Markets were mixed today as strength in FANG stocks pushed the NASDAQ higher while the Dow was soft. According to Fidelity, large growth stocks have become undervalued relative to large value stocks. This was due to rotational selling which occurred after the election as money moved from growth to value and this trend now appears to be moving back the other way. At the close the Dow was off 42 at 20,659 on lighter trading volume.
Pending home sales were up 5.5% at the latest reading from February which is the best reading since April of last year. Pending home sales shot up 11.4% in the Midwest, 4.3% in the South, 3.4% in the Northeast and 3.1% in the West. On the housing supply side of the equation, builders are having a tough time finding land and labor while on the demand side households are wanting buy now and get ahead of interest rate hikes.
Recently some economists are talking about a slowdown in bank C&I lending growth rates. In response to this chatter, the San Francisco Fed president John “Willie” Williams said today that he does not see any slowing on either the demand or supply side of credit markets. Some banks have now shifted away from doing commercial loans on spec and this is leading people familiar with real estate lending trends to suggest that this subtle shift means we could see a slowdown in the economy within the next couple of years. For now however the Fed and firms like Bank of America feel that things are “in excellent order” or as Mr. Bojangles would say “copacetic”.
“May I have this Brexit?” UK PM May signed a letter today officially starting the Brexit process. Markets in Europe closed higher on the news.