#Trumphoria

Housing

Pending Home Sales fell -2.5% M/M and -0.4% Y/Y in November and are signaling downside risk to December Existing Home Sales (recall, Pending Home Sales = signed contract activity while Existing Home Sales = closed transactions so the former naturally leads the latter). Signed contract activity has been +2% or less since May with 4 of those months printing zero or negative growth. Tight inventory and declining affordability suggest the sluggish volume trend that has characterized much of 2016 is more likely than not to extend despite the likelihood for some modest rate related pull-forward in demand. 

Confidence

Trumphoria is now ubiquitous across all Consumer and Business Confidence Surveys with Headline, Present Conditions and Forward Expectations readings all step functioning higher since October. To take a quick cross-section:  Conference Board Consumer Confidence Forward Expectations = +20 pts, NFIB Small Business Optimism Forward Expectations = +19 pts, Philli Fed Manufacturing Survey = +20 pts.  Dallas Fed Services Survey = +31pts … and on it goes.   Note that “Forward Expectations” have been rising at a premium to “Current Conditions”, pushing the “optimism spread” higher.  It will be interesting to watch that spread as we push past the honeymoon period of pre-inauguration politicking to the less empyreal business of actual policy creation.

Volume

Yes, holiday volumes are comparatively soft but the post-election trend has been one of decelerating volume on down moves and vice versa.  Up day volume in the post-election period has been +2.1% higher on average than down day volume and yesterday’s down move extended that pattern with total market volume-9% D/D and -28% relative to the post-election average.  From a signaling perspective, however obvious, when volume is decelerating on down moves, it's less concerning than if volume was accelerating.