Tuesday, August 25, 2020

House Rich, Cash Poor


By Alex Eule |  Tuesday, August 25
The Disconnect. Housing remains a bright spot in the economy, but many Americans don't own homes. Even as existing homes sales rose 14%, the biggest jump in 14 years, the Conference Board said its consumer confidence index had fallen to 84.8, the lowest figure in six years. 
"Consumer spending has rebounded in recent months, but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead," the Conference Board said today. Just 16% of Americans in the survey described business conditions as "good," down slightly from last month, while those answering "bad" rose to 44% from 39%.  
It's a stark reminder of difficult times for consumers and businesses, even as parts of the economy try to re-open. The S&P 500 and Nasdaq Composite still rose on the day, each closing at all-time highs.
Stocks were helped by news that the U.S. and China are still trying to work through issues related to the Phase 1 trade deal from earlier this year. "Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement," the Office of the U.S. Trade Representative said Monday night.
It was another piece of good news for U.S. investors feeling better about a recent reduction in Covid-19 cases and positive data on treatments and vaccines. Here's how  Mark Haefele, UBS Global Wealth Management’s chief investment officer, wrapped up the optimistic view in a note to clients today: 
In our central scenario, we think a combination of no renewed nationwide lockdowns in major economies, widespread vaccine availability by the second quarter of 2021, and no break in the U.S.-China Phase 1 trade deal will allow economic output to return to pre-pandemic levels by early 2022.




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