Posts by Gary Hall

The federal budget deficit was $423 billion in the first eight months of fiscal year 2022, CBO estimates. That amount is about one-fifth of the $2.1 trillion shortfall recorded during the same period in 2021.

Inventories for wholesalers were up 24% year-over-year from April 2021. However, when one looks at inventories-to-sales ratios – this sector looks healthy.

According to an analysis by Calculated Risk, May 2022 rail carloads are down year-over-year. In normal economic times, contraction in the transport sector is a recession flag. But this contraction may be a sign of the supply chain catching up with demand combined with a modest economic slowing.

Consumer Credit expanded in April 2022 according to Federal Reserve headlines for G.19 data. However, consumer debt payments are about mid-range for the period since 1980 – this will worsen as interest rates rise.

CoreLogic says home price growth continues its record-breaking streak growing by 20.9% year-over-year in April 2022. However, this growth is forecast to slow to 5.6% in the period April 2022 to April 2023.

The BEA reports that the trade deficit was $87.1 billion in April 2022 – down $20.6 billion from $107.7 billion in March. Interestingly, imports declined which is a usual recession flag.

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Summary Of the Markets Today:

• The Dow closed down 177 points 0.54%,
• Nasdaq closed down 0.72%,
• S&P 500 closed down 0.75%,
• WTI crude oil settled at 115, down 0.151%,
• USD $102.50 up 0.72%,
• Gold 1848 up 0.90%,
• Bitcoin down 0.35% to $30187,
• 10-year U.S. Treasury up 0.86% / 2.931%

Today’s Economic Releases:

According to the U.S. Bureau of Labor Statistics, their April 2022 JOB OPENINGS AND LABOR TURNOVER report shows a modest reduction in job openings – although job openings remain well above historical values.

The ISM manufacturing index for May 2022 increased to 56.1% from April’s 55.4%. A value above 48.7 percent, over a period of time, generally indicates an expansion of the overall economy.

S&P Global US Manufacturing PMI™ declined from 57.0 in May – down from 59.2 in April.

The headline data from the US Census shows construction spending in April 2022 improved 0.2% month-over-month and 1.3% year-over-year. This is not inflation-adjusted – but the graph below shows inflation-adjusted values (Nov 2009 = 100), and clearly shows a decline month-over-month and year-over-year. Construction spending declines may or may not be associated with recessions.

The Federal Reserve’s Beige Book June 2022 was issued today. Their summary:

All twelve Federal Reserve Districts have reported continued economic growth since the prior Beige Book period, with a majority indicating slight or modest growth; four Districts indicated moderate growth. Four Districts explicitly noted that the pace of growth had slowed since the prior period.

A summary of headlines we are reading today:

• Russia Holds Nuclear Drills As Biden Unveils New Aid Package For Ukraine
• Mortgage rates rise sharply after three weeks of easing
• Mortgage demand falls to the lowest level since the end of 2018, even as interest rates ease a bit
• Unprecedented water restrictions begin in Southern California as drought worsens
• Stocks, Bonds, & Bitcoin Dumped As Dimon Doubles-Down On Dour Outlook
• Trade Setup: Imperative for the markets to open and stay above 16,500 levels

These and other headlines and news summaries moving the markets today are included below.

Summary Of the Markets Today:

• The Dow closed up 517 points 1.61%,
• Nasdaq closed up 2.68%,
• S&P 500 closed up 1.99%,
• WTI crude oil settled at 115, down 1.76%,
• USD $101.87 up 0.018%,
• Gold 1837 up 0.94%,
• Bitcoin up 0.11% to $31666,
• 10-year U.S. Treasury up 0.108% / 2.857%

Today’s Economic Releases:

CoreLogic Deputy Chief Economist Selma Hepp commented on the S&P CoreLogic Case-Shiller National Home Price Index for March that was released this morning:

The S&P CoreLogic Case-Shiller Index posted a 20.6% increase in March – the strongest March annual gain in the history of the data series. At 2.6%, the monthly acceleration also peaked prior to the mortgage rate jump and is likely to return to historical averages in the coming months. After 32 months of logging the strongest home price gains, Phoenix’s price growth slowed considerably more than the other metro regions and is now outpaced by Tampa, Florida. Nevertheless, the first quarter of 2022 was marked by some of the most competitive housing market conditions since the onset of the pandemic. Home-buyer frenzy reached another new high as eager buyers pursued last-ditch efforts to secure a home purchase before the mortgage rate surge.

Chicago Business Barometer lifted to 60.3 in May, following last month’s 56.4. Inventories saw a fresh near 50-year high. All main indicators increased except for supplier deliveries, which hit the lowest since November 2020.

The Dallas Fed May 2022 manufacturing index improved from 10.8 to 18.8.

A summary of headlines we are reading today:

• Oil Prices Continue To Climb As Supply Uncertainties Mount
• The Hamptons summer rental market is facing an unexpected chill as inventory piles up and prices come down
• Rising gas prices and inflation top travel concerns, overtaking Covid, survey finds
• Stocks Go Nowhere In May, USD Sinks Amid Worst Macro-Meltdown Since Lehman
• Trade Setup: Strong chances of markets consolidating at current levels
• The Tell: Retailers hit with ‘double-whammy’ as inventories rise, consumer sector stocks punished in May

These and other headlines and news summaries moving the markets today are included below.

Summary Of the Markets Today:

• The Dow closed up +1.67% +576 points,
• Nasdaq closed up +3.33%,
• S&P 500 closed up +2.47%,
• WTI crude oil settled at 115, up 0.897%,
• USD $101.68 down 0.008%,
• Gold 1853 up 0.01%,
• Bitcoin up 1.09% to $28741,
• 10-year U.S. Treasury down 0.015% / 2.743%

Today’s Economic Releases:

Real personal income (inflation-adjusted) was little changed in April 2022 and continues its downward trend. On the other hand, real personal consumption expenditures continued its growth.

CoreLogic Deputy Chief Economist Selma Hepp recapping where the housing market stands:

With the Fed’s more aggressive talk on tightening financial conditions and expectations of higher mortgage rates throughout 2022, home buyers rushed into the housing markets in early months of this year, reigniting the buyer frenzy and pushing home price growth to new highs. Even monthly increases in home prices reached new post-pandemic highs in the first quarter of 2022. However, since mortgage rates have hit the psychological 5% benchmark, buyers are stepping back and allowing housing market conditions to normalize again. Fewer buyers and more available for-sale inventory means slower growth of home price growth in the months ahead.

A summary of headlines we are reading today:

• U.S. Seizes Russian Tanker Full Of Iranian Crude Near Greece
• Memorial Day weekend car shopping is looking ‘pretty bleak.’ Here’s what to expect
• Carl Icahn loses proxy fight with McDonald’s over animal welfare
• Gap shares tumble nearly 20% after retailer slashes profit guidance for the year

These and other headlines and news summaries moving the markets today are included below.

Summary Of the Markets Today:

• The Dow closed up +1.61% +517 points,
• Nasdaq closed up +2.68%,
• S&P 500 closed up +1.99%,
• WTI crude oil settled at 113, up 3.09%,
• USD $101.98 down 0.10%,
• Gold 1852 flat 0.00%,
• Bitcoin down 0.81% to $29265,
• 10-year U.S. Treasury up 0.004% / 2.751%

Today’s Economic Releases:

The second estimate of 1Q2022 real GDP lowered the economic growth rate to -0.4% from the advance estimates -0.3%. Still, the year-over-year growth rate is 3.5% where the headline number is an extrapolation of the month-over-month change.

The Kansas City Fed’s manufacturing index shows growth slowed in May 2022 but remains in positive territory.

According to the National Association of Realtors, April 2022 made the sixth consecutive month of decline and is now at the slowest pace in nearly a decade. Pending home sales are based on signed contracts for home purchases.

Even though the week claims modestly improved this week, the four-week rolling average continued its worsening trend.

A summary of headlines we are reading today:

• U.S. Refiners Set To Add Just 350,000 Bpd Capacity By End-2023
• Baby formula supply should return to normal in two months, FDA commissioner says
• Home listings suddenly jump as sellers worry they may miss out on the red-hot housing market
• Massive Short-Squeeze Sends Stocks Soaring As Macro Massacre Continues
• Markets Have Reached A Critical Near-Term Pivot With Huge “Trend Reversal” Implications

These and other headlines and news summaries moving the markets today are included below.

Summary Of the Markets Today:

• The Dow closed up +0.60% +192 points,
• Nasdaq closed up +1.51%,
• S&P 500 closed up +0.95%,
• WTI crude oil settled at 111, up 0.55%,
• USD $102.12 up 0.34%,
• Gold 1854 up 0.21%,
• Bitcoin down 0.80% to $29620,
• 10-year U.S. Treasury down 0.004% / 2.756%

Today’s Economic Releases:

New orders for manufactured durable goods in April 2022 increased 12.2% year-over-year. This is a modest increase over the 9.4% reported for March 2022.

The Federal Reserve’s FOMC May 3-4 2022 meeting minutes were published today. It is interesting that the minutes avoided quantifying future increases to the federal funds rate. A paragraph from the minutes which is a good summary:

Participants agreed that the economic outlook was highly uncertain and that policy decisions should be data dependent and focused on returning inflation to the Committee’s 2 percent goal while sustaining strong labor market conditions. At present, participants judged that it was important to move expeditiously to a more neutral monetary policy stance. They also noted that a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook. Participants observed that developments associated with Russia’s invasion of Ukraine and the COVID-related lockdowns in China posed heightened risks for both the United States and economies around the world. Several participants commented on the challenges that monetary policy faced in restoring price stability while also maintaining strong labor market conditions. In light of the high degree of uncertainty surrounding the economic outlook, participants judged that risk-management considerations would be important in deliberations over time regarding the appropriate policy stance. Many participants judged that expediting the removal of policy accommodation would leave the Committee well positioned later this year to assess the effects of policy firming and the extent to which economic developments warranted policy adjustments.

A summary of headlines we are reading today:

• One Billion People Are At Risk Of Rolling Blackouts This Summer
• Dick’s shares rally despite lower forecast; company says outdoor hobbies will outlast pandemic
• Stocks Soar After Dismal Macro Data, Hawkish Fed Minutes
• Iran Deal Has Sunk As Biden Keeps IRGC On Terror List; Tehran “Evaded” Nuclear Inspectors For Years

These and other headlines and news summaries moving the markets today are included below.