Dow is off 40, decliners over advancers 5-4 & NAZ went up 41. The MLP index was fractionally higher to the 188s & the REIT index crawled up 1 to the 463s. Junk bond funds barely budged in price & Treasuries were weak. Oil climbed in the 82s & gold added 2 to 1771.
AMJ (Alerian MLP index tracking fund)
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The nation’s homebuilders aren't seeing any relief from supply chain issues that have slowed construction recently, but high buyer demand appears to be making up for it. Builder confidence in the single-family home construction market rose 4 points to 80 in Oct on the National Association of Home Builders/Wells Fargo Housing Market Index. That is still down from 85 in Oct 2020 & from the record high 90 in Nov of last year. Anything above 50 is considered positive. “Although demand and home sales remain strong, builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices,” said NAHB Chairman Chuck Fowke. Of the index's 3 components, current sales conditions rose 5 points to 87. Sales expectations in the next 6 months increased 3 points to 84 & buyer traffic climbed 4 points to 65. The biggest concern for builders now is affordability, as they raise prices to meet the rising costs of land, labor & materials. The median price of a newly built home sold in Aug was 20% higher than Aug of 2020, according to the US Census. While some of that is the mix of homes selling — more on the high end of the market — it also reflects builder increases. Some builders have actually slowed home sales due to construction hurdles, as they are concerned they won't be able to deliver houses at a normal pace. Homebuyers are turning more & more to new construction, as the supply of existing homes for sale continues to be both incredibly lean & pricey.
Homebuilders are more optimistic about the housing market despite supply chain problems
Thanks to the rollout of coronavirus vaccines, the global economy is slowly starting to emerge from the pandemic. But Covid-19 has left one very destructive economic issue in its wake: disruption to global supply chains. The rapid spread of the virus in 2020 prompted shutdowns of industries around the world &, while most of us were in lockdown, there was lower consumer demand & reduced industrial activity. As lockdowns have lifted, demand has rocketed. And supply chains that were disrupted during the global health crisis are still facing huge challenges & are struggling to bounce back. This has led to chaos for the manufacturers & distributors of goods who cannot produce or supply as much as they did pre-pandemic for a variety of reasons, including worker shortages & a lack of key components & raw materials. Different parts of the world have experienced supply chain issues that have been exacerbated for different reasons, too. For instance, power shortages in China have affected production in recent months, while in the UK, Brexit has been a big factor around a shortage of truck drivers. The US is also battling a shortage of truckers, as is Germany, with the former also experiencing large backlogs at its ports. Unfortunately, experts like Tim Uy of Moody's Analytics say that supply chain problems “will get worse before they get better.” “As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner,” he said last Mon. “Border controls and mobility restrictions, unavailability of a global vaccine pass, and pent-up demand from being stuck at home have combined for a perfect storm where global production will be hampered because deliveries are not made in time, costs and prices will rise, and GDP growth worldwide will not be as robust as a result,” he added. “Supply will likely play catch up for some time, particularly as there are bottlenecks in every link of the supply chain—labor certainly, as mentioned above, but also containers, shipping, ports, trucks, railroads, air and warehouses.”
Supply chain chaos is already hitting global growth. And it’s about to get worse
Progressives attacked Sen Joe Manchin's latest reported demand in negotiations over Dems' $3.5T reconciliation bill,
calling it "cruel" & "terrible" as talks remain stalled less than 2
weeks ahead of the party's latest self-imposed deadline. Axios reported yesterday that Manchin, told the White House that his red line for any extension of the child tax credit program is that it be means tested at roughly $60K per household & include work requirements. This is at odds with progressives' position that the program should be universal for all Americans regardless of income or employment status & several high-profile progressives lashed out at the senator
who's become the most prominent roadblock to Dems' plans to spend Ts of $s on social & climate programs. "Manchin
insisted on passing the bipartisan infrastructure bill first—to the
point of suggesting passing the Build Back Better Act next year—to avoid
embarrassing headlines like this," Rep Mondaire Jones tweeted. "But the American people, and his constituents, deserve to know
how terrible his positions are." "Senator from the 3rd poorest state in the nation decides to deny
needed help to his constituents in order to do who the F knows what,"
added former Obama staffer Dan Pfeiffer, who now hosts "Pod Save
America." The Daily Beast's Wajahat Ali simply called Manchin's position "Cruel." While
Axios' report that Manchin communicated these specific demands to the
White House is new, the senator has been making comments that suggested
he would take a position like this for some time.
Progressives lash out at Manchin over reported demand in fight over $3.5T bill
The biggest news is supply chain problems which show no sign of going away in the short term. That will severely limit global economic growth. The fight against the virus is going better but it's still one step at a time. It looks the progressives have erased the word "compromise" from their dictionary. Stalling the spending bills should be a plus for the stock market. If that wasn't enough, this will be a big week for earnings. Expectations are high although comments about the future may be muted with all that is going on.
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