2008 Is Starting Again - Stock Market Crash Incoming

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Dow Industrials Suffer Worst Annual Decline Since 2008

U.S. stocks rose on the final trading day of 2018, although punishing losses from recent months kept major indexes on course for their steepest one-year decline since 2008.

Major indexes got a lift Monday as investors eyed signs of progress in trade negotiations between the U.S. and China. President Trump tweeted over the weekend that he and Chinese President Xi Jinping had made “big progress” in trade talks that are due to wrap up in March.

“As long as they keep talking, that is positive for the market,” said Geoffrey Yu, head of the London investment office at UBS Wealth Management. “After a few tumultuous weeks, the market is welcoming some stability.”

Still, with trading desks lightly staffed heading into the New Year’s Day holiday, few were willing to call Monday’s gains a decisive turnaround for the market. Stocks suffered a bruising stretch of selling in the final months of 2018 as investors grew increasingly pessimistic about the global economy and grappled with anxieties about the unwinding of central banks’ easy-money policies.

More recently, sparring between lawmakers led to a government shutdown that looks likely to stretch on into the new year.

The litany of issues has led to dizzying moves across the market. Last week, U.S. stocks posted their worst-ever Christmas Eve selloff, then logged their biggest one-day point gain on record. In another sign of market turbulence, the Cboe Volatility Index—a barometer of investors’ expectations for stock swings—headed for its steepest one-year advance ever.

The swings buffeting stocks left major indexes firmly in the red for 2018, even with their New Year’s Eve rally. The Dow Jones Industrial Average climbed 265 points, or 1.2%, to 23327 on Monday. The S&P 500 added 0.9% and the Nasdaq Composite rose 0.8%.

For the year, the Dow industrials were down 5.6%, the S&P 500 off 6.2% and the Nasdaq down 3.9%.

Stock markets elsewhere around the world fared even worse. The Stoxx Europe 600 shed 13% in 2018, while the U.K.’s FTSE 100 declined 13% and Japan’s Nikkei Stock Average fell 12%.

The volatility spared few asset classes. Oil prices hit multiyear highs in October, only to tumble in the fourth quarter as investors grew increasingly worried about a potential supply glut.

U.S. crude oil fell 0.1% on Monday, deepening losses that have taken it down around 25% for the year.

With losses hitting markets from stocks to commodities to bonds, many investors say they have reined in their optimism heading into the new year.

“It will be another volatile year,” said UBS’ Mr. Yu.

That is especially true with data suggesting that growth around the world is starting to falter.

A report Monday showed China’s manufacturing sector contracted in December, with a gauge of factory activity hitting its lowest level in nearly three years. The official manufacturing purchasing managers index declined to 49.4 in December from 50.0 in November, data from the National Bureau of Statistics showed, falling short of the forecasts of many economists.

“The broad-based PMI decline implies higher economic downward pressure” in China, economists at Citigroup said in a note to clients.

The reading was the latest to show that economies in Europe and China are slowing, something that has sparked worries that the malaise could ultimately spread to the U.S.

The Shanghai Composite, which was closed Monday for the holidays, finished 2018 down 25%—marking its steepest one-year loss since 2008. Hong Kong’s Hang Seng, which fell 14%, posted its worst one-year decline since 2011.

https://www.wsj.com/articles/global-...d=hp_lead_pos1

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First it was apple that decided to stop reporting apple iphone sales a few months ago after a sales decline. Now ford is taking a page out of the same play book... Anyone expecting the market to bounce back from here isn't paying attention. We are going much lower..

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Capping what has been an abysmal year for the global automobile market and starting off what Morgan Stanley predicts to be another coming awful year for the industry, Ford reported that its sales for December were down 9%. Ford's fleet sales and car sales both cratered, falling well into the double digits, or -19.5% and -27.8%, respectively.

And it looks as though Tim Cook isn’t the only one not especially excited about giving up on transparency heading into the back end of a decade-long artificial bull market. Taking a page out of General Motors' book, Ford announced that they were no longer going to report monthly sales data and will be moving to reporting sales data on a quarterly basis instead.

As a reminder, when General Motors changed its reporting of sales, it hilariously stated that reducing its disclosures would "give a more accurate view of its business operations".

"Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market," Kurt McNeil, GM's U.S. VP of sales operations, said at the time.

Right.

Along those same delusional lines, Ford's management called the month the end to "another strong year for Ford and the industry". So strong, in fact, that they want to report sales only 33% as often as they used to. Here is a more detailed look of how Ford brands fared across the company's entire portfolio of vehicles:

https://www.zerohedge.com/news/2019-...sales-plunge-9

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Gold doesn't spike like this unless banks see strong declines ahead. All the warning signs are here... These are massive buy orders for gold. These aren't average people buys. This is institutional buying.

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U.S. Recession Risk Hits Six-Year High

Economists put the risk of a U.S. recession at the highest in more than six years amid mounting dangers from financial markets, a trade war with China and the federal-government shutdown.

Analysts surveyed by Bloomberg over the past week see a median 25 percent chance of a slump in the next 12 months, up from 20 percent in the December survey. The Federal Reserve is now projected to keep interest rates steady in the first quarter, instead of raising them, before two increases total this year -- down from four moves in 2018.

The median projection for 2019 economic growth edged down to 2.5 percent following 2.9 percent in 2018 as the boost from fiscal stimulus fades. Growth is still expected to be buoyed by a strong jobs market, rising wages and some lingering effects of tax cuts. If the expansion that began in 2009 lasts until July, it would mark 10 years and become the country’s longest on record.


“It’s not our call that there’s a recession coming soon by any means, but financial conditions have tightened materially over the past two months, you have ongoing trade issues that are weighing on global growth, and you’re seeing business confidence waning a bit,” said Brett Ryan, a U.S. economist at Deutsche Bank AG. “The government shutdown weighs on business confidence and could weigh on consumer confidence.”

Ryan gave a 20 percent chance of recession, up from 12 percent in the December survey.

Analysts generally expect the partial government shutdown -- which President Donald Trump said could last for months if not years, and is now in its third week -- to weaken quarterly economic growth by 0.1 to 0.2 percentage points every one to two weeks it drags on.

It’s already affecting projections. On Thursday, JPMorgan Chase & Co. chief U.S. economist Michael Feroli cut his first-quarter growth forecast to a 2 percent annualized pace from 2.25 percent, citing the shutdown.

The shutdown has also delayed government data releases, such as retail sales and inventories, that investors and analysts use to assess the state of the economy. That puts more focus on companies such as retailers Macy’s Inc. and Kohl’s Corp., who gave disappointing reports on Thursday. Other figures from Johnson Redbook Research showed retail sales rising in recent weeks.

Less optimism among consumers would build on financial-market concern about a broader slowdown. Sectors where interest rates have been rising, such as the auto industry, will likely take a hit, according to Barclays Plc chief U.S. economist Michael Gapen.

He said the trade war with China, which is contributing to overall slowing global trade and has raised prices for some U.S. companies, also is weighing on growth and increasing the risk of a downturn.

https://www.bloomberg.com/news/artic...n?srnd=premium

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Gundlach Warns U.S. Economy Is Floating on ‘an Ocean of Debt’

Jeffrey Gundlach said yet again that the U.S. economy is gorging on debt.

Echoing many of the themes from his annual "Just Markets" webcast on Tuesday, Gundlach took part in a round-table of 10 of Wall Street’s smartest investors for Barron’s. He highlighted the dangers especially posed by the U.S. corporate bond market.

Prolific sales of junk bonds and significant growth in investment grade corporate debt, coupled with the Federal Reserve weaning the market off quantitative easing, have resulted in what the DoubleLine Capital LP boss called “an ocean of debt.”

The investment manager countered President Donald Trump’s claim that he’s presiding over the strongest economy ever. The growth is debt-based, he said.

Gundlach’s forecast for real GDP expansion this year is just 0.5 percent. Citing numbers spinning out of the USDebtClock.org website, he pointed out that the U.S.’s unfunded liabilities are $122 trillion -- or six times GDP.

“I’m not looking for a terrible economy, but an artificially strong one, due to stimulus spending,” Gundlach told the panel. “We have floated incremental debt when we should be doing the opposite if the economy is so strong.”

Stock Bear
Gundlach is coming off another year in which his Total Return Bond Fund outperformed its fixed-income peers. It returned 1.8 percent in 2018, the best performance among the 10 largest actively managed U.S. bond funds, according to data compiled by Bloomberg.

Gundlach expects further declines in the U.S. stock market, which recently have steadied after reeling for most of December since the Great Depression. Equities will be weak early in the year and strengthen later in 2019, effectively a reversal of what happened last year, he said.

“So now we are in a bear market, which isn’t defined by me as stocks being down 20 percent. A bear market is determined by the way stocks are acting,” he said.

Read: Gundlach Likens Buy-the-Dip Mentality to Crisis: Brian Chappatta

Rupal Bhansali, chief investment officer of International & Global Equities at Ariel Investments, picked up on Gundlach’s debt theme in the Barron’s cover story. Citing General Electric’s woes, she urged investors to focus more on balance-sheet risk rather than whether a company could beat or miss earnings. Companies with net cash are worth looking at, she said.

https://www.bloomberg.com/news/artic...t?srnd=premium

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U.S. banks have less than $7 in equity for each $100 in assets.

The 2008 financial crisis showed what happens when the banking system lacks an adequate foundation of loss-absorbing equity capital. Unable to raise what they needed from wary investors, banks were forced to slash lending at precisely the worst time for the economy. Ultimately, only the full faith and credit of the U.S. government — and a direct infusion of more than 200 billion taxpayer dollars — could prop them up.

The lesson seems clear enough: Banks should raise capital while they can, and before they have to. The Federal Reserve apparently hasn’t learned it.

The 2010 Dodd-Frank Act gave the Fed this very responsibility: tell banks to build a buffer of extra capital in good times, when the economy is growing and funds are relatively easy to raise. This idea of so-called countercyclical capital has worked well in other countries, most notably Spain.

The question is when to add to the buffer. In the U.S., now seems right. The economy has been expanding for nearly 10 years, inflation is close to the Fed’s target, and forecasters expect annual growth to peak this year at about 2.9 percent. Business lending standards are deteriorating even as corporate debt levels hover near record highs. Across the Atlantic, the U.K., France and eight other European countries have already raised their buffers.

The Fed hasn’t. This is partly because of how officials have chosen to interpret Dodd-Frank. The central bank has adopted a rule that says systemic vulnerabilities should be “meaningfully above normal” before extra capital is required — a threshold that some, including Chairman Jerome Powell, say hasn’t been met. Opponents of requiring more capital also argue that U.S. banks don’t need it, because they’re already better capitalized than their European counterparts.

That’s true — but better capitalized doesn’t mean adequately capitalized. On average, the six largest U.S. banks have less than $7 in equity for each $100 in assets. That’s more than they had before the 2008 crisis, but probably not enough to avoid distress in a similar situation. Economists at the Minneapolis Fed, for example, have estimated that banks need more than twice as much equity to make the probability of government bailouts as low as it should be. Even if fully deployed, the Fed’s countercyclical buffer would get them only a small part of the way there.

Fed officials ought to ask: If not now, when? If the central bank’s rules prevent them from acting, they should change them. By the time investors are sure the system has a problem, it will be too late.

https://www.bloomberg.com/opinion/ar...n-bank-capital

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A Bleak Warning on Global Division and Debt

DAVOS, Switzerland — As business and political leaders arrive in the Swiss Alps for the annual meeting of the World Economic Forum, a surprisingly alarming letter from an influential investor who studiously eschews attention has already emerged as a talking point.

The letter, written by Seth A. Klarman, a billionaire investor known for his sober and meticulous analysis of the investing world, is a huge red flag about global social tensions, rising debt levels and receding American leadership.

Mr. Klarman, a 61-year-old value investor, runs Baupost Group, which manages about $27 billion. He doesn’t make the annual pilgrimage to Davos, but his words are often invoked by policymakers and executives who do. His dire letter, which is considerably bleaker than his previous writings, is a warning shot that a growing sense of political and social divide around the globe may end in an economic calamity.

“It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions,” he wrote.

He made the remarks in a 22-page annual letter to his investors, which include the endowments of Harvard and Yale and some of the wealthiest families in the world. It was being passed around ahead of the Davos gathering, which draws business leaders like Bill Gates and Sheryl Sandberg, social and cultural figures like Bono, and elected officials like Chancellor Angela Merkel of Germany.

Mr. Klarman expressed bafflement at how investors often shrugged off President Trump’s Twitter outbursts and the retreating American role in the world during the past year.

“As the post-World War II international order continued to erode, the markets ignored the longer-term implications of a more isolated America, a world increasingly adrift and global leadership up for grabs,” he wrote.

Mr. Trump and the United States delegation canceled plans to attend the Davos conference because of the government shutdown, which will leave Ms. Merkel and Prime Minister Shinzo Abe of Japan with an opportunity to fill the leadership void.

Citing the “yellow vest” marches in France that spread throughout Europe, Mr. Klarman said, “Social frictions remain a challenge for democracies around the world, and we wonder when investors might take more notice of this.” He added, “Social cohesion is essential for those who have capital to invest.”

Mr. Klarman, sometimes called the Oracle of Boston, is one of the few financiers ever praised by that Omaha oracle, Warren Buffett. His views are so sought after that an out-of-print book he wrote about value investing sells for as much as $1,500 on Amazon.

The circulation of his letter is likely to add to the hand-wringing that typically takes place in Davos during a week of panels and conversation over Champagne and canapés.

For one thing, he details the way virtually every developed country has taken on mounting debt since the financial crisis in 2008, a trend that he says could lead to a financial panic. He cites the increasing ratio of government debt to gross domestic product from 2008 to 2017, to a point exceeding 100 percent in the United States and nearing that figure in France, Canada, Britain and Spain.

“The seeds of the next major financial crisis (or the one after that) may well be found in today’s sovereign debt levels,” he said.

Mr. Klarman is especially worried about debt load in the United States, what it could mean to the dollar’s status as the world’s reserve currency and how it could ultimately affect the country’s economy.

“There is no way to know how much debt is too much, but America will inevitably reach an inflection point whereupon a suddenly more skeptical debt market will refuse to continue to lend to us at rates we can afford,” he wrote. “By the time such a crisis hits, it will likely be too late to get our house in order.”

Mr. Klarman believes that the public, almost irrationally, has become too blasé about all these risks and that investors have been lulled into taking on even more risk.

https://www.nytimes.com/2019/01/22/b...m-klarman.html

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This is the year when the Federal Reserve’s credibility finally died

The central bank, under Jerome Powell, can’t wean the stock market off stimulus

As with many terminal patients, the initial hope is that aggressive treatment would work and cure the patient.

But when the one-time emergency round of drugs didn’t cure the patient, additional drugs were needed and turned the patient into a hopeless junkie. After multiple injections, a sense of dread was making the rounds.

For the Federal Reserve, quantitative easing stage one (QE1) did not cure the patient, so QE2 and QE3 were required, with a little “twist” here and there thrown in. But the Fed doctors kept promising all would be well, and the addiction could be stopped and the patient returned to normal.

And so it looks promising for a while. There was that scary flare-up in 2016 when the patient regressed and the normalization had to be put on hold, but then a miracle drug came along called Tax Cut and suddenly it seemed as if the removal of drugs from the system could be accelerated.

So jubilant and optimistic were the Fed doctors that they promised further rounds of withdrawal and kept pointing to their “dot plot” of normalization for official interest rates.

Yet here we are, a mere three months later, and the Fed doctors are at a loss again. Unable and unwilling to admit to the patient the true nature of the disease, the Fed doctors once again decided to stop all withdrawal of the drugs. Worse, they indicated they may have to administer new drugs to come. The patient begged for more drugs, and the Fed doctors absolved themselves of their Hippocratic Oath and capitulated once again to the patient’s scream for another high, a scream only drowned out by the dying sigh of the Fed’s credibility, the initial casualty in this war on monetary-drug dependency.

For it is true, the Fed doctors failed to wean the patient off drugs.

But now Fed Chairman Jerome Powell has made it official and killed off the Fed’s credibility in the process.

It’s probably just as well. It’s been painful to watch, as everybody knew the probability of survival was low. It was a slow death. And nobody wants to see suffering longer than needed and everybody knew it anyway.

As to the patient? Well, he’s back on the drip, smiling at the prospect of his final fix. The 10-year addiction never ended and the patient remains uncured. Yet the patient can’t get a new high without new drugs and so the current satisfaction at seeing the drip may turn into a great disappointment before the new drugs finally arrive.

See, the Fed doctors have been withholding a vital piece of information from the patient: We can’t cure you; we can only get you hooked on drugs to make you feel better. In medical terms that’s called malpractice, which typically kills off the credibility of any medical professional. It shouldn’t be any different for a central bank. And it isn’t.

https://www.marketwatch.com/story/th...ied-2019-01-31

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Redback about to be living under a bridge..

Australian Banking and housing sector crumbling

A yearlong public probe into misconduct in the Australian financial sector has brought plenty of embarrassment for the country’s biggest banks. There’s more pain to come for their stocks.

An independent inquiry set up in late 2017 laid out a slew of industry wrongdoing in its final report published Monday, from loose lending to collecting fees from dead customers. It also suggested an overhaul of Australia’s regulatory regime, once a source of pride in a country that escaped the worst of the financial crisis. Some institutions may yet face civil or criminal trials.

Even so, investors may feel relieved. The Royal Commission’s report, while damning, stopped short of more radical proposals, such as breaking up the big banks, which include ANZ Bank , ANZBY +1.41% Westpac , Commonwealth Bank of Australia and National Australia Bank . Shares of the country’s four largest banks—which dominate the local market—have fallen by an average of 18% in the past two years, underperforming both the broader market and global peers.

Faced with the investigation, Australian banks have already tightened their lending standards, which in turn has slowed their growth. The government may worry that further pressure could risk the health of an economy that has avoided recession for a generation. Yet being tough on the banks will likely remain a standard political line to take in the coming months, with another Australian general election looming. Both the ruling party and the opposition have said they would support all of the commission’s 76 recommendations.

The country’s lenders face another problem still harder to control: a crumbling housing market. Property prices in Australia’s biggest cities, Sydney and Melbourne, have already dropped around 10% from their peak in 2017. Tighter credit has played a part, but a post-building boom oversupply of apartments, as well as the retreat of Chinese investors, means the market likely has more room to fall. An economic slowdown in China, by far Australia’s largest trading partner, will also inevitably ripple Down Under.

Australian banks used to enjoy a valuation premium over their global peers, but not any more. The four largest banks trade at an average 1.6 times tangible book value, down from 2.1 times two years ago, according to S&P Global Market Intelligence. That’s more in line with U.S. peers like JPMorgan and Bank of America , which trade at 1.6 to 1.9 times. Given the country’s housing market woes, it’s still too early to jump back into Australian banks.

https://www.wsj.com/articles/austral...ut-11549276857

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Retail sales drop the most since September 2009

U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

The Commerce Department said on Thursday retail sales tumbled 1.2 percent, the largest decline since September 2009 when the economy was emerging from recession. Data for November was revised slightly down to show retail sales edging up 0.1 percent instead of gaining 0.2 percent as previously reported.

Economists polled by Reuters had forecast retail sales increasing 0.2 percent in December. Retail sales in December rose 2.3 percent from a year ago.

The December retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. No date has been set for the release of the January retail sales report, which was scheduled for publication on Friday.

Excluding automobiles, gasoline, building materials and food services, retail sales dropped 1.7 percent last month after a slightly upwardly revised 1.0 percent surge in November. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have jumped 0.9 percent in November.

https://www.cnbc.com/2019/02/14/us-r...-december.html

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Amazon Cancels NYC Plans

Amazon announced Thursday that it is backing out of plans to open a new headquarters in New York City, blaming local politicians who "had opposed our presence and will not work with us."

The retail giant announced in December it would build a campus in the Long Island City neighborhood of Queens for 25,000 employees.

"After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens. For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term," the company said in a statement.

"While polls show that 70 percent of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City," the statement said.

"We are disappointed to have reached this conclusion—we love New York, its incomparable dynamism, people, and culture — and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents."

https://www.nbcnews.com/tech/tech-ne...arters-n971636

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As U.S. Debt Rate Rises, Auto Loan Delinquencies Hit Record High

The Federal Reserve Bank of New York just put out its latest quarterly report on U.S. household debt and found that Americans collectively owe about $13.54 trillion, an amount that has risen for 18 consecutive quarters and is 21% higher than the $12.7 trillion owed in 2008 during the height of the Great Recession.

Among the more troubling facts from the report is the record 7 million Americans who are 90 days or more behind on their auto loan payments. It's a signal, economists say, that Americans are struggling to pay bills despite other indications of a strong economy and low unemployment. Approximately 6.5% of all auto finance loans are 90-plus days past due.

Student loan debt edged higher, hitting $1.46 trillion in the fourth quarter, and serious delinquency rates in the category continue to be much higher than any other debt type.

Mortgage debt accounted for most of the total, hitting $9.12 trillion in the fourth quarter.

https://finance.yahoo.com/news/u-deb...122400801.html

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If any of you are caught off guard and surprised by the coming debt/financial crises you are fucking stupid and you're simply not paying attention.

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Consumer debt hits $4 trillion for the first time ever

*Americans' collective debt surpasses $4 trillion for the first time.

*Holiday spending, rising student loan balances and a jump in automobile financing at the end of last year helped consumer borrowing reach the new milestone.

Americans are diving deeper and deeper into the red.

As of this month, outstanding consumer debt exceeded $4 trillion for the first time, according to the Federal Reserve.

Relatively strong holiday spending, particularly in November, and increasing credit card debt added more than $41 billion in outstanding balances at the end of 2018, according to LendingTree, a loan comparison website, which analyzed the data from the Fed.

In addition, a steady rise in student loan balances, as well as an increase in the cost of automobile financing in the fourth quarter, contributed another $80 billion.



At these levels, consumers are spending about 10 percent of their disposable income on nonmortgage debts, including credit cards and auto, personal and student loans, said LendingTree chief economist Tendayi Kapfidze. Ahead of the Great Recession, that averaged about 13 percent, he added.

"It's a level of debt that's pretty manageable overall," Kapfidze said. "Of course, for any one individual, you have to make sure you are not taking on more debt than you can handle."

The average American has a credit card balance of $4,293, according to the latest Experian data. Total credit card debt is also at its highest point ever, surpassing $1 trillion, the Federal Reserve found.

Now, more than 1 in 3 people — or 86 million Americans — said they're afraid they'll max out their credit card when making a large purchase, according to a WalletHub credit cards survey. (Most of those polled considered a large purchase as anything over $100.)

At the same time, credit card interest rates have never been higher. The average card interest rate is currently 17.41 percent, according to CreditCards.com's latest report. That's up from 16.15 percent one year earlier and 15.22 percent two years ago.

And still, credit card delinquency rates, or late payments over 90 days past due, remain relatively low even though rates have been slowly rising in the last few years.

Meanwhile, outstanding student loan debt has tripled in the last decade and is now $1.5 trillion. A college education is now the second-largest expense an individual is likely to make in a lifetime — right after purchasing a home.

https://www.cnbc.com/2019/02/21/cons...twitter%7Cmain

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U.S. housing starts fall to more than two-year low

WASHINGTON (Reuters) - U.S. homebuilding tumbled to a more than two-year low in December as construction of both single and multi-family housing declined, the latest indication that the economy lost momentum in the fourth quarter.

Other details of the report from the Commerce Department on Tuesday were also downbeat and suggested that the housing market could remain sluggish for a while despite an easing in mortgage rates. Housing completions dropped to a more than one-year low in December and while building permits increased, they were driven by the volatile multi-family housing segment.

Housing starts dropped 11.2 percent to a seasonally adjusted annual rate of 1.078 million units last month, the weakest reading since September 2016. Data for November was revised down to show starts at a 1.214 million unit rate instead of the previously reported pace of 1.256 million units.

Building permits rose 0.3 percent to a rate of 1.326 million units in December.

Economists polled by Reuters had forecast housing starts slipping to a pace of 1.250 million units last month.

The release of the December housing starts and building permits report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. No date has been set for the release of January’s report.

The Commerce Department said while delays in data collection could make it more difficult to determine the exact start and completion dates of construction, “processing and data quality were monitored and no significant issues were identified.”

The dollar extended losses against a basket of currencies on the report, while U.S. Treasury prices rose. U.S. stock index futures fell.

SOFTENING GROWTH
The report added to weak December retail sales and business spending plans on equipment in suggesting that economic growth cooled down significantly at the tail end of 2018.

It also implied that residential investment probably contracted in the fourth quarter, which would extend a decline that began in early 2018.

The housing market hit a soft patch last year amid higher mortgage rates as well as land and labor shortages, which led to tight inventories and more expensive homes.

Though mortgage rates have been declining and house price inflation has decelerated, economists expect the housing market weakness to persist at least through the first half of 2019.

A survey last week showed homebuilder confidence increased in February, but builders continued to say land and labor shortages and tariffs on lumber and other key building materials were keeping costs high.

Single-family homebuilding, which accounts for the largest share of the housing market, dropped 6.7 percent to a rate of 758,000 units in December, the lowest level since August 2016.

It was the fourth straight monthly decline in single-family homebuilding. Single-family starts in the South, which accounts for the bulk of homebuilding, rose 2.2 percent in December.

Single-family homebuilding plunged 20.3 percent in the Northeast and dived 18.5 percent in the West. Groundbreaking on single-family homes tumbled 14.2 percent in the Midwest.

Permits to build single-family homes fell 2.2 percent in December to a pace of 829,000 units. Starts for the multi-family housing segment dropped 20.4 percent to a rate of 320,000 units in December. Permits for the construction of multi-family homes rose 4.9 percent to a pace of 497,000 units.

Housing completions fell 2.7 percent to 1.097 million units, the fewest since September 2017. Home completions increased 3.4 percent in 2018.

https://www.reuters.com/article/us-u...-idUSKCN1QF1LQ

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U.S. Trade Gap Surged to $621 Billion in 2018, 10-Year High

The U.S. trade deficit widened in 2018 to a 10-year high of $621 billion, bucking President Donald Trump’s pledges to reduce it, as tax cuts boosted domestic demand for imports while the strong dollar and retaliatory tariffs weighed on exports.

The annual deficit in goods and services increased by $68.8 billion, or 12.5 percent, Commerce Department data showed Wednesday. The December gap jumped from the prior month to $59.8 billion, also a 10-year high and wider than the median estimate of economists. The merchandise-trade deficit with China -- the principal target of Trump’s trade war -- hit a record $419.2 billion in 2018.

https://www.bloomberg.com/news/artic...e?srnd=premium