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Wednesday, November 25, 2015
Markets crawl higher ahead of the holiday
Dow edged up all of 1, advancers over decliners over decliners 3-2 & NAZ were up 13. The MLP index was fractionally higher to the 302s & the REIT index added 1+ to the 321s. Junk bond funds did not do much & Treasuries rose. Oil inched higher & gold retreated.
While US consumers are more optimistic about the outlook for the
economy & their personal finances than they were in the aftermath of
the housing bust, their confidence doesn't measure up to previous
cyclical peaks:
Bloomberg
The Nov final reading of the Univ of Mich index of sentiment came in at 91.3, a slight gain from the Oct level, but fell relative to the initial report for the month. The director of the survey, Richard Curtin said this relatively subdued confidence & high savings
rate reflect the notion that future generations might not see an
increase in their standard of living: Retailers will face headwinds based on consumers' demands
that purchases of durable goods would be contingent upon price
discounts. "In only nine surveys in our long history, and this
goes back more than a half a century, have more consumers mentioned
their insistence on price discounts than in this current survey," added
Curtin. As such, the holiday shopping season won't be terrible,
according to the professor, but retailers will have to deal with more
margin compression than they may have anticipated.
New US single-family home sales surged in Oct & the inventory
of properties for sale was the highest since early 2010, which could
allay concerns of a significant slowdown in housing. The Commerce Dept said sales increased 10.7% to a seasonally adjusted annual rate of 495K units.
The Sep sales pace was revised down to 447K units from the
previously reported 468K units. Economists had forecast new home sales, which
account for about 8% of the housing market, rebounding to a rate
of 500K units. Sales were up 4.9% compared to Oct of last
year. Though new home sales tend to be volatile month-to-month because they
are drawn from a small sample, this bounce back should offer some
assurance that the housing market remains on solid ground despite
declines last month in home resales, housing starts & confidence among
builders. New home sales vaulted a record 135.3% in the Northeast to
their highest level since Jan 2010. Sales rose 8.9% in the
populous South & were up 5.3% in the Midwest. They fell 0.9% in the West. The inventory of new homes on the market increased
1.3% to 226K, the highest since Mar 2010. Supply still remains less than half of what it was at the height of
the housing boom. At the Oct sales pace it would take 5.5 months to
clear the supply of houses on the market, down from 6.0 months in
Sep. The median price of a new home fell 6.0% from a year
ago to $281K.
Presi Obama said there is no specific or credible
intelligence indicating a plot against US targets. In a brief
statement after meeting his national-security team, Obama said Americans
should go about their normal Thanksgiving holiday activities but also
urged vigilance. "If you see something suspicious, say something," he
said. He added the US & other nations are stepping up the
pressure on ISIS in the wake of the deadly attacks
in Paris on Nov 13.
On this semi holiday, volume was light & price movements were generally small. Tomorrow begins the important holiday season for retailers & the overall US economy. With so many warnings around, there is a fair amount of worry about the strength of retail sales. Markets will close early on Fri & little is expected with even more traders on holiday (assuming there is no terrorist strike).
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