Tag: investing

Morning Report: Jobs week

Vital Statistics:

Stocks are lower this morning on no real news. Bonds and MBS are flat.

Jerome Powell is speaking at 1:00 pm today.

The week ahead will be dominated by the jobs report on Friday, however we will get ISM data and a lot of Fed speakers. The Street is looking for payroll growth to slow and for the unemployment rate to be steady at 4.2%.

Consumer sentiment improved in September, according to the University of Michigan Consumer Sentiment Survey. “Consumer sentiment extended its early-month climb, ultimately rising more than 3% above August. This increase was seen across all education groups and political affiliations. Furthermore, all five index components gained, led by a 6% surge in one-year business expectations. The expectations index is now 13% above a year ago and reflects greater optimism across a broad swath of the population. While sentiment remains below its historical average in part due to frustration over high prices, consumers are fully aware that inflation has continued to slow. Sentiment appears to be building some momentum as consumers’ expectations for the economy brighten. At the same time, many consumers continue to report that their expectations hinge on the results of the upcoming election. Relative to August, consumers across political parties are increasingly expecting a Harris presidency, though about two-thirds of Republicans still expect Trump to win.”

A harbinger of slower economic growth ahead? Jeep maker Stellantis delivered lower guidance as the auto industry struggles with slower demand. “Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition,” Stellantis said in a statement Monday.

The stock is down 14% in European trading.

Morning Report: Consumer confidence dims on weakening labor market

Vital Statistics:

Stocks are flat this morning on no real news. Bonds and MBS are flat as well.

Home prices hit a new record, according to the Case-Shiller Home Price Index. Prices rose 5.0% year-over-year in July, a deceleration from the 5.5% recorded in June. New York City led the charge, followed by Las Vegas and Los Angeles. “We continue to observe outperformance in most low-price tiers in the market on a three- and five-year horizon,” Luke continued. “The low-price tier of Tampa was the best performing market nationally with five-year performance of 88%. The New York market was the best market annually, posting a gain of 8.9%. New York’s low-tier index, which include home values up to $533,000, helped drive that growth with 10.8% annual gains. Over five years, markets such as New York and Atlanta saw low-price-tiered indices outperforming their market by as much as 20% and 18%, respectively. The relative outperformance of low-price-tiered indices has both benefited first-time homebuyers as well as made it more difficult for those looking for a starter home. The opposite is happening in California, which has the most expensive high-price tiers in the nation, all well over $1 million. The rich are getting richer in San Diego, Los Angeles, and San Francisco where their high-price-tiered indices outperformed on a one- and three-year basis.”

Consumer confidence declined in September, according to the Conference Board. “Consumer confidence dropped in September to near the bottom of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “September’s decline was the largest since August 2021 and all five components of the Index deteriorated. Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further. Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income.

The Present Situation Index has moved down markedly over the summer and continues to fall. Inflationary expectations remained elevated at 5.2%.

Mortgage applications rose 11% last week as purchases rose 1.4% and refis rose 20%. “Mortgage applications increased to their highest level since July 2022, boosted by a 20 percent increase in refinance applications after a large increase the prior week. The 30-year fixed rate decreased for the eighth straight week to 6.13 percent, while the FHA rate decreased to 5.99 percent, breaking the psychologically important 6 percent level,” Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result of lower rates, week-over-week gains for both conventional and government refinance applications increased sharply. The refinance share of applications is now at 55.7 percent, and while the level of refinance activity is still modest compared to prior refi waves, they now account for the majority of applications, given the seasonal slowdown in purchase activity.”