Housing Boom
Existing home sales climbed 5.6% to an annualized rate of 5.81 million versus estimates of a decline of 0.7%.
- 5.09 million annual rate Single-family home +4.5% sequentially and +3.2% year-to-year
- 720,000 annual rate for Co-Ops and Condos +14.3% sequentially and +7.5% from a year ago
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%.
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 is 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 4.8% group). Nonetheless, 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 is not 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
- Will invest $1.0 billion and give 200,000 employees a $1,000 bonus
Boeing
- Is investing $300 million in infrastructure, training, and employee matching programs
Wells Fargo
- Will give $400 million to charity and raising minimum wage to $15.00
Fifth Third Bank
- Giving its 13,500 employees $1,000 bonus and hiking minimum wage to $15.00
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 insane that Long Island Iced Tea Company changed its name over night to Long Blockchain Company and the stock is poised to pop 300% this morning.
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