Friday, December 16, 2016
Ahead of Friday’s opening bell we saw new Housing Starts and Permits data. Recall a month ago we saw October numbers way up: 25.5%; analysts expected a revision, but they didn’t expect it to be an upward one. Now October’s numbers have reached 27.4% in new Housing Starts.
This is a way to help absorb the disappointment on the November numbers which just came out: 1.09 million new housing starts is down 18.7% month over month, but again, this is from a big upswing the previous month. Clearly these numbers carry a measure of volatility with them, and in the current environment — with Trumpmania running rampant through the markets — this morning we receive a dollop of sobriety on the housing scene.
Building Permits were also down in the month of November to 1.20 million from expectations of 1.23-1.26 million. Still nothing to sneeze at, but what these numbers reveal is that entry-level housing is not being built, and this is an important entity in the progressive order of the nature of housing: young people leave Mom & Dad’s basement to move into their own place; when they make enough money they buy their first place; once established they improve on their home ownership, and so on. We’re missing a cog in this wheel.
Dow to 20,000?
The Dow is looking to perform at its highest levels in more than a year this week, and this might be the case even if the index doesn’t hit the psychologically pleasing 20,000 number. But with the Dow +33 points in the pre-market — higher than the levels we’re currently seeing in the S&P 500 and the Nasdaq at this point — it does beg the question: will today be the day?
We see differing opinions on this matter, even from our own shop here at Zacks: Exec VP Steve Reitmeister wrote today in his Profit From the Pros article that “the S&P likely makes it to 2300 before the year is out,” while Chief Strategist John Blank disagrees, saying we can still have a strong outlook on forward markets and also anticipate a 7-8% pullback from current levels: Look At All That Froth!