October 21, 2018 | Wall of Worry Now Includes a Serious Downturn in Real Estate

Existing-home sales continue to fall, increasing the odds that the aging stock-market bull has finally breathed its last. If so, the selloffs we’ve seen on Wall Street over the last few weeks have not been merely corrective, but the beginning of a bear market that promises to be as nasty as the bull has been giddy. Investors have shrugged off plenty of bad news since shares lifted from a deep trough in March 2009, but it’s hard to imagine they will be able to finesse an already protracted housing slump that threatens to grow even worse. The deterioration has gone on for seven straight months — the worst performance since 2014, when real estate was still recovering from the Great Financial Crash. With 30-year mortgages headed toward 5%, prospects of an upturn in housing in the coming months seem remote. The same factors are going to weigh heavily on the auto sector as well, since leases that effectively allow Americans to drive more car than they can afford are heavily dependent on easy credit and low rates. Incidentally, I foresee a dead-cat bounce in housing soon that could offer a high-leveraged play for traders. For explicit details, visit the Rick’s Picks Facebook page.

Rick Ackerman October 21st, 2018

Posted In: Rick's Picks

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