Dow finished up 34 (well off the lows), but decliners over advancers 2-1 & NAZ gained 51. The MLP index fell 3+ to the 338s (shown in the chart below) & the REIT index dropped 4+ to the 358s. Junk bond funds did little & Treasuries were slightly lower. Oil fell 1+ to under 51 & gold was off 3 to 1249 after recent strength.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US stocks off session lows as big-cap consumer, tech issues rise
The number of job openings in the US rose slightly in Oct to just over 7M & clung close to a record high, signaling that companies are still seeking to hire more workers to keep up with rising sales. Job openings hit a record 7.3M in Aug & have remained extremely high, easily outstripping the number of unemployed Americans. The gov said 6M who want jobs are out of work. Job openings increased in Oct in information & media, real estate & education. The share of people who left jobs on their own, known as the quits rate, fell a tick to 2.6% among private-sector employees. It was the first decline in 6 months. The rate of people quitting had hit the highest level in 17 years toward the end of summer. The rate was 2.3% for all employees in Oct, including gov workers. More people are likely to quit their jobs when times are good & they feel secure enough that they'll find other work. Typically workers who move end up getting better pay. The US economy by most measures is quite healthy, but stocks have slumped over the past week amid growing worries that growth could slow in 2019. Investors are anxious about a festering US trade dispute with China & a steady increase in interest rates by the Federal Reserve.
Homeowners in most places are still seeing their nest eggs get a little bigger, but the gains are shrinking quickly. The average homeowner with a mortgage saw a gain of $12.4K in home equity between Q3 of last year & this year, according to CoreLogic. That includes price appreciation & paying down the mortgage. That's down from $16K in annual gains in Q2 & the smallest gain in 2 years. States in the West did see bigger gains: Home equity increased by $36K in California & by $33 in Nevada. But home equity actually fell in North Dakota, Louisiana & Connecticut. "On average, homeowners saw their home equity increase again this quarter but not nearly as much as in previous quarters," said Frank Nothaft, chief economist at CoreLogic. "This lower year-over-year gain reflects the slowing in appreciation we've seen in the CoreLogic Home Price Index." Home values were up 5.4% annually in Oct, according to CoreLogic, but they had been gaining close to 7% a few years ago & only recently have the gains been slowing more dramatically. Prices initially ran up quickly because there was so much demand and so little supply. Bidding wars were the norm, especially on the lower end of the market. But as mortgage rates began to rise at the start of this year, potential buyers began to drop out. Affordability hit a decade low. By summer, values were cooling, and then rates rose again in Sep. In addition, more homes began coming on the market & competition chilled as well. The drop in equity gains has been sharpest in Q3 of this year. After hitting a record high, the amount of tappable equity, which is how much cash homeowners can pull out of their homes, fell qtr to qtr for the first time since the housing recovery began. About a ¼M fewer homeowners have equity to tap. Tappable equity is the appraised value of a home minus the 20% equity most lenders require for a refinance. At the end of Q3, 43.6M homeowners with mortgages had equity available to draw, 272K fewer than in Q2. The average homeowner had $136K available, which was about $2300 less than in Q2. Equity is still higher, however, compared with a year ago.
Homeowners are seeing the smallest equity gains in two years
Although tax cuts & regulatory rollbacks this year fueled small-business optimism to hit its CNBC|SurveyMonkey Small Business Survey reveals that small-business confidence is starting to cool. After hitting a record high in Q3, the Small Business Confidence index declined from 62 to 59 in Q4, led by small moves lower in components across the board. This new data from CNBC & SurveyMonkey underscores the idea that while sentiment is at or near record highs, challenges still remain for Main Street. The survey, conducted from Nov 19–29, polled more than 2100 small-business owners. The dip in the survey comes at a time when the markets are punctuated by bouts of volatility & economic concerns loom over trade tensions & the shortage of skilled workers. The data supports other small declines in metrics, from the National Federation of Independent Business's monthly read on small-business sentiment in Sep & Oct, as well as trends around hiring & labor from 2 banks. "Unemployment is down, small businesses are growing, but there are still some very troubling trends," said Todd McCracken, pres of the National Small Business Association. "The rate of small-business start-ups and small-business hiring continues to lag, one-quarter of small firms still cannot get the financing they need, and few can afford a good health insurance plan." He added that "economic security is a huge drive in how small businesses are faring — they're less likely to invest, grow, innovate & so on if they fear economic problems on the horizon." McCracken pointed to polling from the group's membership, which also saw a decline in economic outlook midyear in 2018. For the first time in 6 qtrs, sentiment around business conditions also has taken a slight dip, from 58% in Q3 to 55% in Q4, although that read is still up 11 percentage points year-over-year. Just 34% of small-business owners now say that tax-policy changes will have a positive effect for them in the next 12 months, down from a high of 46% kicking off the year, indicating some of the positive sentiment surrounding the law may have waned. More small-business owners are questioning the positives the administration's trade policies will have on their bottom lines. 16% of small-business owners say they expect changes in trade policy will have a positive effect on their businesses in the next 12 months, a new low for the survey. 1 in 5 business owners surveyed do business with China & they were nearly twice as likely as others to expect a negative impact on their business. On the job market, 18% of business owners said they had roles open for at least 3 months, an increase of 2% from Q3 of this year. To help bridge that gap, 56% said they were offering higher wages, 31% said they were offering to pay for additional training & 27% said they were offering additional benefits to workers. Others said they were offering to help pay for student loans & even relaxing policies around things like drug testing & criminal records.
Small-business optimism dips over fears of an economic slowdown: Survey
Stocks had another wild, which has become routine. The Dow chart below shows what a high volatility market looks like up close. That's scary for those feint of heart. The Dow closed 500+ above session lows & the NAZ rose 150 from its lows. However market breath was negative. More swings can be expected in the days ahead with so much going on worldwide. US-China trade discussions are "iffy." The outlook for Brexit is uncertain. France has its share of problems & Italy is still trying to a avoid a financial headache. Then there is Russia-Ukraine. The Dow continues to be in the red YTD. Not good!!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Stocks, which had been on track to close
in correction territory, pared losses as big tech & big consumer
stocks climbed. The Dow plummeted earlier in
the session after British Prime Minister Theresa May announced that the
Parliamentary vote on Brexit was being delayed, admitting that it would
fail if the vote were held on schedule. At one
point the blue-chip Dow Jones Industrial Index was on track to close in
correction territory, 10% below its recent high of 26,828,
reached on Oct 3. But in the PM, the market began paring losses, led by big tech & big consumer equities. The European Court of Justice ruled that the UK can revoke
Article 50 & halt Brexit without the permission of other member
states. The US will hold fast to its 90-day deadline for
the conclusion of a lasting trade agreement with China & would impose
punishing tariffs on Chinese imports if none is reached, according to US Trade Representative Robert Lighthizer. At
the end of the 90-day period, which began Dec 1, tariffs on $200B of Chinese goods would rise to 25% from the current 10%. China shares ended lower today as
disappointing trade and inflation data for Nov added to concerns
over slowing growth. The Shanghai Composite was down 0.8% & Hong Kong's Hang Seng dropped 1.2%. Japan's Nikkei tumbled to a 6-week low, ending the day down 2.1%. Equity
investors rocked by days of volatility are saying good riddance to the
week on Fri in what was another stomach-churning session. The month
of Dec is now off to its worst start since 2008. The
Dow finished the final day of the week down
558 (2%), curbing losses that were well over
600 points intraday. The S&P 500 sank 2% & the NAZ 3% as large cap tech names weighed on the Dow. For the week, all 3 of the broader US averages lost 4% amid significant declines. On the economic front, the Nov jobs report was softer than expected. The Labor Dept said American employers created 155K jobs last month, less than the 200K expected. The
Nov jobs report also found that the unemployment rate is still 3.7%, its lowest level in nearly ½ a century, & that wages edged
slightly higher last month.
US stocks off session lows as big-cap consumer, tech issues rise
White House Council of Economic Advisors Chairman Kevin Hassett said a capital spending boom is giving the US economy momentum. “The
bottom line is that a capital spending boom like the one that we’re in
usually takes three to five years,” he said. “We’ve had about a 10 percent increase in capital [spending]
since this time last year and that should continue if it’s a normal
spending boom for the next three to five years.” GDP increased at a 3.5% rate in Q3,
according to a revised estimate from the Bureau of Economic Analysis. In Q2, GDP increased at a 4.2% rate. Last
month Federal Reserve Chairman Jerome Powell said he now sees the
central bank's current benchmark interest rates “just below” neutral.
The Fed funds rate is currently in a target range of 2-2.25%. The Fed raised interest rates 3 times this year & signaled
that it would hike rates again in Dec. They also projected 3
rate hikes next year. The Fed raises interest rates to prevent the
economy from growing too fast as a result causing inflation. “I wouldn’t want to give the Fed advice,” said Hassett. “But we said
last year that we’d have 3 percent growth and by the end of the year
we’d have decelerating inflation because of the capital spending boom —
the increase in supply. And that’s exactly what we’re seeing in the
data.” Pres Trump's tax overhaul, the Tax Cuts & Jobs Act passed last Dec, slashed the corp income tax rate & charged
businesses a one-time tax on profits held overseas. As a result,
companies repatriated over $300B in Q1. Hassett said because the tax cuts are retroactive, capital spending will pick up in Q4.
Capital spending boom will continue for the next 3 years: Hassett
The number of job openings in the US rose slightly in Oct to just over 7M & clung close to a record high, signaling that companies are still seeking to hire more workers to keep up with rising sales. Job openings hit a record 7.3M in Aug & have remained extremely high, easily outstripping the number of unemployed Americans. The gov said 6M who want jobs are out of work. Job openings increased in Oct in information & media, real estate & education. The share of people who left jobs on their own, known as the quits rate, fell a tick to 2.6% among private-sector employees. It was the first decline in 6 months. The rate of people quitting had hit the highest level in 17 years toward the end of summer. The rate was 2.3% for all employees in Oct, including gov workers. More people are likely to quit their jobs when times are good & they feel secure enough that they'll find other work. Typically workers who move end up getting better pay. The US economy by most measures is quite healthy, but stocks have slumped over the past week amid growing worries that growth could slow in 2019. Investors are anxious about a festering US trade dispute with China & a steady increase in interest rates by the Federal Reserve.
U.S. job openings crest to just over 7 million and remain near record high
Homeowners in most places are still seeing their nest eggs get a little bigger, but the gains are shrinking quickly. The average homeowner with a mortgage saw a gain of $12.4K in home equity between Q3 of last year & this year, according to CoreLogic. That includes price appreciation & paying down the mortgage. That's down from $16K in annual gains in Q2 & the smallest gain in 2 years. States in the West did see bigger gains: Home equity increased by $36K in California & by $33 in Nevada. But home equity actually fell in North Dakota, Louisiana & Connecticut. "On average, homeowners saw their home equity increase again this quarter but not nearly as much as in previous quarters," said Frank Nothaft, chief economist at CoreLogic. "This lower year-over-year gain reflects the slowing in appreciation we've seen in the CoreLogic Home Price Index." Home values were up 5.4% annually in Oct, according to CoreLogic, but they had been gaining close to 7% a few years ago & only recently have the gains been slowing more dramatically. Prices initially ran up quickly because there was so much demand and so little supply. Bidding wars were the norm, especially on the lower end of the market. But as mortgage rates began to rise at the start of this year, potential buyers began to drop out. Affordability hit a decade low. By summer, values were cooling, and then rates rose again in Sep. In addition, more homes began coming on the market & competition chilled as well. The drop in equity gains has been sharpest in Q3 of this year. After hitting a record high, the amount of tappable equity, which is how much cash homeowners can pull out of their homes, fell qtr to qtr for the first time since the housing recovery began. About a ¼M fewer homeowners have equity to tap. Tappable equity is the appraised value of a home minus the 20% equity most lenders require for a refinance. At the end of Q3, 43.6M homeowners with mortgages had equity available to draw, 272K fewer than in Q2. The average homeowner had $136K available, which was about $2300 less than in Q2. Equity is still higher, however, compared with a year ago.
Homeowners are seeing the smallest equity gains in two years
Although tax cuts & regulatory rollbacks this year fueled small-business optimism to hit its CNBC|SurveyMonkey Small Business Survey reveals that small-business confidence is starting to cool. After hitting a record high in Q3, the Small Business Confidence index declined from 62 to 59 in Q4, led by small moves lower in components across the board. This new data from CNBC & SurveyMonkey underscores the idea that while sentiment is at or near record highs, challenges still remain for Main Street. The survey, conducted from Nov 19–29, polled more than 2100 small-business owners. The dip in the survey comes at a time when the markets are punctuated by bouts of volatility & economic concerns loom over trade tensions & the shortage of skilled workers. The data supports other small declines in metrics, from the National Federation of Independent Business's monthly read on small-business sentiment in Sep & Oct, as well as trends around hiring & labor from 2 banks. "Unemployment is down, small businesses are growing, but there are still some very troubling trends," said Todd McCracken, pres of the National Small Business Association. "The rate of small-business start-ups and small-business hiring continues to lag, one-quarter of small firms still cannot get the financing they need, and few can afford a good health insurance plan." He added that "economic security is a huge drive in how small businesses are faring — they're less likely to invest, grow, innovate & so on if they fear economic problems on the horizon." McCracken pointed to polling from the group's membership, which also saw a decline in economic outlook midyear in 2018. For the first time in 6 qtrs, sentiment around business conditions also has taken a slight dip, from 58% in Q3 to 55% in Q4, although that read is still up 11 percentage points year-over-year. Just 34% of small-business owners now say that tax-policy changes will have a positive effect for them in the next 12 months, down from a high of 46% kicking off the year, indicating some of the positive sentiment surrounding the law may have waned. More small-business owners are questioning the positives the administration's trade policies will have on their bottom lines. 16% of small-business owners say they expect changes in trade policy will have a positive effect on their businesses in the next 12 months, a new low for the survey. 1 in 5 business owners surveyed do business with China & they were nearly twice as likely as others to expect a negative impact on their business. On the job market, 18% of business owners said they had roles open for at least 3 months, an increase of 2% from Q3 of this year. To help bridge that gap, 56% said they were offering higher wages, 31% said they were offering to pay for additional training & 27% said they were offering additional benefits to workers. Others said they were offering to help pay for student loans & even relaxing policies around things like drug testing & criminal records.
Small-business optimism dips over fears of an economic slowdown: Survey
Stocks had another wild, which has become routine. The Dow chart below shows what a high volatility market looks like up close. That's scary for those feint of heart. The Dow closed 500+ above session lows & the NAZ rose 150 from its lows. However market breath was negative. More swings can be expected in the days ahead with so much going on worldwide. US-China trade discussions are "iffy." The outlook for Brexit is uncertain. France has its share of problems & Italy is still trying to a avoid a financial headache. Then there is Russia-Ukraine. The Dow continues to be in the red YTD. Not good!!
Dow Jones Industrials
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