Camelot Portfolios Talking Points

The Battle for the European Union

This past weekend, France held its first round of elections for president. Emmanuel Macron and Marine Le Pen received the most votes and will be a part of the run-off election held May 7th. Politics in France, as well as other European countries, have altered their views over the past decade because of tensions derived from decisions made by the European Union. The major theme that has markets on edge is whether or not France will leave the EU like its United Kingdom counterpart (Wall Street Journal). Other themes of this election are labor reform and immigration (Wall Street Journal). 

European markets were optimistic after the first round of elections. In France the CAC 40 index, which is made up of the 40 largest and actively traded shares listed on Euronext Paris (EuroNext), increased 4.1% on Monday (EuroNext). The German DAX index, similar to the CAC 40, increased 3.3% during Monday’s trading session (Bloomberg). Other major swings in the market were the Euro currency strengthening 4.9% in value compared to the US Dollar (Bloomberg).

While there are 11 days until run-off election, sentiment among the media and financial professionals are pointing towards the status quo. Both candidates would be considered on the “right” side of the US right/left political spectrum. Emmanuel Macron seems to be in favor due to his more centralist ideas among French constituents (BBC). Marine Le Pen has been getting the most headlines because of the ongoing terrorist attacks in France (BBC).

Is US Housing Market Booming or Peaking?

As winter has lost its grip, spring and summer traditionally bring peak season for housing and construction. Last month, building permits across the United States rose 4.2 percent month over month (Economics).  While this is impressive growth, permits are still down historically from its average of 1356 thousand permits (Economics). New housing starts are still gradually increasing year over year by 9.2 percent, but it is 6.8 percent below February housing starts (US Dept of Housing and Urban Development). There is an increasing trend within construction, but is demand meeting up with supply.

The demand for residential properties is still keeping up with the supply around the United States, yet the price and inventory pressures are starting to creep into the picture. New home sales rose 5.8 percent month over month and 15.6 percent year over year (Bureau). The median sales price was $315,100 (Bureau); this is an increase of 1.8% year over year. Inventory for housing remained steady at around 5.2 months. 

Overall, demand and supply seem to be in equilibrium. There are a couple of deviations from the month to month, but construction and sales are in a steady increasing trend. A long term factor that may affect housing in the future are likely increases in interest rates. The Fed may have enormous control over short term interest rates, but fiscal, corporate, and consumer trends tend to play a greater part in long term interest rates. Whereas interest rates and job prospects play a role, every good realtor knows it comes down to “location, location, location.”

Compiled by the Camelot Portfolios Investment Committee

Darren Munn, CFA, Chief Investment Officer

Sarah Berndt, Portfolio Manager

Eric Kartman, Research

Drew Steinman, CPA, Trader/Research

Frank Echelmeyer, MBA, CKA®, Advisor Consultant

-for Broker/Dealer and RIA use only-

Works Cited

BBC. French Election 2017. April 2017. 2017.

Bloomberg. Bloomberg Markets. April 2017. 2017.

Bureau, US Census. Monthly new Residential Sales. April 2017. 2017.

Economics, Trading. Trading Economics. April 2017. 2017.

EuroNext. CAC 40. 26 April 2017. 2017.

US Dept of Housing and Urban Development. Monthly New Residential Construction. April 2017. 2017.

Wall Street Journal. French Election Results. April 2017. 2017.

Disclosure

The material presented is for use by professional advisors only.  It is intended as informational and educational, and is not intended to be interpreted as investment advice.  The references to specific investment ideas, be they concepts, trends, sectors or even specific securities, are not recommendations for any advisor to adopt for any of their clients.  No investor or client reading these materials should view them as investment advice.  These materials are to be utilized as a catalyst for thought and discussion regarding the economy, investments, and responsible investing in general.  Past performance is not necessarily indicative of future returns, and there is no guarantee that any information presented herein will contribute to a profitable portfolio.  All facts referenced herein are derived from sources believed to be reliable.  A408