Morning Commentary
Housing Boom
Existing home sales climbed 5.6% to an annualized rate of 5.81 million versus estimates of a decline of 0.7%.
This is the strongest pace for sales since December 2006.
Geographic Tide
They say real estate is local and that’s true; however, there is a wave in the nation that’s lifting regions from coast to coast.
Geographically, the biggest winner was the Midwest with strong sales and pricing increases (only the west saw sales decline). Pricing pressure should remain in place as months’ supply has drifted to 3.6%.
Existing Home Sales |
Change in Sales |
Change in Prices |
Northeast |
+6.7% |
+4.0% |
Midwest |
+8.4% |
+8.8% |
South |
+8.3% |
+4.8% |
West |
-2.3% |
+8.2% |
Red Flags
The sub $100,000 existing home sales market continues to collapse (11.7 during the month overall) as each geographic region endured declines with the largest decline (-33.5%) in the West.
First-time buyers slipped to just 29% of buyers, well below the 40% needed in a “strong” housing market.
Historic Tax Cut
Well, it’s finally done. The Republican Party delivered a historic tax cut bill, and President Trump will sign it into law soon. This deal will positively impact the lives of all Americans, even those 4.8% that actually will have to pay higher taxes (I’m in that group). Still, I must say the tax cut is a big deal and a promise kept. President Trump’s statement and the White House ceremony was upbeat but low key.
There was no ‘spiking the football.’
Of course, the bill isn’t perfect and the Republican Party knows there is more work to be done. On that note, I have my own list:
x Individual tax cuts made permanent
x Alternative minimum tax (AMT) for individuals
x Estate tax
x Carried interest
Meanwhile, corporate America is already stepping up to the plate:
AT& T
Boeing
Wells Fargo
Fifth Third Bank
Message of the Market
There was a major draw on crude oil even as American production climbed to its highest level ever, helping to send crude oil higher. Interestingly, crude oil stocks actually soared, especially those with access to the Permian basin (PBT).
I think these stocks are extremely attractive as value investments (worst performing sector in 2017), and also as crude benefits from the better economy. I also like the action in metals, particularly steel, which has stumbled at every breakout attempt.
These commodities moves, coupled with higher bond yields, tell the story of an improving economy that’s gaining momentum.
Today’s Session
I’m working on putting together the best Bitcoin/Blockchain coverage out there. The hysteria is getting so crazy that Long Island Ice Tea Company changed its name over night to Long Blockchain Company and the stock is poised to pop 300% this morning.
Comments |
Ironically, the big boost to the tax cut bill will come from Democrats, who, since they refuse to accept anything coming from Trump, will return their tax benefits to Washington. Patricia Flynn on 12/21/2017 11:57:28 AM |
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