Market Update as of August 15, 2018

Small Businesses Are Ecstatic
The National Federation of Independent Business small business optimism index rose 0.7 points in July to 107.9. The NFIB said it was the second-highest level in history and just under the 1983 peak. Eight of the ten components, led by plans to increase employment, expectations for rising sales and for expansion, increased; those for current inventories and plans to increase inventories declined. The single most important issue flagged by small businesses were concerns about the quality of labor, with a net 23% saying so. 

Homebuilders Are Upset And Have No Hope
U.S. homebuilders are slowly losing confidence in their business. A monthly index of builder sentiment fell one point to 67 in August, the lowest level since September 2017. Sentiment was unchanged from one year ago, according to the National Association of Home Builders. Anything above 50 is considered positive sentiment, and the index hit a recent high of 74 last December. Yet there are signs of growing concern among builders. "The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations," said NAHB Chairman Randy Noel, a homebuilder from LaPlace, La. "However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.

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Good Vibes Only In US Markets
Today we received some nice color from a recent money managers’ survey. Managers expectations for US companies profits has increased to be the highest in the world. And why wouldn't it? Even as the stock market has rallied and fallen in the last 6 months, earnings have been very strong and GDP is growing. As far as risks to this bull market, it seems that self-inflicted damage via trade wars is the number one concern for money managers. In other words, lets not rock the boat.

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Courtesy of Sotheby's International Realty's in-house Lender Simon Atik, 310.880.8414, Simon.Atik@grarate.com, Vice President of Mortgage Lending, Guaranteed Rate Affinity.

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