Daily Bullets……For May 22, 2014

·         Leading indicator up again…..The Conference Board’s index of leading economic indicators rose again in April, up 0.4%, and was revised up to 1% gain for March. Sectors contributing to the improvement were housing and the financial sector.

What’s the point? The economy appears to be accelerating from its severe weather-induced slowdown in Q1. There is increasing evidence that the housing market is improving. The strength of the stock market also benefits the economy through the “wealth effect” and generally improved consumer and business psychology. Overall, the rise in leading indicators is consistent with our view that the U.S. economy should continue to strengthen this year, which is positive for corporate profits and, hence, stock prices. Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140522&id=17643157

 

·         Existing home sales up…..National Association of Realtors reports this morning that existing home sales rose a solid 1.3% in April with most of the strength coming from the condo market. The supply of homes for sale also rose to 5.9 months from 5.2 months.

What’s the point? This is another in a string of reports recently that indicate the housing market is beginning to recover from the effects of the severe winter. We think there is meaningful pent up demand for housing because of severe under-building over the past five years relative to household formation. The improvement in the housing market, some of which is of course seasonal, is another factor that should add to acceleration in the U.S. economy as we progress through the year. Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140522&id=17643110