Vitayu and welcome to the Metz Market Minute for the Chrisman Commentary.
All The Data: We had a LOT of mixed data this week, and the busiest week of the year for reports. It ends up being a mixed bag with some aligning, some contradictory. Let's unwind it.
Inflationary Energy: The Strait remains closed and oil is up. That appeared in the Fed's commentary (more on that later) that it's clearly pushing inflation higher for longer. Energy expenditures were up 11.8%, a big jump. Overall, PCE was up 3.2% annualized, an increase from last month, and outstripping personal income's gain of .6%.
How Do We Feel About That? The jury is out. The Conference Board showed a 3rd month of rising consumer confidence, at 92.8% versus the expected 89%. Today's data from the University of Michigan disagreed, though. It was at 49.8, a good fall from March's 53.3 and the lowest read since 1978. The Fed loves watching this metric, and particularly that the survey showed year-ahead inflation expectations were up to 4.7% from the prior 3.8%. While we're at it...
Let's Talk About The Fed: The vote to leave rates as-is was 98% likely, so no surprise. We had plenty of other surprises though. There were 4 dissents in the vote, the largest since October 1992. It was Powell's last as Chair, but he also made the surprise move to stay on the board and said "they left me no choice". He's sticking around until all probes are settled, which also deprives President Trump from another nomination to the board for now. Warsh was approved by Senate Banking, but made a comment about wanting to test inflationary metrics with some new theory, which made people uneasy.
The Market Reaction? Rates bumped up. Spring buying season still held strong, purchases were up even as overall applications dropped due to refinances dropping 4%. We had both February and March numbers come out for builders showing permits down 10% and building starts up 10%. This shows builders are working with what they've got, but are hesitant on The Future. Case-Shiller and FHFA both agreed, with lackluster HPI readings nearing in on flat.
In Other News... Real is purchasing Remax for $550M, with debt included for a total of $880M. UWM is starting with Vantage, and guidelines seem to indicate they're subtracting 20 points to bring it to a FICO equivalent score. The pilot program still seems closed to any lenders not in the initial group.
Resources
2.) GDP Numbers
3.) PCE
4.) Consumer Confidence: Consumer Board and UMich
5.) Jobless claims
6.) HPI: Case-Shiller and FHFA
8.) Construction and construction