TGIF,

The only news today was The National Association of Realtors released a monthly report yesterday showing existing home sales decreased by 1.2% to a seasonally adjusted annual rate of 4.94 million units in January. This was below forecast of 5.0 million units and was the lowest level since November 2015. Existing home sales were down by 8.5% from one year ago. The median house price increased 2.8% from a year ago and was the smallest increase since February 2012.

So with that, most of the commentary courtesy from Dan Rawitch and Elliot Eisenberg this a.m. (I am not smart enough to bring up Fibonacci numbers.. ever)  but as it is both positive and I agree with his logic, please have a read…

Bonds are up and almost even with yesterday’s losses. The Stock market is a bit all over the place. It started making some sense yesterday, but oops, it is up again almost 200 points. It has now climbed 4400 points since Christmas Eve, without a correction! This has NEVER happened…. EVER! Why should you care. A typical and almost always will happen, Fibonacci correction is 38.2%. Fibonacci was famous mathematician/economist back in 1200’s that developed a mathematical sequence that is eerie. So, if the market has moved up 4400 points and Fibonacci is right, the market will come down 1600 some odd points. It may jump back up again. Yes, we could still be in a bull market, I could be wrong about this being a bull trap, but either way, Fibonacci will tell you that a 1600 point correction is due. Again, who cares. Well, imagine the bond rally that will follow! I believe this correction will be well timed when the BS about a fake or at least a horrible trade deal is released. Have I mentioned that there is more corporate debt coming due in the next 6 months than there has been, EVER? Have I mentioned, that there is less investable capital sitting on the sidelines than there has been in over twenty years, AND that there are a bunch of public offerings about to hit the markets? What happens when this devil’s triangle all hit the media at the same time, AND the Fibonacci correction comes a knocking? Yes, I remain bearish on stocks and bullish on bonds.

And last from Elliot Eisenberg offering great insight into the correlation between GDP and Fed Moves/Interest rates as a whole; If 2019 real GDP growth is 2%, inflation holds at 2%, and unemployment falls no lower than 3.7% such that Y-o-Y wage growth stays around 3%, the Fed keeps rates unchanged. If growth rises above 2.3%, and unemployment falls below 3.5%, then we get one quarter-point rate hike. But, if growth dips below 1.75% and inflation weakens, we’ll see a quarter-point cut. The potential moves, while small, are critically important. 

Enjoy the weekend and first, make today great!