Kelly Evans’ afternoon commentary & top market stories

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WED, FEB 13, 2019

YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC
 
DJIA 25521.08
+0.37% +95.32
S&P 500 2752.16
+0.27% +7.43
NASDAQ 7428.69
+0.19% +14.07

EDITOR'S NOTE

 
 

Here's a head-scratcher:

 

Wage gains are accelerating, especially for low-income workers (the bottom 10% of wage earners are seeing the fastest income growth since 2000, per Strategas). Job openings are soaring (7.3 million as of last count) and payroll growth (+526k the past two months) is vastly stronger than it "should be" this late in the cycle. 

 

And yet delinquency rates are rising. 

 

Delinquency rates on auto loans have hit their highest since 2010. And it's not just there, as the charts below from Deutsche Bank's Torsten Slok show. Mobile-home delinquencies (yes, that's a data set) have jumped. Delinquency rates on second homes and home equity lines of credit are on the rise, too. 

 

This can go on for quite some time before the onset of a recession--years, as the episodes from the late '80s and late '90s show. 

 

And there have been structural changes, too, says FTN Financial's Jim Vogel, particularly when it comes to autos: "It is an error to flag rising delinquencies without noting i) they remain small relative to more auto debt; ii) they are unfortunately concentrated with younger borrowers and those with credit scores <=620," he notes.  

 

To that point, the number of households using LESS credit overall is also on the rise. 

 

Mr. Vogel again: "The weirdest number from Q4 was the lack of acceleration in credit card debt to pay for holidays." And CreditCards.com says 34% of households are now debt-free, up from 14% five years ago. 

 

The fragmentation of households into those using (and falling behind on) credit versus those with no debt at all is telling us something about the overall economy--but not as much about "the cycle" as it probably once did. 

 

See you at 1 p.m. for "The Exchange"!

Kelly 

 

 

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KEY STORIES 

 
 
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Confusion reigns as Trump and Congress scramble to dodge another shutdown
Congress is rushing to finalize legislation to avoid a government shutdown, but President Donald Trump has not yet committed to signing it.
The US reportedly wants to put automatic tariffs in place to keep China in line with any trade deal
The trade deal U.S. negotiators are seeking will have some teeth in case China goes back on its trade promises, The New York Times reported.
The $4.8 trillion immigration issue that is being overlooked by Washington
Immigration is the No. 1 concern of small businesses on Main Street, the Q1 CNBC/SurveyMonkey Small Business Survey reveals. The sentiment may be driven by the skills shortage and curbs that limit the formation of start-ups by immigrants.
Johnson & Johnson to buy Auris Health for $3.4 billion
The purchase gives J&J, one of the world's largest maker of health products, an entry into robotics and builds on the company's partnership with Alphabet's Verily.
The earnings slowdown will wipe out 2019's gains, investor Peter Boockvar warns
Wall Street bear Peter Boockvar warns that 2019's market rally is flawed, and a major setback will slam stocks.
That $22 trillion national debt number is huge, but here's what it really means
National debt for the first time passed $22 trillion this week — a big, scary number that really doesn't pose much of a threat now but threatens to in the future.
Warren Buffett: This is your 1 greatest measure of success in life (and if you don't have it, 'your life is a disaster')
Count on billionaire Warren Buffett to deliver the gift of wisdom right when you need it most. At the end of your life, he says the greatest measure of success comes down to just number.
'Scary over the next couple of months' — boutique investing chief says 2019 rally won't last
Leuthold Group's Doug Ramsey lays out a series of worst case scenarios for stocks, including a "broad and deep revaluation" during the next recession.
SEC files insider trading lawsuit against former Apple lawyer
Before his termination in September, Levoff was "responsible for Apple's compliance with securities laws," the SEC complaint says.

 

IN CASE YOU MISSED IT

 
 

 

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