The day after the Federal Reserve FOMC minutes stressed an economic slowdown in 2019, there were several disappointing data releases corroborating that forecast. 

Philly Fed

The street was looking for +14.0, instead it got -4.1, as most components of the report declined and some plunged.

• New Orders -2.4 from 21.3
• Shipments -5.3 from 11.4
• Workweek 4.7 from 6.0

Silver linings

• Number of employees 14.5 from 9.6
• Six-month expectations edged higher to 31.3 from 31.2
• Prices paid 21.8 rom 32.7

Summation

This was the first negative read since May 2016, so it’s too early to panic, but manufacturing data has been a concern since late 2018.  I think the fact expectations held means the worries about manufacturing are short term.  I’m also excited about the continued strength in employment.

Existing Home Sales

January existing home sales declined to annual rate of 4.94 million or -1.2% from December.  The street was looking for +0.8%.  This is the lowest reading since November 2015.

Existing Home Sales

Highlights (or lowlights)

Single Family	Reported	Change m/m	Change y/y
Annualize Rate	4,370,000	-1.8%	-8.4%
Months’ Supply	3.9	+8.3%	+14.7%
Price	$287,600	-1.7%	-2.4%

 

Condos	Reported	Change m/m	Change y/y
Annualize Rate	570,000	+3.6%	-9.5%
Months’ Supply	3.8	-7.3%	+26.7
Price	$280,900	-2.3%	-0.1%

Summation

Existing home sales continue to be a mixed, yet disappointing, segment of the economy.  First time buyers were only 29% of total, which remains significantly below the 40% needed for a healthy housing market.  Lower prices and more supply make it more of a buyers’ market, and that could change the course when coupled with easier access to mortgages. 

Commercial banks are not lending, which means higher fees and fewer approvals for would-be buyers.

I actually like the way the market is acting, as the Dow is down mostly from two big names, which are dealing with temporary issues (Nike = ripped sneaker and JNJ = bad talc powder lawsuits) that shouldn't have long term fundamental impact. 

Comments

It is amazing how just a few companies can influence the market. Just as a few individuals can influence the way one thinks and behaves. John on 2/21/2019 3:13:26 PM

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