Stat of the Day: The Consumer's In Good Shape

This morning's release of the Bureau of Economic Analysis's Personal Income and Outlays Report confirms what we've been seeing consistently in our weekly macro analysis; that the U.S. consumer -- who's responsible for 2/3rds of U.S. economic activity -- remains in pretty good shape.

Today's Podcast: Why The Market Hates Protectionism

In yesterday's "Headlines of the Day" my closing line included:

....the market reaction to a U.S./China/EU trade war will be the definition of ugly.

Per this morning's headline -- "Trump Slaps Steel Tariffs on EU, Canada, Mexico as Tensions Rise" -- we can add Canada and Mexico to the list of combatants in a potential trade war.

Headlines of the Day

As I type ahead of this morning's open Dow futures point to a nice rebound after Tuesday's bludgeoning. 

In yesterday's podcast I suggested that while the market's reaction to Italian politics was understandable, given the time frame and the process to come before Italy succumbs to populist rule (if it indeed does), the quick, steep decline could only be described as knee-jerk (Italian stocks are up 3% in the premarket this morning).

Unfortunately, stocks had something else to contend with in yesterday's headlines; a something else that stands to dampen what could be a substantially strong rally off of yesterday's lows:

Stat of the Day: A Little More On Housing

Over the weekend we offered up our tracking of 4 key data points that suggest that the housing market is a-ok for the time being. Today's release of the S&P CoreLogic Case-Shiller Home Price Index says essentially the same thing:

The Present State of the Correction (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

This Week's Message: The European Problem and Probabilities Going Forward (podcast)

A quick note on financials to add to this week's commentary: The financial sector -- our largest target weighting -- is leading the way lower this morning amid a global equity market selloff. This looks to us to be a reaction to a strong move into U.S. treasuries, forcing yields lower, in response to present Eurozone woes (which I touch on in the audio). Lately, financials have shown strong correlation to interest rates, as higher rates would lead to higher earnings on loan portfolios. Therefore, a move lower -- the likes of what we've seen the past few days -- virtually has to hit the sector harder than we might've otherwise expected. 

The Current Look of the Housing Market

Seems like folks are thinking a lot about housing these days, as I've been fielding more than the usual inquiries on the subject of late. Just this morning a young mortgage broker solicited my opinion on the basketball court, of all places.