Stocks were mixed today as the Dow traded both up and down before falling into the close while the NASDAQ held late gains. At the close The Dow was off 40 points to 17,583. Trading volume was light as markets held steady and seemed to climb a wall or worry. Today’s action broke a 7 day uptrend for the Dow.
The situation in Brussels is hitting the European Union in various ways. In reaction to the bombings, the British Pound fell against both the US Dollar and the Euro because of the possibility that the attacks could boost the odds of a “Brexit” vote as we head into the June 23 pols. A Brexit could throw the EU into turmoil since Britain is the largest EU nation by market cap while Germany is its largest by GDP. Meanwhile the EU, having now experienced an attack at its very doorstep will need to focus on the situation siince ISIS appears to have now effectively inserted sleeper cells throughout Europe which terror experts estimate could contain a few thousand jihadis.
Ralph “Ralphie” McLaughlin, Chief economist at online real-estate firm Trulia, wrote a paper about the current state of gridlock in the housing markets. The piece was interesting and goes against conventional wisdom which blames the low inventory on housing starts. Ralphie feel instead that it begins with starter homes. His data shows that 25% of starter homes are still underwater and another 33% are owned by investors who are content to hold property in a very profitable rental environment. These two forces keep over half of the available starter homes off the market. The other factor is a widening gap between the prices of premium homes versus medium homes. Premium homes now average $542k which is a record gap over and above the $267K medium home price. This gap makes it harder for people in starter homes to move up and thus we have housing gridlock and a low inventory level that not even a good labor market can overcome.
Oil today was little changed after lots of intraday churning. WTI crude fell slightly to trade near $40.47 a barrel. Gold rose after the events in Brussels finishing the day up $4.50 an ounce to $1,248.