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Tuesday, September 27, 2016
Higher markets on improving consumer confidence
Dow went up 50, advancers barely ahead of decliners & NAZ gained 24. The MLP index lost 4+ to the 307s & the REIT index was flat in the 362s. Junk bond funds rose along with stocks & Treasuries climbed higher. Oil dropped to the 44s (see below) & gold rose.
Home prices in 20 US cities continued to gain at a solid pace in
Jul, according to S&P CoreLogic Case-Shiller data. 20-city
property values index climbed 5% from Jul 2015 (forecast was
for 5.1%), after a 5.1% year-over-year rise in Jun. National home-price gauge increased 5.1% from 12 months earlier. On a monthly basis, the seasonally adjusted 20-city gauge was little changed. Steady price appreciation is keeping the housing market on a
reassuring path at the start H2-2016. The residential
real estate market took a breather last month, with existing-home sales
unexpectedly declining in Aug while purchases of new properties retreated from a 9-year high. Durable job gains & borrowing costs lingering
near record lows should remain a support for potential home buyers. “Both
the housing sector and the economy continue to expand,” David Blitzer,
chairman of the S&P index committee, said. While some
cities are seeing rapid price gains, “there is no reason to fear that
another massive collapse is around the corner” because mortgage debt is
rising at a relatively slow pace. All
20 cities in the index showed year-over-year gains.
Consumer confidence rose in Sep to the highest level since
before the last recession on optimism about the labor market, according
to the Conference Board. Confidence index increased to 104.1 (forecast was 99.0), the highest since Aug 2007, from a revised 101.8. Present conditions gauge rose to 128.5, also highest since Aug 2007, from 125.3. A measure of consumer expectations for the next 6 months climbed to 87.8, highest since Oct, from 86.1. Share of those who said jobs were plentiful rose to 27.9, highest since Jul 2007. The
survey may bode well for consumer spending, which has cooled after a
robust Q2, reflecting resilient labor market conditions &
steady income growth. The assessment of the availability of jobs is
consistent with data showing vacancies at a record high nationwide,
suggesting that wages could see further gains.
Consumers were more optimistic about the outlook for the labor
market, as 15.1% said more jobs will be available in 6 months,
the most since Jun 2015. The share of Americans who see their incomes increasing in the next 6 months fell to 17.1% from 18.5%.
Oil fell after Iran said it’s unwilling to freeze output at current
levels & wants to raise production to 4M barrels a day, curbing
hopes for OPEC to reach a deal to stabilize markets when the group
meets tomorrow. Futures dropped as much as 3%, continuing the
gyrations of recent days. It's “not on our agenda” to reach agreement at
the OPEC talks in Algiers, Iranian Oil Minister Bijan Namdar Zanganeh
said. Influential forecasters gave a worsening
outlook for the market, with the head of the International Energy Agency
saying supply & demand won't be in balance until late 2017.
West
Texas Intermediate for Nov delivery dropped $1.29 (2.8%),
to $44.64 a barrel & total volume traded was 22% above the 100-day average. Prices
have averaged about $44.80 in Q3.
While the stock market is high, this hardly qualifies as a significant rally, especially with market breadth about even. Confusion about the big meeting on reducing oil production adds to market uncertainties. Meanwhile, gold & Treasuries are rising (negative bets on the stock market). Dow continues to hover a little above the important 18K support level.
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