Dow dropped 151, decliners over advancers 2-1 & NAZ fell 26. The MLP index fell 1 to 242 & the REIT index was fractionally lower in the 351s. Junk bond funds pulled back & Treasuries rose in price. Oil was off pennies, but still above 50, & gold went up 5 to 1246 as stocks were sold.
AMJ (Alerian MLP Index tracking fund)
US stocks trading cautiously ahead of Fed rate-setting meeting
Homebuilder sentiment dropped in Dec to its lowest point in more than 3 years while potential buyers hesitate to purchase new homes even as mortgage rates have pulled back in the past month. According to the National Association of Home Builders/Wells Fargo Housing Market Index, homebuilder sentiment declined 4 points in Dec to 56, the lowest reading since May 2015 & well below Dec 2017's level of 74. This comes after an 8-point drop in Nov. Anything above 50, however, is considered positive sentiment. "We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs," said NAHB Chairman Randy Noel. "However, recent declines in mortgage interest rates should help move the market forward in early 2019." Mortgage rates jumped at the start of 2017 & then again in Sep to the highest level in 8 years. They fell back slightly in Nov, but were still nearly a full percentage higher than a year ago. Newly built homes come at a price premium to existing homes & are thus more sensitive to any changes in affordability. Mortgage rates are widely expected to move higher in 2019. Homebuilders have been focused on the move-up & luxury sectors, even though demand for entry-level homes is high. Builders say that given the high costs of land, labor & materials, they are unable to build as many starter homes as they might like. Home prices for new & existing homes have soared over the past few years, as demand dramatically outpaced supply. Of the index's 3 components, current sales conditions fell 6 points to 61, sales expectations in the next 6 months dropped 4 points to 61 & buyer traffic fell 2 points to 43. Regionally, on a 3-month moving average, builder sentiment in the Midwest dropped 2 points to 55; the West & South each fell 3 points to 68 & 65, respectively; & the Northeast plunged 8 points to 50. "The fact that builder confidence dropped significantly in areas of the country with high home prices shows how the growing housing affordability crisis is hurting the market," said NAHB chief economist Robert Dietz. "This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points."
Homebuilder sentiment drops to the lowest point in more than 3 years
Pres Trump took another shot at the Federal Reserve, saying he thinks "it is incredible" that "the Fed is even considering yet another interest rate hike." The Federal Open Market Committee (FOMC) is meeting this week to set interest rates & the central bank is widely expected to hike rates following the meeting, which would be its 4th hike this year. Trump has openly criticized the Fed, as well as Chairman Jerome Powell, multiple times this year. The pres has gone so far as to say the Fed has "gone crazy" with monetary policy, & thinks "the rate's too high." "I think we have much more of a Fed problem than we have a problem with anyone else," Trump said in Nov.
Trump says ‘it is incredible’ that the Fed is considering hiking interest rates again
The Empire State manufacturing index fell 12.4 points to 10.9 in Dec, the New York Fed said, the weakest level in 19 months. The forecast called for a reading of 21. Any reading above zero indicates improving conditions. There was weakness across the board in the report. The new-orders index fell 5.9 points to 14.5 in Dec, while shipments fell 7 points to 21. The Empire State index is the first of several regional manufacturing gauges to be released. They can frequently be volatile from month to month, but taken together they present one of the timeliest reads on a critically cyclical sector. The Empire index had been stronger in Nov than the Philadelphia Fed index. Analysts are blaming trade tension with China & the strong $ or the weaker manufacturing outlook.
This is the worst start for stocks in Dec since 1980. Investors are finding little to cheer about, so they are buying safe haven investments (gold & Treasuries). Macro economic data has been coming in a little weaker. Unknowns about what the Fed will decide on Wed, adds to investor worries. The Dow is below 24K & down 800 YTD.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 51.12 | -0.08 | -0.2% |
| GC=F | Gold | 1,245.70 | +4.30 | +0.4% |
Stocks opened lower following another losing week & ahead of the final Federal Reserve policy meeting of the year. The
week will be headlined by the 2-day Fed policy meeting, which begins
on Tues & ends with a decision on interest rates & a press
conference on Wed. After 2 weeks of
selling stocks are poised to open moderately lower on
continued worries about global growth. The anticipated Fed rate
hike is also fueling concerns that central bankers may be overly
aggressive in tightening next year. The Dow &
S&P 500 are already down at least 2.5% YTD & on track
for their first annual declines since 2015. The
NAZ is up just slightly. In fact a decline of more than
7, which appears likely at the opening bell, would put the
tech-heavy index into the red for the year. The NAZ hasn't had a
losing year since 2011. It's been 10 years since all 3 indices
were negative for the year. In Asian markets, China's Shanghai Composite ended the day up 0.2% & Hong Kong's Hang Seng ended the session flat. Japan's Nikkei average finished the day up 0.6%. In Europe, London's FTSE traded down 0.5%, Germany’s DAX slipped 0.5% & France's CAC was lower by 0.6%. On
Fri, US stocks plunged, as the NAZ joined the Dow & S&P 500, now in negative territory
for the week. All 3 of the major stock
averages lost about 2% with the Dow
falling nearly 500. The Dow & S&P 500 are now negative for
the year & in correction territory.
US stocks trading cautiously ahead of Fed rate-setting meeting
Homebuilder sentiment dropped in Dec to its lowest point in more than 3 years while potential buyers hesitate to purchase new homes even as mortgage rates have pulled back in the past month. According to the National Association of Home Builders/Wells Fargo Housing Market Index, homebuilder sentiment declined 4 points in Dec to 56, the lowest reading since May 2015 & well below Dec 2017's level of 74. This comes after an 8-point drop in Nov. Anything above 50, however, is considered positive sentiment. "We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs," said NAHB Chairman Randy Noel. "However, recent declines in mortgage interest rates should help move the market forward in early 2019." Mortgage rates jumped at the start of 2017 & then again in Sep to the highest level in 8 years. They fell back slightly in Nov, but were still nearly a full percentage higher than a year ago. Newly built homes come at a price premium to existing homes & are thus more sensitive to any changes in affordability. Mortgage rates are widely expected to move higher in 2019. Homebuilders have been focused on the move-up & luxury sectors, even though demand for entry-level homes is high. Builders say that given the high costs of land, labor & materials, they are unable to build as many starter homes as they might like. Home prices for new & existing homes have soared over the past few years, as demand dramatically outpaced supply. Of the index's 3 components, current sales conditions fell 6 points to 61, sales expectations in the next 6 months dropped 4 points to 61 & buyer traffic fell 2 points to 43. Regionally, on a 3-month moving average, builder sentiment in the Midwest dropped 2 points to 55; the West & South each fell 3 points to 68 & 65, respectively; & the Northeast plunged 8 points to 50. "The fact that builder confidence dropped significantly in areas of the country with high home prices shows how the growing housing affordability crisis is hurting the market," said NAHB chief economist Robert Dietz. "This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points."
Homebuilder sentiment drops to the lowest point in more than 3 years
Pres Trump took another shot at the Federal Reserve, saying he thinks "it is incredible" that "the Fed is even considering yet another interest rate hike." The Federal Open Market Committee (FOMC) is meeting this week to set interest rates & the central bank is widely expected to hike rates following the meeting, which would be its 4th hike this year. Trump has openly criticized the Fed, as well as Chairman Jerome Powell, multiple times this year. The pres has gone so far as to say the Fed has "gone crazy" with monetary policy, & thinks "the rate's too high." "I think we have much more of a Fed problem than we have a problem with anyone else," Trump said in Nov.
Trump says ‘it is incredible’ that the Fed is considering hiking interest rates again
The Empire State manufacturing index fell 12.4 points to 10.9 in Dec, the New York Fed said, the weakest level in 19 months. The forecast called for a reading of 21. Any reading above zero indicates improving conditions. There was weakness across the board in the report. The new-orders index fell 5.9 points to 14.5 in Dec, while shipments fell 7 points to 21. The Empire State index is the first of several regional manufacturing gauges to be released. They can frequently be volatile from month to month, but taken together they present one of the timeliest reads on a critically cyclical sector. The Empire index had been stronger in Nov than the Philadelphia Fed index. Analysts are blaming trade tension with China & the strong $ or the weaker manufacturing outlook.
Empire State manufacturing index slumps in December to 19-month low
This is the worst start for stocks in Dec since 1980. Investors are finding little to cheer about, so they are buying safe haven investments (gold & Treasuries). Macro economic data has been coming in a little weaker. Unknowns about what the Fed will decide on Wed, adds to investor worries. The Dow is below 24K & down 800 YTD.
Dow Jones Industrials
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