Dow rose 31, advancers over advancers 2-1 & NAZ gained 44. The MLP index added 1+ to the 335s & the REIT index was off 1+ to 400. Junk bond funds were bid higher & Treasuries saw more selling. Oil went higher in the 57s & gold added 1 to 1500.
AMJ (Alerian MLP Index tracking fund)
Wholesale inventories in the US rose 0.2% in Jul to rebound from a small decline in the prior month. Sales in the month were flat, however. The ratio of inventories to sales was also unchanged at 1.36. That's how many months it would take to sell all the inventory on hand. One year ago, the inventory-to-sales ratio was much lower at 1.27, suggesting that companies are either producing too much now or not selling good as fast as they were last year. Still, an increase in inventories adds to GDP.
Homebuyers are taking advantage of lower mortgage rates & a slow summer for sellers, driving mortgage applications higher. Total mortgage application volume rose 2% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was up 69% compared with the same week one year ago, when interest rates were much higher. The week's results included an adjustment for the Labor Day holiday. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484K or less) decreased to 3.82% from 3.87%, with points increasing to 0.44 from 0.34 (including the origination fee) for loans with a 20% down payment. Low rates, combined with more moderate home prices & more desperate sellers, are all bringing buyers back to the market. Mortgage applications to purchase a home increased 5% for the week & were 9% higher than the same week one year ago. More homes usually come on the market after the Labor Day holiday, marking an end of the summer slump. Some agents say the spring was particularly slow, so a lot of that demand may have been pushed forward to the fall. The lowest mortgage rates in about 3 years did not push applications to refinance a home loan much higher, at least for the week. They were up just 0.4% compared with the previous week. They were still 169% higher than the same week one year ago, when the average rate on the 30-year fixed was 102 basis points higher, at 4.84%. Mortgage rates fell throughout much of last week, & some lenders say that is precisely when potential refinancers hold off, hoping they will go even lower. By the end of the week, however, rates popped higher, & they are now at the highest level in over a month.
Weekly mortgage applications rise as buyer's market takes hold
Stocks are back to meandering with a bias to the upside. For what it's worth, the Chinese economy is getting pinched in the trade war which may encourage them to come to a trade agreement.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 57.69 | +0.29 | +0.5% |
| GC=F | Gold | 1,497.90 | -1.30 | -0.1% |
The American Chamber of Commerce in Shanghai said US companies are steering business away from China at an increasing rate amid the escalating trade war between DC & Beijing. More than a qtr (26.5%) of the 333 respondents to AmCham's annual survey said they have redirected investment away from China over the past
year, up 6.9 percentage points from 2018. Technology, hardware, software & services companies (40%), industrial manufacturing (37.1%) & chemicals (36.7%) were the most likely to look
elsewhere. “The causes are manifold, but
include a need to guard supply chains from any further deterioration in
U.S.-China trade relations and attendant tariffs; a Chinese regulatory
environment that still favors domestic companies; and growing labor and
material costs in China,” AmCham said. A 3rd
of respondents said revenue was down by as much as 10% due to
US tariffs on Chinese goods while 13% said revenue fell by up
to 20% & 5% said revenue was off by more
than 20%. AmCham
found 13.1% of respondents directed investment to Southeast
Asia, the biggest beneficiary, with India (7.6%) & the US (5.5%) rounding out the top 3. The
survey, which was during the period when Pres Trump & Chinese
Pres Xi Jinping had reached a trade war ceasefire. It’s not just US companies that are moving away.
A recent analysis looked at a
sample of more than 50 manufacturers that have left the country,
including local companies & found their departures will have major
implications for the economy. Losing business and investment is just one thing Beijing will have to consider when trade talks restart in Oct. China's
economy was already slowing down before the trade war began when Trump in Mar 2018, announced tariffs on imports of steel & aluminum. It
grew 6.6-6.7% for the 2 years from
mid-2016 to mid-2018, before slowing to a 6.2% growth rate in Q2 of this year. Despite the headwinds in China, there are still some areas of optimism from US businesses. Pharmaceutical
companies expressed confidence over revenue growth in China last year.
Additionally, 69.2% of food & agricultural companies plan to
increase investment in the year ahead, the report found. Even
so, companies are expecting the trade war to persist for some time,
with more than 65% of respondents saying they expect the conflict
to continue for at least another year.
Wholesale inventories in the US rose 0.2% in Jul to rebound from a small decline in the prior month. Sales in the month were flat, however. The ratio of inventories to sales was also unchanged at 1.36. That's how many months it would take to sell all the inventory on hand. One year ago, the inventory-to-sales ratio was much lower at 1.27, suggesting that companies are either producing too much now or not selling good as fast as they were last year. Still, an increase in inventories adds to GDP.
U.S. wholesale inventories climb 0.2% in July, sales flat
Homebuyers are taking advantage of lower mortgage rates & a slow summer for sellers, driving mortgage applications higher. Total mortgage application volume rose 2% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was up 69% compared with the same week one year ago, when interest rates were much higher. The week's results included an adjustment for the Labor Day holiday. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484K or less) decreased to 3.82% from 3.87%, with points increasing to 0.44 from 0.34 (including the origination fee) for loans with a 20% down payment. Low rates, combined with more moderate home prices & more desperate sellers, are all bringing buyers back to the market. Mortgage applications to purchase a home increased 5% for the week & were 9% higher than the same week one year ago. More homes usually come on the market after the Labor Day holiday, marking an end of the summer slump. Some agents say the spring was particularly slow, so a lot of that demand may have been pushed forward to the fall. The lowest mortgage rates in about 3 years did not push applications to refinance a home loan much higher, at least for the week. They were up just 0.4% compared with the previous week. They were still 169% higher than the same week one year ago, when the average rate on the 30-year fixed was 102 basis points higher, at 4.84%. Mortgage rates fell throughout much of last week, & some lenders say that is precisely when potential refinancers hold off, hoping they will go even lower. By the end of the week, however, rates popped higher, & they are now at the highest level in over a month.
Weekly mortgage applications rise as buyer's market takes hold
Stocks are back to meandering with a bias to the upside. For what it's worth, the Chinese economy is getting pinched in the trade war which may encourage them to come to a trade agreement.
Dow Jones Industrials
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