Stocks are lower this morning after bad revenue numbers out of Open AI. Bonds and MBS are down as oil surges.
Iran has offered to re-open the Strait of Hormuz if the US lifts its blockade and agrees to postpone talks about Iran’s nuclear program. Needless to say, the Trump Admin is not too keen on this offer. “That’s not opening the straits. Those are international waterways. They cannot normalize, nor can we tolerate them trying to normalize, a system in which the Iranians decide who gets to use an international waterway and how much you have to pay them to use it,” Rubio said.
Meanwhile, the fighting between Israel and Hezbollah in Southern Lebanon continue. Oil continues to work its way higher on the impasse.
The Fed begins its meeting today. The Fed Funds futures are predicting no move, and the December futures now see only a 20% chance of a rate cut this year. Thursday’s PCE report will carry a lot of weight for markets in general.
The bill that boots institutional investors from the build-for-rent business is causing financing to dry up for that sector. The issue is a provision which requires the builder to sell the properties within 7 years. Given that cap rates are already not so great in resi, limiting the income stream to 7 years makes many of these projects marginally profitable, and lenders are becoming reluctant to lend capital.
About $3.4 billion in investment is currently suspended as investors / builders analyze their options. Invitation Homes is scheduled to release earnings tomorrow and that should be an interesting conference call to listen in on.
