Tuesday, September 25, 2018

Markets waver ahead of the decision tomorrow

Dow fell 69, decliners ahead of advancers 4-3 & NAZ went up 14.  The MLP index lost 1+ to the 273s & the REIT index dipped 6 to 351.  Junk bond funds hardly budged in price & Treasuries were weak, bringing the yield on the 10 year Treasury up 2 basis points to 3.1%.  Oil crawled higher in the 72s & gold inched up 1 to 1206.

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

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Pres Trump called out members of OPEC for relying on US defense while hiking the price of oil, in an address to the UN General Assembly.  “OPEC and OPEC nations are, as usual, ripping off the rest of the world and I don’t like it, nobody should like it,” he said.  “We want them to stop raising prices … and they must contribute … to military protection.”  The sentiment echoed a tweet the pres sent out last week calling on “the monopoly” to lower prices ahead of a meeting of the 15-member oil cartel.  Oil prices hit a 4-year high today after the OPEC meeting over the weekend ended without an agreement to raise production, despite the US his calls to lower prices.  Meanwhile, OPEC's secretary-general warned that the global industry could “fall from one crisis to another” unless OPEC & non-OPEC countries cooperate.  Mohammed Barkindo added that global oil demand will increase by 14.5M barrels a day to a total of 111.7M barrels in 2040.  Trump maintained the US commitment to move ahead with sanctions on Iranian oil in Nov.  The pres also called out Germany directly for its reliance on Russian energy, saying unless it “immediately changes course” it will soon be completely reliant.  He maintained that the US was ready to export its oil, clean coal & natural gas, while it remains “committed” to maintaining its “independence from the encroachment of expansionist foreign powers.”

Trump: OPEC countries are ‘ripping off’ the rest of the world

Home prices are still rising, but the pace of the gains continues to slow, as potential homebuyers hit an affordability wall & sellers cave to the new reality.  Home prices rose 6% annually in Jul, down from the 6.2% gain in Jun, according to the S&P Corelogic Case-Shiller national index.  The 20-city index rose 5.9% annually, down from 6.4% in Jun.  The 10-city index rose 5.5% annually, down from 6.0% the previous month.  "Rising homes prices are beginning to catch up with housing," says David M. Blitzer, managing director & chairman of the index committee at S&P Dow Jones Indices.  "Sales of existing single family homes have dropped each month for the last six months and are now at the level of July 2016. Housing starts rose in August due to strong gains in multifamily construction. The index of housing affordability has worsened substantially since the start of the year."  Las Vegas, Seattle & San Francisco continue to see the biggest annual gains in home prices, with increases of 13.7%, 12.1% & 10.8% respectively.  5 of the 20 cities saw home price gains accelerate annually compared with Jun.  Since home prices last bottomed in 2012, following the epic housing crash, 12 of the 20 cities tracked by S&P Corelogic Case-Shiller have reached new highs, although those are not adjusted for inflation.  Those that are still lower were some of the cities that saw the greatest gains during the last housing boom, like Las Vegas, Miami, Phoenix & Tampa.  All those cities are still seeing strong price gains now, especially Las Vegas, which leads all the cities in gains.  While demand for housing is still strong, a continued shortage of for-sale listings has overheated prices throughout much of the past year & buyers stepped back.

Home prices rise at a slower rate in July: S&P Case-Shiller

Starbucks (SBUX) plans to lay off some corp employees & amp;institute leadership changes as part of an organizational shakeup, according to an internal memo from CEO Kevin Johnson.  “Starting next week and into mid-November there will be leadership shifts and non-retail partner impacts as we evolve the direction of teams across the organization in size, scope and goals,” Johnson wrote.  Johnson also said SBUX will make “some significant changes” to leadership roles & how functional groups are structured.  Job cuts will not include retail staff,. The corp restructuring comes as the company turns its focus to rapidly expanding in China & other global markets.  The coffee chain's sales growth in its home market has slowed & the company plans to close about 150 US stores next year.  SBUX has also undergone a transition at the top of the company.   Howard Schultz, credited for turning SBUX into a coffee giant, stepped down as exec chairman in Jun.  Former JC Penney (JCP) chief Myron E. Ullman was named chairman.  The stock gained 21¢.
If you would like to learn more about SBUX, click on this link:

Starbucks will make 'significant changes' to company, which includes layoffs

The markets were mixed until the PM when Dow (but not the NAZ) ran into selling.  Uncertainty about the trade wars & Fed statement tomorrow kept traders on edge today.  In addition, Trump made a tough speech at the UN which may have brought gloom to traders.  The Dow is still up more than 500 this month.  Not bad for a month that has been the toughest month of the year.

Dow Jones Industrials

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