As the market was gyrating, D.C. was spinning news from the New York Federal Reserve on household wealth and debt levels.
Household debt is at an all-time high, more than $536 billion above the previous peak; right now, the situation is more than manageable.
During the first quarter, household debt increased by $63 billion to a total of $13.21 trillion. Student loans continue to surge, climbing 2.1% to $1.41 trillion. In addition, auto debt, which has been growing for six straight years, increased the most (+0.7%) to $1.23 trillion; credit card debt had the largest pre-recession non-household debt level, which declined 2.3% to $815 billion.
Household Debt & | QUARTERLY | ANNUAL | TOTAL |
|---|---|---|---|
MORTGAGE DEBT | + $57 BILLION | + $312 BILLION | $8.94 TRILLION |
HOME EQUITY LINE OF CREDIT | - $8 BILLION | - $20 BILLION | $436 BILLION |
STUDENT LOAN DEBT | + $29 BILLION | + $63 BILLION | $1.41 TRILLION |
AUTO LOAN DEBT | + $8 BILLION | + $62 BILLION | $1.23 TRILLION |
CREDIT CARD DEBT | - $19 BILLION | + $51 BILLION | $815 BILLION |
TOTAL DEBT | + $63 BILLION | + $486 BILLION | $13.21 TRILLION |
Household Debt and Credit Developments as of Q1 2018
Delinquency improved dramatically as student debt edged up slightly for autos and remained the same in other debt categories.
Mortgage delinquency at 1.1% is impressive as median credit score edged higher to 761 from 755. Median credit for auto loans was unchanged at 708.
| Q4 2017 | Q1 2018 |
|---|---|---|
MORTGAGE DEBT | 1.1% | 1.1% |
HOME EQUITY LINE OF CREDIT | 0.9% | 1.0% |
STUDENT LOAN DEBT 2 | 9.3% | 8.9% |
AUTO LOAN DEBT | 2.3% | 2.3% |
CREDIT CARD DEBT | 4.6% | 4.7% |
ALL | 2.3% | 2.3% |
Highlights
"While housing wealth is at an all-time high, it has shifted into the hands of older and more creditworthy borrowers, in part because of tight mortgage lending standards, an increased amount of available home equity should make the household balance sheet more resilient in the event of a financial shock, though that may not be an option for lower-credit-score borrowers."
About 192,000 consumers had a bankruptcy notation added to their credit reports in 2018Q1, the lowest observed in the 19-year history of the data.
The number of credit inquiries within the past six months—an indicator of consumer credit demand—declined in the first quarter to 146 million, the lowest level seen in the history of the data.
Message Of The Market
Thursday was a very interesting session where stocks seemed more preoccupied with the avalanche of news, gossip, and speculation out of Washington, D.C. than economic data and corporate news. The three major indices were all lower, but market breadth was positive.
NYSE
There were more advancers than decliners and more up volume to down volume on the NYSE, as 151 stocks hit new 52-week highs versus 53 new lows.
NASDAQ
Also, we saw more advancing issues than decliners with down volume, only fractionally more than up while there were 171 new 52-week highs against 51 names hitting new lows.
Trends
Certain trends remain in place, including:
The Russell 2000, which extended its new all-time record.
Energy stocks continue to gush higher, led by refiners and names with exposure to the Permian Basin.
- (EOG) EOG Resources
- (CXO) Concho Resources
- (PXD) Pioneer Natural Resources
Also, defense contractors including, Northrop Grumman Corporation (NOC), continue to edge higher
Dividend-payers were slammed again as investors rotated out of real estate and utility stocks into treasuries. Conversely, the ten-year yield shot up to 3.12%, its highest level since July 2011.
During the session, investors were tough on companies that reported results even when the headlines were positive. Walmart (WMT) and Cisco Systems (CSCO) paid the price yesterday; after the close, the initial reaction to results from Applied Materials (AMAT) and Nordstrom’s (JWN) was to dump the stock.
If there isn’t a great call from Applied Materials, it will be a tough day for chipmakers today, and I suspect money will flee back into high-flying names such as Amazon (AMZN) and Nvidia (NVDA).
Finally, the stock of the day (and tell of the day) on Thursday was Boeing (BA), which continues to rally from that recent trade showdown dip. If there is a trade deal with China, look for the entire market to move higher and for Boeing shares to fly to new all-time high levels.
Today’s Session
Equity futures slipping into the open but I was surprised they were up this morning to begin with.
Join the conversation as a VIP Member