Market Brief – Thursday 3/14/19

The economic news out of China was less than stellar as Industrial Production grew at +5.3% YoY versus expectations of +5.6% YoY and as Retail Sales matched expectations at +8.2% YoY. This is the worst growth rate for Industrial Production since March 2009 and the worst Retail Sales growth since May 2003.

The Trump Administration continues to flip flop on whether the trade deal is about to be completed or not. In the meantime, the next meeting between President Trump and President Xi is going to be in April at the earliest.

Import and export prices rose in February but import prices are falling at a -1.3% YoY rate while export prices are rising at a scant +0.3% YoY rate. These numbers are by far more disinflationary than inflationary.

January’s New Home Sales fell -6.9% MoM despite an increase in homebuilder sentiment and a drop in prices. On a year-over-year basis, new home sales are contracting at a -4.1% rate. The median price of a new home has fallen to $317,200, still well above what most young Millennials can afford.

After starting the day lower, buyers stepped in to push equity prices higher as tomorrow’s quadruple-witching day looms. Treasury yields started the day lower, but for the same reason, yields rose as sellers look to reverse their potential losses from shorting the Treasury market.

Stocks barely budged today as both buyers and sellers found the broad equity market to be fairly priced. The S&P 500 remains stuck at 2,800, a long-trending resistance level. Look for wild swings in the market tomorrow as quadruple-witching day triggers a mountain of expiring options contracts.

Treasury yields traded slightly higher as both the 10- and 30-year Treasury yields bounced off support. Today’s weak bounce off support is nothing more than a weak bounce.

Physical gold was rejected at $1,310/oz and closed below its 50-day moving average. A close below resistance and its 50-DMA suggests prices should head lower. The mining stocks followed gold lower.

Agricultural commodities took off on low volume, which isn’t the best sign for a rally. However, in a long beaten up sector, low volume rallies can be an indication of seller exhaustion. Sellers did arrive later in the trading day, but the Bulls held their ground.

The Fed’s balance sheet increased $2 billion last week and will see about $20 billion in reduction over the next two weeks.

The broad M2 money supply continued to decelerate on a year-over-year basis to 4.04%. The 6-month growth rate increased to 2.05%, while the 3-month growth rate was flat at 0.99%.