources

Also, defense contractors including, Northrop Grumman Corporation (NOC), continue to edge higher

Dividend-payers were slammed again as investors rotated out of real estate and utility stocks into treasuries. Conversely, the ten-year yield shot up to 3.12%, its highest level since July 2011. 

During the session, investors were tough on companies that reported results even when the headlines were positive. Walmart (WMT) and Cisco Systems (CSCO) paid the price yesterday; after the close, the initial reaction to results from Applied Materials (AMAT) and Nordstrom’s (JWN) was to dump the stock.

If there isn’t a great call from Applied Materials, it will be a tough day for chipmakers today, and I suspect money will flee back into high-flying names such as Amazon (AMZN) and Nvidia (NVDA).

Finally, the stock of the day (and tell of the day) on Thursday was Boeing (BA), which continues to rally from that recent trade showdown dip.  If there is a trade deal with China, look for the entire market to move higher and for Boeing shares to fly to new all-time high levels.

Today’s Session

Equity futures slipping into the open but I was surprised they were up this morning to begin with. 

Comments

Charles I like you picks in the market. lv Larry D Vaden on 5/18/2018 8:53:41 AM

There is quiet news that Paul Ryan is set to introduce a large FUEL TAX bill in congress in the next few days and that will destroy the Oil & Gas market. I believe that it is just hype from some would be invester shisters. I cannot believe that a Republican would introduce a new TAX at this time reguardless of how he or she loves to float around in the Washington Swamp. LYLE HOWELL on 5/18/2018 9:56:31 AM

These days what comes out of the republican party no longer surprises me and many want a higher tax on fuel to pay for infrastructure and road maintenance or to fund something that has nothing to do with roads. Oil has always been an easy target for progressive (a sin tax candidate) although its a monster job creator in America sorry to see GOP jump on the bandwagon of what would be a seriously regressive tax. Charles Payne on 5/18/2018 10:05:12 AM

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