Fed Minutes Show a Consensus for Taking a Break… Minutes from the central bank’s last meeting show the members are split on lowering rates but agree on stepping back for a while.
What it means – If you know exactly where the U.S. economy is headed, then you’re a step ahead of the central bankers. Some Fed members think things are great, while others worry about a slowdown fed by international worries. The one thing they appeared to agree on was standing pat after the latest rate cut. That’s probably a good move. It’s been a tough year for the bankers, who just a short 11 months ago raised rates before reversing course this year. It looks like they’re not sure of what’s going on.
The minutes show the bankers will step aside unless or until they see a material change in the economy, although they didn’t define that term.
Housing Starts Rebound in October, Up 3.8%… The 1.314 million annualized rate put starts back on a solid, positive trajectory. Although, permits, which jumped to 1.461 million, were the surprise of the report.
What it means – Single-family housing starts are closing in on one million per year, a rate we haven’t seen since the early 2000s. And permits aren’t far behind, at 12-year highs.
Multifamily starts are also moving higher, up 8.6% last month. If builders are bringing on mid-priced and lower-priced units, then these numbers could bode well for a solid spring real estate season. With mortgage rates and unemployment both near record lows, all we need is housing stock at the right price to get this sector moving again.
E-Commerce Retail Sales Up 5% in the Third Quarter… While retail sales, in general, appeared to cool a bit in the latest quarter, online spending powered higher.
What it means – The retail apocalypse you might have heard about in the financial press has been greatly exaggerated. Yes, both Kohl’s and Macy’s reported ugly numbers, and even Home Depot took a step back. That doesn’t mean consumers closed their wallets. Instead, they moved their spending online. The 5% pop in retail sales online followed a 4.2% increase in the second quarter and beat the estimate of a 4.8% gain. If you sell goodies online, Christmas is looking up!
Existing Home Sales Expanded by 1.9% in October… For the year, home sales are up 4.6%.
What it means – Higher sales were concentrated in the expensive end of the market, while the sale of homes priced at less than $250,000 fell. On the West Coast, the sale of moderately-priced homes, those between $100,000 and $250,000, dropped 19.5%. It’s not for lack of demand, it’s because there aren’t many homes to buy. At the current sales pace, the market has just 3.9 months’ worth of inventory available. The imbalance between supply and demand showed up in prices, which is 6.2% higher than at this time last year.
The problem with first-time homebuyers remains. There simply aren’t enough of them. Historically, first-time buyers make up 40% of the market. Since the downturn, they’ve made up one-third or less, a trend that continued in October. As noted in housing starts, we need builders to load up on the modest end of the market.
The OECD Lowered Its Forecast of Global Growth to 2.9%… The international organization cited government inaction as the main culprit.
What it means – The updated forecast report was full of stilted language, but the upshot was clear. Governments have mucked up the global economy by pursuing trade wars and have generally made a mess of things by pulling back from global trade initiatives that ramped up after the Cold War.
The assessment might be on point. Still, it doesn’t address issues like technology theft and patent infringement by the Chinese, or the draining of manufacturing jobs by overseas labor markets.
The OECD pointed out that, with governments failing to take the lead, central banks are stepping up with monetary policy aimed at fostering growth. That sounds good. However, it’s likely to lead to even more debt outstanding and more negative interest rates around the world. When we fall into the next recession, we’ll have a hard time digging out.
During Audit, Pentagon “Finds” $81 Million in Naval Equipment… It must’ve sounded like a parent confronting kids with a mess in the kitchen. Who’s $81 million worth of equipment is this? Did you do it? Who left this lying around?
In 1990, the government mandated that all agencies complete audits. The Pentagon is conducting its first one, almost 30 years later. In the course of the audit, the auditors found the unclaimed equipment in a Jacksonville facility. The equipment wasn’t logged into any inventory system.
In another find, the Pentagon realized it was using almost five acres to house obsolete equipment. Who knows what else might turn up as they go through this process?
Data supplied by Dent Research/Delray Beach Publishing
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