Stocks turned lower today as trade war rumors once again took center stage. The Dow closed off 219 on heavy trade to close at 24,700. Both IBD and BTS are now positive on stocks.
Here in Seattle the residential real estate markets have softened a bit in the past 6 weeks. Inventories are up as retirees look to sell and with higher inventory comes more stable prices and less frenzy in the bidding wars. While prices are still up 13% from a year ago it seems that the hot housing in Seattle is starting to cool.
While fundamentals in the US appear to be solid, things in China might not be so rosy. The Shanghai stock market is down over 25% since its January high as trade war worries appear to be affecting China more than the US. Wells Fargo recently put odds that a full-blown trade war has only a 10% chance of happening and that the most likely outcome will be a long drawn out process of negotiations that will inject volatility into the markets. Meanwhile things in China are iffy. Some gurus, like Blackrock, say that China has good fundamentals but will experience a slowdown. Others warn of a property bubble that could burst and cause the 2nd largest economy to falter. CNBC reports that a third of Chinese millionaires want to bolt the country and that China has taken steps to limit capital flight. Check out this recent video on our Faceplant page where these two guys visit the ghost cities that are only 3 years old and already falling apart. Its sickening. The big question that we at Greystone are looking at is how, if at all, a recession in China might affect the US economy and markets. We hope to keep you posted as this situation develops.