Dow gained 439, advancers over decliners an impressive 6-1 & NAZ jumped 189. The MLP index went up 4+ to the 142s & the REIT index rose 3+ to the 319s. Junk bond funds continued strong & Treasuries were a tad lower. Oil added 1 to the 32s & gold climbed 3 to 1748.
AMJ (Alerian MLP Index tracking fund)
Evidence is increasingly pointing to a comeback in the US housing market, one month after the coronavirus pandemic & ensuing economic meltdown stalled demand for new mortgages. Mortgage applications to purchase a home increased 6% last week from the previous week, according to the Mortgage Banker Association's (MBA) seasonally adjusted purchase index. Purchase activity was only 1.5% lower than a year ago, a significant recovery from just six weeks ago when it was 35% below last year's level. "Applications for home purchases continue to recover from April's sizeable drop & have now increased for five consecutive weeks," Joel Kan, MBA's associate VP of economic & industry forecasting, said. Record low mortgage rates & strong pent-up demand from before the pandemic started helped to spur the homebuyers. "As states gradually reopen and both home buyer and seller activity increases, we will be closely watching to see if these positive trends continue, or if they reflect shorter-term, pent-up demand," Kan added. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510K decreased to 3.41% from 3.43%. Points, including the origination fee, increased to 0.33 from 0.29 for 80% loan-to-value ratio loans. Still, low rates are not driving existing homeowners to refinance their mortgages, according to the survey. Refinance applications fell 6% for the week, although it was still 160% higher compared to the same period last year. "The average loan amount for refinances fell to its lowest level since January - potentially a sign that part of the drop was attributable to a retreat in cash-out refinance lending as credit conditions tighten," Kan said. "We still expect a strong pace of refinancing for the remainder of the year because of low mortgage rates."
Lowe's (LOW) Q1 profit spiked 28% from a year ago as customers stocked up on essential items during the early days of the COVID-19 pandemic. The home-improvement chain had EPS of $1.77 as revenue rose 11% year-over-year to $19.7B. The forecast called for adjusted EPS of $1.32 on revenue of $18.3B. Comparable sales in the US jumped 12.3%. "Our strong first-quarter performance, which continues into May, also reflects the benefits of our retail fundamentals strategy, the improvement in our execution, and the resiliency of our home improvement business model,” CEO Marvin Ellison said. “I am also pleased with our ability to pivot to serve increased online demand with Lowes.com sales increasing 80% in the quarter.” The company made 2 separate $300 payments to full-time employees & $150 payments to part-time employees to help with unexpected expenses caused by COVID-19, & increased pay for frontline employees by $2 per hour in the month of Apr. Total expenses related to supporting employees & the community totaled $340M. At the end of Q1, LOW had $6B cash & $3B available on its credit facilities The company repurchased 9.6M shares for $947M during Q1, but does not expect to buy back any more stock this year. LOW withdrew its full-year 2020 guidance due to uncertainty caused by COVID-19. The stock rose 1.07.
If you would like to learn more about LOW, click on this link:
club.ino.com/trend/analysis/stock/LOW?a_aid=CD3289&a_bid=6ae5b6f7
More help will be needed from the Federal Reserve & Congress to get the economy thru its slump, Dallas Fed Pres Robert Kaplan said. At least some of that aid likely will need to go to state & local govs, which have been hampered by lost revenue during the coronavirus pandemic, Kaplan said. His comments reflect those of Fed Chair Jerome Powell, who told a Senate pane that govs that are required to balance their budgets likely will need additional aid to survive without have to resort to mass layoffs. “My guess is we are going to need to do more. But my guess is also you’re going to need more fiscal action, whether it’s aid to governments or other fiscal action as we go through this,” Kaplan said. “The problem is we’re going to have an unemployment rate that peaks at around 20%, which we’re going to reach very soon,” he added. “We’re going to end the year with an unemployment rate as high as 10%, and we’re going to need to grind that down, and it’s probably going to take more fiscal action to help grind that down.” The Fed has approved lending & liquidity measures totaling more than $2T, though it has only put a fraction of that level to work. Congress in turn has approved another $2T in rescue funds. The Treasury Dept also has provided seed money that the Fed can use to leverage up in its lending programs. However, as constraints remain in place on the national economy, policymakers are being pressed to do more. “The Fed has done a lot to help stabilize the markets and make sure that small companies, mid-size companies, bigger companies have access to capital,” Kaplan said. “But again, these are loans. We’re the lender of last resort and this is intended to be a bridge to when we are going to recover.” Kaplan's home state of Texas was among the first in the nation to restart its economy following about 2 months of social distancing. The state has reported about 50K Covid-19 cases, of which 29K have recovered & 1369 fatalities. Daily case counts have vacillated in recent days. “Success in reopening means that the cases may not continue to decline, but it also means that they don’t spike,” Kaplan said. “So I think this reopening has to happen, but it’s got to happen with good testing, contact tracing, good procedures, and that’s what I’m watching.” He said an economic rebound is unlikely to happen until people feel safe enough to go out again.
Fed’s Kaplan says more fiscal help will be needed, including aid to states
The news on new mortgages & LOW was encouraging in an otherwise dreary economy. The Dow is at a more than 2 month high, but will need additional good news for further gains.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 33.31 | +1.35 | +4.2% |
| GC=F | Gold | 1,749.40 | +3.80 | +0.2% |
Evidence is increasingly pointing to a comeback in the US housing market, one month after the coronavirus pandemic & ensuing economic meltdown stalled demand for new mortgages. Mortgage applications to purchase a home increased 6% last week from the previous week, according to the Mortgage Banker Association's (MBA) seasonally adjusted purchase index. Purchase activity was only 1.5% lower than a year ago, a significant recovery from just six weeks ago when it was 35% below last year's level. "Applications for home purchases continue to recover from April's sizeable drop & have now increased for five consecutive weeks," Joel Kan, MBA's associate VP of economic & industry forecasting, said. Record low mortgage rates & strong pent-up demand from before the pandemic started helped to spur the homebuyers. "As states gradually reopen and both home buyer and seller activity increases, we will be closely watching to see if these positive trends continue, or if they reflect shorter-term, pent-up demand," Kan added. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510K decreased to 3.41% from 3.43%. Points, including the origination fee, increased to 0.33 from 0.29 for 80% loan-to-value ratio loans. Still, low rates are not driving existing homeowners to refinance their mortgages, according to the survey. Refinance applications fell 6% for the week, although it was still 160% higher compared to the same period last year. "The average loan amount for refinances fell to its lowest level since January - potentially a sign that part of the drop was attributable to a retreat in cash-out refinance lending as credit conditions tighten," Kan said. "We still expect a strong pace of refinancing for the remainder of the year because of low mortgage rates."
Housing market shows sign of recovery
Lowe's (LOW) Q1 profit spiked 28% from a year ago as customers stocked up on essential items during the early days of the COVID-19 pandemic. The home-improvement chain had EPS of $1.77 as revenue rose 11% year-over-year to $19.7B. The forecast called for adjusted EPS of $1.32 on revenue of $18.3B. Comparable sales in the US jumped 12.3%. "Our strong first-quarter performance, which continues into May, also reflects the benefits of our retail fundamentals strategy, the improvement in our execution, and the resiliency of our home improvement business model,” CEO Marvin Ellison said. “I am also pleased with our ability to pivot to serve increased online demand with Lowes.com sales increasing 80% in the quarter.” The company made 2 separate $300 payments to full-time employees & $150 payments to part-time employees to help with unexpected expenses caused by COVID-19, & increased pay for frontline employees by $2 per hour in the month of Apr. Total expenses related to supporting employees & the community totaled $340M. At the end of Q1, LOW had $6B cash & $3B available on its credit facilities The company repurchased 9.6M shares for $947M during Q1, but does not expect to buy back any more stock this year. LOW withdrew its full-year 2020 guidance due to uncertainty caused by COVID-19. The stock rose 1.07.
If you would like to learn more about LOW, click on this link:
club.ino.com/trend/analysis/stock/LOW?a_aid=CD3289&a_bid=6ae5b6f7
Lowe's profit spikes as customers load up during coronavirus outbreak
More help will be needed from the Federal Reserve & Congress to get the economy thru its slump, Dallas Fed Pres Robert Kaplan said. At least some of that aid likely will need to go to state & local govs, which have been hampered by lost revenue during the coronavirus pandemic, Kaplan said. His comments reflect those of Fed Chair Jerome Powell, who told a Senate pane that govs that are required to balance their budgets likely will need additional aid to survive without have to resort to mass layoffs. “My guess is we are going to need to do more. But my guess is also you’re going to need more fiscal action, whether it’s aid to governments or other fiscal action as we go through this,” Kaplan said. “The problem is we’re going to have an unemployment rate that peaks at around 20%, which we’re going to reach very soon,” he added. “We’re going to end the year with an unemployment rate as high as 10%, and we’re going to need to grind that down, and it’s probably going to take more fiscal action to help grind that down.” The Fed has approved lending & liquidity measures totaling more than $2T, though it has only put a fraction of that level to work. Congress in turn has approved another $2T in rescue funds. The Treasury Dept also has provided seed money that the Fed can use to leverage up in its lending programs. However, as constraints remain in place on the national economy, policymakers are being pressed to do more. “The Fed has done a lot to help stabilize the markets and make sure that small companies, mid-size companies, bigger companies have access to capital,” Kaplan said. “But again, these are loans. We’re the lender of last resort and this is intended to be a bridge to when we are going to recover.” Kaplan's home state of Texas was among the first in the nation to restart its economy following about 2 months of social distancing. The state has reported about 50K Covid-19 cases, of which 29K have recovered & 1369 fatalities. Daily case counts have vacillated in recent days. “Success in reopening means that the cases may not continue to decline, but it also means that they don’t spike,” Kaplan said. “So I think this reopening has to happen, but it’s got to happen with good testing, contact tracing, good procedures, and that’s what I’m watching.” He said an economic rebound is unlikely to happen until people feel safe enough to go out again.
Fed’s Kaplan says more fiscal help will be needed, including aid to states
The news on new mortgages & LOW was encouraging in an otherwise dreary economy. The Dow is at a more than 2 month high, but will need additional good news for further gains.
Dow Jones Industrials
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