The fear trade is alive and well in the smaller community and regional bankers–fear of interest rate hikes and resultantly commercial real estate failures of which these bankers have some pretty large interests. Everyone needs to keep a close eye on these bankers, unfortunately after a month or 2 of over communicating we are all stuck now with little new data–on top of this we had the head Fed yakker testifying before congress the last 2 days-with ongoing threats of further rate hikes. Investors can either take another ‘bite of the apple’, sit back and watch or sell. Obviously with nothing new known I am holding–and will consider further nibbling in a week when a large number of CDs and treasuries mature replenishing my dry powder. I’m looking at the Merchant Bancorp (MBIN) issues and Associated Bancorp (ASB).
Well the S&P500 has been soft this week and is soft again this morning–all of which is helpful in resolving what I believe is an overly optimistic economic view of equity markets. It seems healthy to have some backing and filling in indexes instead of something that goes up week after week. This is not the S&P500 of the olden days–this index is filled with tech companies so necessarily the index will likely run in the direction of the tech company’s.
Economic news this week has been mixed–like it has been for months and months. Yesterday we had 1st time unemployment claims up some from what was forecast–264,000 versus 256,000 expected–no giant jump and a continuing indication of fairly strong employment. The number of housing starts, which was released on Tuesday, was truly impressive at 1.63 million new starts versus expectations of 1.39 million. I have always written, and believe, that employment breeds housing demand and to me strong employment is the number 1 indicator of the future of the economy. I’m still looking for the forecast recession–I can’t see it as of today.
Well lets’s get this day started–it looks like a soft day in equities, but a Friday at the end of June means that equity volumes may be light and directions can change quickly–whatever–it will do what it will do.