Watching stocks today was like watching a ping pong match as indexes traded back and forth before finishing the day with a 98-point drop to 25,764 on heavier trading volume. For the week the Dow had an overall drop of 176 points or roughly 0.68% and for the year is up 10.9%. IBD lists stocks as being in a “correction” so caution is advised for now.
Green and gold tractor maker Deere and Co reported worse than expected results sending shares lower as gurus bolted the stock in droves. Revenue was up 6% as weak ag sales offset strength in construction and mining. Net income was up 12% and the company moderated its forward guidance as a perfect storm is hitting the farming sector with the trade war and a falloff in soybean exports. It appears the swine fever in China is wiping out so many pigs that demand for feedstocks, of which soybeans play a big part, is dropping. I talked to one individual today who expressed concern over the food supply in China but so far President Xi is listening to the hard liners on trade and this is having a negative effect on US farming.
Housing starts surprised to the upside in April, hitting a 1.235 million annual rate, signaling signs of life in home building early in the second quarter. In addition, housing starts were revised higher for March and a pickup in construction activity looks set for the months ahead. There has been a rapidly growing backlog in planned housing projects (the number of units authorized but not yet started), which are up 19% in the past year and remain very close to the post-recession high set in January. Builders have responded with a surge in completions, which should help free up badly needed workers to start development on new projects.
The University of Michigan released its consumer sentiment index for April and the figure came in well above expectations with a reading of 102.4 up from 97.2. Richard “Mugsy” Curtin, Chief economist for the survey noted that consumers viewed the prospects for the overall economy favorably with economic outlook readings hitting the highest levels since 2004. Please remember that this reading predates the latest trade spat.
Troop 100 is heading out for the annual Aurora district Camporee this weekend. There will be patrol competitions and prizes are up for grabs. Troop 100 usually does well at these things. Hopefully it will rain this weekend and add an element of misery to the whole affair.