Weekly Talking Points

1. The S&P 500 ended the week down 1.31%, mainly on continued worries over tariffs and the threat thereof. Interestingly President Trump, during his rally in North Dakota, stated rather adamantly that the “trade disputes will ultimately be worked out.”
2. Once (or is it “if”?) the trade issues “get worked out” I am still of the opinion that the market has a way to run in this current cycle. As of Friday’s close of business, the year-to-date numbers on the markets are as follows: S&P 500 is up 2.6%; Dow Jones Industrial Average is down 0.73%; NASDAQ is up 9.37% and the EAFE (International) is down 2.37%. Earnings and revenues are still growing, and growing broadly across sectors.
3. Last week it was reported that durable goods orders for the month of May declined 0.6%. The decline was largely driven by auto’s, and related parts, along with aircraft. Despite the month-over-month decline, the “trend is your friend” manta is applicable here as total orders are up 9.2%, and excluding transportation are up 7.8%. This is healthy economic activity.
4. New single-family homes increased 6.7% in May to a 689,000 annual rate. Sales are now up 14.1% yoy. Interestingly according to First Trust:

“Unlike with existing homes, the inventory of new homes has been expanding and is up 10.3% from a year ago. However, the inventory of completed new homes is still very low by historical standards, and almost all of the gain in inventory over the past two years has been in homes that have yet to be started or ones under construction, not completed homes, waiting for a buyer. Completed homes are the smallest share of inventories since 1999, back when the government started tracking this data. Prior to the end of the housing bubble, sales of new homes were typically about 15% of all home sales. They fell to around 6.5% of sales at the bottom of the housing bust, and now have recovered to 11%. In other words, there’s still plenty of room for growth in new home sales, and as they continue to trend higher it will help alleviate the supply problems that have pushed up the median age of homes in the U.S. from 31 years in 2005 to 37 years in 2015, the most recent data available.”