markets

Summary Of the Markets Today:

• The Dow closed down 495 points or 1.70%,
• Nasdaq closed down 1.51%,
• S&P 500 down 1.45%,
• Gold $1669 up $0.50,
• WTI crude oil settled at $80 down $1.56,
• 10-year U.S. Treasury 3.821% up 0.072%,
• USD index $112.15 weakening 0.1%,
• Bitcoin $19,439 down $154,
• Baker Hughes Rig Count: U.S. +1 to 765 rigs

Today’s Economic Releases:

Chicago Business Barometer stabilized in August.  The indicator inched up 0.1 points to 52.2. The only sub-indicators to fall were employment and supplier deliveries, while price paid was unchanged from previous month.

Personal income increased 0.3% at a monthly rate with consumer spending increasing 0.4% in August 2022. When these numbers are adjusted for inflation personal consumption year-over-year growth is up 2.1% whilst income remains in contraction at -4.7% (see graph below). It is interesting that consumption seems to keep on humming whilst income remains underwater.

Michigan Consumer sentiment confirmed the preliminary reading earlier this month and was essentially unchanged from the month prior, at less than one index point above August. Buying conditions for durables and the one-year economic outlook continued lifting from the extremely low readings earlier in the summer, but these gains were largely offset by modest declines in the long run outlook for business conditions. As seen in the chart, sentiment for consumers across the income distribution has declined in a remarkably close fashion for the last 6 months, reflecting shared concerns over the impact of inflation, even among higher-income consumers who have historically generated the lion’s share of spending.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 458 points or 1.54%,
• Nasdaq closed down 2.84%,
• S&P 500 down 2.11%,
• WTI crude oil settled at $82 unchanged,
• USD $112.11 down $0.64,
• Gold $1661 little changed,
• Bitcoin $19,420 down 0.51% – Session Low 18,883,
• 10-year U.S. Treasury 3.759% up 0.71%,

*Stock data, cryptocurrency, commodity prices as of the market close.

Today’s Economic Releases:

In the week ending September 24, the 4-week moving average for seasonally adjusted unemployment insurance claims was 207,000, a decrease of 8,750 from the previous week’s revised average. The 4-week moving average continues to moderate.

The third estimate of 2Q2022 Real Gross Domestic Product was unchanged from the previous estimate of -0.6%. This was the second economic decline in a row as 1Q2022 real GDP decreased 1.6%.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 547 points or 1.88%,
• Nasdaq closed up 2.05%,
• S&P 500 up 1.96%,
• WTI crude oil settled at $82 up $3.51,
• USD $112.75 down $1.36,
• Gold $1661 up $32,
• Bitcoin $19,543 up 2.69% – Session Low $18,505,
• 10-year U.S. Treasury 3.707% down 0.256%

*Stock data, cryptocurrency, commodity prices as of the market close.

Today’s Economic Releases:

As one would expect higher mortgage rates to affect home sales – pending home sales declined for the third straight month in August 2022. Pending homes sales is a forward-looking indicator of home sales based on contract signings, which fell 2.0% month-over-month and fell 24.2% year-over-year.

7,201,572 single- and multifamily residences in Hurricane Ian’s path with high flash flood risk:

• The National Hurricane Center (NHC) currently forecasts that the entire state of Florida is at some level of flash flood risk due to heavy rainfall from Hurricane Ian. Most of the state is at moderate (40%) or greater risk. The cities of Tampa Bay and Orlando have a 70% chance of flash flooding (Figure 1).

• CoreLogic estimates that 7,201,572 single- and multifamily residences (SFRs and MFRs) with a combined total reconstruction value (RCV) of $1.6 trillion are within the “moderate” and “high” flash flood risk bands, as forecasted by NHC (Figure 1). Note, this does not indicate that every single home within these bands will flood, nor that any flooded home will sustain 100% damage up to its full RCV. This estimate accounts for flash flooding only and excludes homes that at risk to riverine and coastal flooding.

Figure 1: Hurricane Ian 1 to 3-day flash flood risk valid September 28 – October 1.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 126 points or 0.43%,
• Nasdaq closed up 0.25%,
• S&P 500 down 0.21%,
• WTI crude oil settled at $78 up 2.75%,
• USD $114.25 up $0.14,
• Gold $1635 up $2.00,
• Bitcoin $19,029 down 0.50% – Session Low 18,868,
• 10-year U.S. Treasury 3.988% up 0.108%,

Today’s Economic Releases:

The S&P CoreLogic Case-Shiller 20-City Composite in July 2022 posted a 16.1% year-over-year gain, down from 18.7% in the previous month. CoreLogic Deputy Chief Economist Selma Hepp stated:

In July, the CoreLogic S&P Case-Shiller Index posted an increase of 15.8%, down from a 18.1% gain in June, marking the fourth month of decelerating annual home price appreciation. In addition, month-to-month index turned negative, down 0.3% in July, the first time since late 2018 when the Federal Reserve went through a round of monetary tightening leading to a surge in mortgage rates and subsequent housing market slowdown. Rapid home price deceleration, which is spreading beyond the West Coast markets, was anticipated given the Fed’s actions and will bring home price growth closer in line with income growth. Returning to long-term average of 4-5% annual price growth is closer than initially anticipated – potentially by early 2023.

New orders for manufactured durable goods in August 2022, down two consecutive months, decreased 0.2% month-over-month and is up 8.8% year-over-year. Still, when adjusted for inflation, year-over-year growth is down 0.8% (see graph below):

Sales of new single‐amily houses in August 2022 were at a 28.8% above July rate but is 0.1% below August 2021.  The median sales price of new houses sold in August 2022 was $436,800.  The average sales price was $521,800.

The Federal Reserve Bank of Richmond composite manufacturing index rose fro+m −8 in August to 0 in September, matching its July level.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 330 points or 1.11%,
• Nasdaq closed down 0.60%,
• S&P 500 down 1.03%,
• WTI crude oil settled at $77 down 3.33%,
• USD $114.04 weakens $1.02,
• Gold $1631 down $24,
• Bitcoin $19,193 up 1.43% – Session Low 18,693,
• 10-year U.S. Treasury 3.879% little changed

Today’s Economic Releases:

The Dallas Fed Manufacturing Index improved in September and rose eight points to 9.3, a reading suggestive of stronger output growth.

The Chicago Fed National Activity Index (CFNAI) 3-month moving average increased modestly from last month’s -0.08 to August 2022’s +0.01. A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth. I consider the CFNAI to be one of the best coincident indicators of the economy. The following graph is the monthly index (which is not used for economic forecasting) but shows the inputs from the 4 categories that comprise the index.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 486 points or 1.62%,
• Nasdaq closed down 1.80%,
• S&P 500 down 1.72%,
• WTI crude oil settled at $79 down 5.60%,
• USD $113.05 weakening 1.44%,
• Gold $1643 down $29,
• Bitcoin $18,739 down 3.43% – Session Low 18,588,
• 10-year U.S. Treasury 3.681 little changed,
• Baker Hughes Rig Count: U.S. +1 to 764 Canada +4 to 215

Today’s Economic Releases:

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 107 points or 0.35%,
• Nasdaq closed down 1.37%,
• S&P 500 down 0.84%,
• Gold $1681 up $5,
• WTI crude oil settled at $83 up $0.58,
• 10-year U.S. Treasury 3.704%  little changed,
• USD index $110.31 weakening 0.60%,
• Bitcoin $19,350 up 4.80%,

Today’s Economic Releases:

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 522 points or 1.70%,
• Nasdaq closed down 1.79%,
• S&P 500 down 1.71%,
• WTI crude oil settled at $83 down 1.12%,
• USD $111.00 weakening $1.26,
• Gold $1683 up $11.30,
• Bitcoin $19,006 up 0.41% – Session Low 18,815,
• 10-year U.S. Treasury 3.526 little changed

Today’s Economic Releases:

Existing-home sales declined for the seventh consecutive month. Total existing-home sales contracted 0.4% month-over-month in August 2022. Year-over-year, sales declined 19.9%. Sales are now at levels seen in 2012/2013. The median existing-home price for all housing types in August was up 7.7% year-over-year.

The Federal Reserve raised the federal funds rate by 75 bps to 3%-3.25% today, the third straight three-quarter point increase and pushing borrowing costs to the highest since 2008. The FOMC statement said in part:

Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures. Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run … and anticipates that ongoing increases in the target range will be appropriate.

At the same time, the Federal Reserve Board / FOMC released their economic projections which shows a significantly worsening economy since their June 2022 projections. However, there was no forecasted recession in these projections.

Summary Of the Markets Today:

• The Dow closed down 313 points or 1.01%,
• Nasdaq closed down 0.95%,
• S&P 500 down 1.13%,
• Gold $1674 down $4.50,
• WTI crude oil settled at $84 down $1.54,
• 10-year U.S. Treasury 3.559%  little changed,
• USD index $110.16 weakening 0.37%,
• Bitcoin $19,048 down 2.74%,

Today’s Economic Releases:

Privately‐owned housing units authorized by building permits in August 2022 were 10.0% below July and 14.4% below August 2021.  Privately-owned housing starts in August were up 12.2% month-over-month and down 0.1% year-over-year. Privately‐owned housing completions in August were down 5.4% month-over-month but are up 3.1% year-over-year. The new home construction sector remains near or above the pre-pandemic levels.

Mortgage Delinquencies Inch Up From May but Remain Near Record Low in June. For the month of June 2022, 2.9% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 1.5 percentage point decrease compared to 4.4% in June 2021.

Summary Of the Markets Today:

• The Dow closed up 197 points or 0.64%,
• Nasdaq closed up 0.76%,
• S&P 500 up 0.69%,
• WTI crude oil settled at 85 up 0.45%,
• USD $109.63 strengthened 0.12%,
• Gold $1683 up 0.02%,
• Bitcoin $19,514 up 0.45% – Session Low 18,340,
• 10-year U.S. Treasury 3.487 Unchanged,

Today’s Economic Releases:

In another sign that the slowdown in the housing market continues, builder sentiment fell for the ninth straight month in September as the combination of elevated interest rates, persistent building material supply chain disruptions and high home prices continue to take a toll on affordability. Builder confidence in the market for newly built single-family homes fell three points in September to 46, the lowest level since May 2014 with the exception of the spring of 2020.

In a still-tight labor market, 85% of companies are actively hiring, up from 81% in the spring of this year. Despite the need for workers, 53% of companies expect a recession and 31% are taking actions to prepare for a slowdown, according to new survey results from global outplacement and executive leadership coaching firm Challenger, Gray & Christmas, Inc.