Pending Home Sales declined 3.7% last month, more than double the anticipated drop in homes under contract.  The low supply of houses actually for sale is said to be the culprit.

Instead, U.S. consumers are spending their money on other stuff: Personal Spending rose 0.4%, while Personal Income only rose 0.2%.  Way to go America.

Investors are banking (literally) on central banks around the globe easing monetary policy to keep this party going.  Good thinking world.

Votes

Just a friendly reminder that today is the primary election in Utah.

After dropping almost 6% since the Brexit vote, stocks are attempting to rebound today.  They are currently up just over 1%.  Some are calling the stabilization a dead cat bounce and expect stocks to continue to sell off further after the stabilization effort.  Bonds are dead even three hours into the trading day.  The 1.47 yield on the 10-year Note is within 0.1% of the all-time low 1.379% recorded four years ago.  It may be important to note here that during that same time four years ago the S&P Index was in the mid 1400’s–30% lower than the current Index value.

The final reading of GDP for the first quarter showed a 1.1% rise, above expectations for 1.0%.  Now we move on to speculating over the 2nd quarter, which draws to a close on Thursday.

Safety Net

Two bits of information are important to reiterate today: Bonds are a safe haven for investment dollars and Bonds thrive on economic uncertainty.  Investors use these secure vehicles (bonds) as safety nets when the risk of leaving assets in the stock market is greater than one’s intestinal fortitude will allow for comfortably.  Consequently, the cost of entry into the bond market rose sharply this morning (driving down yields in the process–more on that later) as news hit the wires that the citizens of the United Kingdom had voted by a slim majority to leave the European Union.  Now former Prime Minister of Britain David Cameron resigned after the vote to leave was finalized.  It’s that bad.  The price of Gold is also up almost 5% this morning.

The Fed Funds futures market is claiming that a July rate hike is off the table and that there is only a 12% chance that the Fed will hike rates at any subsequent meeting in 2016.  Makes Fed Chair Janet Yellen seem like a prophetess given her remarks to Congress earlier this week.  The net result of all of this is lower interest rates all across the board.

Should We Stay or Should We Go

Early on in the “Brexit” vote, 52% of those surveyed said that they voted for the U.K. to remain in the European Union.  This is a narrow margin and startling considering pre-vote polls showed an 85% “stay” rate.

Contrary to what all of the nail guns going off around you would lead you to believe, New Home Sales dropped 6% last month.

In or Out?

Existing Home Sales rose 1.8% to an annualized 5.5M transacted units, tying a nine year high.  There is a lot of commission being paid out right now!

But the markets are buzzing about the possibility of the United Kingdom voting to leave the European Union.  The vote happens tomorrow and right now, it looks as though the consensus will be to remain in the E.U.  Were they to secede, Stocks would most likely tank and interest rates would drop even lower.  Don’t hold your breath.

Skating Away Time

Historically, June 21st is my favorite day of the year.  Not just because today is the ninth annual International Skateboarding day, but because usually it’s the day with the most daylight out of the 364 other days.  This year, yesterday had the most daylight.  If you want evidence that time is speeding up, that’s one more proof.  Riding a skateboard may help you keep up.

Fed Chair Janet Yellen spoke to the Senate Banking Committee this morning, lauding the improving economy in spite of the slowing labor market.  While she noted that indicators point to a stronger GDP for the 2nd quarter (ending in nine days), there is a cautious tone overall, with inflation well short of the Fed’s 2.0% goal.

The likelihood that the U.K. will exit the E.U. is slimming, buoying up the price of U.S. stocks and holding down bond prices.  But so far, mortgage rates are holding their ground.

According to a recent study of income and home prices across the country, the average American needs to make just over $51,000 per year to afford to purchase a median-priced home in his or her area.  That calculation is based on the a 20% required down payment and a 28% debt-to-income ratio.  As a side note, I do loans with $0 down and DTI to 55% almost every single day.  You are welcome America.

More Job Openings

The Job Openings and Labor Turnover Survey (JOLTS) published this morning shows that there are 5.8 million current job openings–up 40K from last month.  It’s higher in part because 59% of people that have been out of work for two years or more have given up their search.

And CoreLogic reports that home prices rose 1.8% last month alone, bringing the year-over-year value increase to 6.2%. This has been stimulated by low interest rates and fewer homes available for purchase.

Kick the Can

I spent last week totally off the grid in Lake Powell.  It took a few days to get used to not having my thoughts interrupted by my phone buzzing or my computer dinging.  And now that I am back in cell range I am struggling to get into the swing of things.  Maybe it’s for the best since I’ll be at scout camp all next week.

The current Fed Fund Futures are pricing in a 3.8% chance of a rate hike next week, a 38% chance in July, and a 40% chance in September, showing the Fed is okay kicking the can down the road just a little bit longer and agreeing with my position that rates will stay low through the election.