Impeachment Trial is Underway… As required by law, the U.S. Senate opened the impeachment trial of President Trump and will work six days a week until it ends.
What it means – It’s either proof positive that Trump’s a bad actor who broke the faith of office by leaning on a foreign government for political purposes, or it’s the culmination of a three-year witch hunt that has no basis in fact and is merely a political show.
Barring new information, the trial won’t change many minds and will end in acquittal. The one big question is if we get witnesses. If that happens, the Democrats should be able to draw a clearer line between Trump and the intent of withholding aid from the Ukrainians, but it seems likely that Joe Biden and his son would be subpoenaed as well. As the old saying goes, be careful what you wish for.
There is one concrete outcome. Our Congress has, and will, spend millions of dollars on something where the outcome is a foregone conclusion, at the expense of other legislative imperatives that deserve their attention, like immigration reform and federal land management.
Existing Home Sales Up 3.6% in December… Existing home sales pushed higher at the end of the month, with year-over-year sales increasing 10.8% to an annual rate of 5.54 million units.
What it means – With unemployment at 50-year lows, housing starts at 13-year highs, and 30-year mortgage rates near 3.65%, it makes sense that housing is rebounding. But don’t be fooled by the shifting numbers. Home sales bogged down at the beginning of the year and then perked up after several Fed rate cuts. If we just look at the number of homes sold in 2019, not the rate of sales at the end of the year, it’s not as exciting. Existing home sales last year were almost the same as 2018, 5.34 million.
But there’s no denying the higher prices. The median sales price for an existing home last month was $274,500, 7.8% higher than the median price at the end of 2018. It’s still a game of low inventory, about a three-month supply. On the up side, there is a crowd of potential Millennial buyers at the low end of the market.
S&P 500 Earnings Down 2.1%, Even as Revenues Up 2.7%… Companies in the S&P 500 also reported a drop in profit margin for the fourth consecutive quarter.
What it means – The long year of flat and falling profits doesn’t mean that U.S. companies did poorly in 2019. It shows that 2018 was a banner year due to a dramatic cut in taxes that filled their coffers. But the divergence between profits and revenue might give us a glimpse of what’s ahead in 2020.
Several of the companies that reported earnings first also noted higher costs, including wages and salaries. This could mark the beginning of the wage-push inflation central bankers have been waiting on for years.
As unemployment ticks lower, eventually companies must offer some incentive to attract workers. That “something” generally comes in the form of higher pay, which cuts into corporate profits while also boosting consumer spending.
Impossible Whoppers Not So Special… With much fanfare, Burger King launched “Impossible Whoppers” on August 8 last year. The flame-broiled sandwich is made with plant-based meat from Impossible Foods.
The burgers launched at $5.99 and received favorable reviews. But in the last six months, it looks like customer enthusiasm has waned. Several restaurants report selling fewer than 25 Impossible Whoppers per day, and now the chain has added the sandwich to the discount 2-for-$6 deal list.
To be clear, Burger King isn’t abandoning the menu item and is considering adding an Impossible Whopper Jr. as well as Impossible sausage. But it does look like some of the initial interest is fading.
Data supplied by Dent Research/Delray Beach Publishing
“When the facts change, I change my mind.
What do you do, sir?” ~ John Maynard Keynes
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