Thursday, September 17, 2015

Markets fluctuate ahead of FOMC announcement

Dow slid back 4, advancers ahead of decliners 5-4 & NAZ added 10.  The MLP index did little in the 334s & the REIT index was barely moved in the 303s.  Junk bond funds inched higher & Treasuries rose.  Oil & gold were flattish.

AMJ (Alerian MLP Index tracking fund)

CLV15.NYM...Crude Oil Oct 15...47.22 Up ...0.07 (0.2%)

GCU15.CMX...Gold Sep 15.....1,117.90 Down ...1.30  (0.1%)

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New-home construction in the US fell in Aug, indicating the real-estate recovery will take time to evolve.  Residential starts declined 3% to a 1.13M annualized rate from a 1.16M pace the prior month (slower than previously estimated), according to the Commerce Dept.  The forecast was for 1.16M.  Steady job gains & mortgage rates holding at historical lows are attracting more Americans to the real-estate market even as wage growth remains tepid.  Permits to build single-family houses climbed last month to the highest level in 7 years, signaling builders remain confident even as the Federal Reserve is poised to raise interest rates this year.  Permits, a proxy for future construction, climbed 3.5% to a 1.17M annualized rate, indicating starts could edge up this month.  Applications to begin work on single-family houses, the largest & most economically significant part of the market, climbed to a 699K rate, the highest since Jan 2008.  Single-family starts fell 3% last month to a 739K rate from a 7-year high of 762K in Jul.  Work on multifamily homes, such as condominiums & apartment buildings, also declined 3% to an annual rate of 387K.  3 of 4 regions showed decreases in starts last month, led by a 33.7% slump in the North.  The South showed the only advance.   Homebuilders have remained optimistic about the conditions and outlook in the residential real estate market. The National Association of Home Builders/Wells Fargo builder sentiment index rose to 62 this month, the highest level since 2005, from 61 in Aug.  Measures of buyer traffic & single-family sales both advanced, while a gauge of the outlook remained close to its highest in a decade.

Housing Starts in U.S. Fall in Sign of Slow, Steady Recovery

OPEC is assuming the oil price will rise gradually to $80 a barrel in 2020 as supply growth outside the group weakens, a slower recovery than several member nations have said they need.  The average selling price of its crude will increase by $5 annually to 2020 from $55 this year.  Iran & Venezuela said they would like to see a price of at least $70 this month & most member countries cannot balance their budgets at current prices.  While both OPEC & the International Energy Agency expect growth in global supply to slow as low prices bite, others predict that a persistent glut will keep crude low for the next 15 years.  Production from nations outside OPEC will be 58.2M barrels a day in 2017, 1M lower than previously forecast.  The impact low prices is “most apparent on tight oil, which is more price reactive than other liquids sources,” the report said.  “Supply reductions in U.S. and Canada from 2014 to 2016 are clearly revealed.”  OPEC expects little stimulus to global demand in the medium term as a result of cheaper oil, with daily consumption growing by about 1M barrels a year to 97.4M in 2020.  While demand from China, Russia & OPEC members will grow more slowly than forecast a year ago, developing nations with still account for the bulk the expansion, it said.

OPEC Sees Crude Rising to $80 by 2020

Initial jobless claims in the US declined last week to the lowest level in 2 months, highlighting a resilient labor market.  Applications for unemployment benefits decreased 11K to 264, according to the Labor Dept.  The survey period included the Labor Day holiday.  The forecast projected claims would hold at 275K.  Employers are holding back on dismissals as the economy forges ahead against the headwinds of slowing global markets.  Greater opportunities in the labor market will help give consumers the incomes & job security needed to maintain spending levels, which Federal Reserve officials are monitoring today.  Claims last week were the lowest since Jul 18.  The 4-week average of claims, a less-volatile measure than the weekly figure, dropped to 272K from 275K the week before.  The number continuing to receive jobless benefits declined 26K to 2.24M & the unemployment rate among people eligible for benefits held at 1.7% the prior week,.

Jobless Claims in U.S. Decline to Lowest Level in Two Months

Stocks are drifting, waiting for Janet to speak in the PM.  Not a lot to say until then.

Dow Jones Industrials

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