While all eyes were on the fourth quarter 2018 Gross Domestic Product (GDP), the more up-to-date February Chicago Purchasing Managers’ Index (PMI) crushed Wall Street estimates. The Street was looking for 56.7. The headlines came in at 64.7 as four of the five subcomponents increased with 3 surging, and with only Supplier Deliveries contracting:

• New Orders: +15.2 points
• Production: +8.5 points
• Backlog: +5.6 points

This has been the largest monthly increase since February 2017. The report more than made up for the 8.7 point decline in January and belied the global trend of a collapse in manufacturing.

It has been noted the Chicago PMI is more volatile than the national number. However, the stage is set for a positive surprise that would once again underscore the amazing resolve of the American economy.

U.S. Homeownership

It wasn’t just manufacturing data that was overlooked yesterday. The homeownership data was very positive:

Overall Ownership

• 64.8%, the highest since 1Q2014

Black Ownership

• 4Q2008: 46.8%
• 4Q2016: 41.7%
• 4Q2018: 42.9%

35-to-44 Age Group

• 61.1%, the highest in five years

Even with all the issues, including higher prices and a recent spike in mortgage rates, older Millennials are moving out and forming households. In fact, the 35-to-44 age group saw the strongest quarter-to-quarter increase in homeownership.

Sadly, the under 35 age group saw a homeownership decline to 36.5% from 36.8%. The big problem is the rent trap. While median rents came down from the record $1,003 set in the third quarter, it’s clear this is a serious headwind to escape. It’s hard to save up the cash for a down payment when it’s all going to rent.

While rents have climbed 31% since January 2008, home prices have climbed 38% to $232,000.  For all the talk, homeownership isn’t the investment that everyone once thought it was. Certainly, it would have been a better deal to own than rent over the past decade. I’m thrilled older Millennials probably are finally making money from those sheepskins and making their moves.

After the close on Thursday, it was feast or famine. Stocks either rocketed higher or plunged to earth.

Winners: GAP (GPS): +26%, Puma Biotechnology (PBYI): +22%, Zscaler (ZS): +15%, Habit Restaurants Inc (HABT): +15%, Funko Inc (FNKO): +13%, 3D Systems (DDD): +6%, AMC Entertainment Hldgs (AMC): +6%, and Radius Health Inc (RDUS): +6%.

Losers: Nutanix (NTNX) -22%, Maxar Technologies (MAXR): -21%, Intrexon Corp (XON): -12%, Zix Corp (ZIXI): -9%, Tactile Systems Technology (TCMD): -8%, Stericycle Inc (SRCL): -7%, Pure Storage (PSTG): -6%, and NeoPhotonics Corp (NPTN): -5%

Portfolio Approach

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