Dow dropped 101, decliners over advancers 2-1 & NAZ was off 104. The MLP index declined 2 to the 166s & the REIT index rose 1+ to the 485s. Junk bond funds edged lower & Treasuries saw limited selling. Oil fell to 70 & gold dropped 6 to 1766.
AMJ (Alerian MLP index tracking fund)
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The House of Representatives voted to lift the federal debt ceiling by $2.5T & will send the bill to Pres Biden's desk for final approval. The House voted 221-209 in favor of the increase after the Senate voted to avoid a default. Rep Adam Kinzinger is the only House Rep to vote in favor of the increase. The votes followed months of discord in DC. The Senate vote was also along party lines, 50-49. Lawmakers expect the increase, which raises the debt ceiling to roughly $31.5T, to last beyond the upcoming midterm elections & into 2023. Treasury Secretary Janet Yellen said lawmakers had until today to raise the debt ceiling or risk a potential default on US obligations. Earlier, Reps agreed to a one-time exception to the filibuster, allowing the Dems to pass the debt hike by a simple majority vote rather than meeting the 60-vote threshold.
House votes to lift debt ceiling, sends bill to Biden’s desk
The national trade organization that represents the industry whose products Americans consume each day is spotlighting that the supply chain crisis that has impacted the nation's economy & created havoc with holiday shopping won't disappear with the start of the new year & will "be on the ballot in 2022." The Consumer Brand Association, an organization that represents leading food & beverage, household & personal care companies, emphasizes that "the country is at an inflection point where the supply chain’s vulnerabilities are exposed and it is time to act on the lessons we have learned." The group, in a report & a public opinion survey conducted in key battleground states, warns that "the window for meaningful action is shrinking. So is the patience of American voters, who will question why we didn’t do more to face future supply chain crises if we fail to act today." Slowdowns in manufacturing & transportation woes this year, due to COVID-19 outbreaks amid the worst pandemic to strike the world in a century, have caused severe global supply chain breakdowns. And while the problems are beginning to recede, manufacturing, shipping & retail execs do not predict a return to normalcy until sometime next year at the earliest. The supply chain crisis has helped fuel a spike this summer & autumn in consumer prices across the nation. "Once invisible to consumers, the pandemic and holiday shipping crunch have unmasked the supply chain and made it kitchen table conversation," Consumer Brands CEO Geoff Freeman highlighted. "Voters have exhausted their patience with years of government inaction, and elected officials can’t afford to lose sight of the supply chain after New Year’s Day."
Group predicts supply chain crisis will be on ballot in 2022
Surprisingly strong housing demand, even in the usually slower season for housing, has homebuilders feeling increasingly confident. Builder sentiment in the single-family housing market rose one point to 84 in Dec, on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). That is the 4th consecutive increase & ties with Feb for the highest level of the year. Anything above 50 is considered positive sentiment. The increase comes despite concerns over inflation, supply-chain disruptions & an ongoing labor shortage. Prices for wallboard, steel, aluminum & plastic construction products rose sharply in Nov, according to the producer price index. “While demand remains strong, finding workers, predicting pricing and dealing with material delays” remain challenging, said NAHB Chair Chuck Fowke. Builders continue to benefit from the incredibly lean supply of existing homes for sale. They're also seeing high demand from investors, as the build-for-rent sector continues to gain steam. The number of single-family built-for-rent construction starts reached its highest quarterly volume on record during the last qtr. There are hurdles ahead, especially given how high prices have jumped recently. The cost of a newly built home jumped 17.5% year over year in Oct, according to the US Census. Mortgage rates are also expected to rise markedly as the Federal Reserve eases its support for mortgage-backed bonds to contend with surging inflation. “While 2021 single-family starts are expected to end the year 24% higher than the pre-Covid 2019 level, we expect higher interest rates in 2022 will put a damper on housing affordability,” said NAHB chief economist Robert Dietz.
Homebuilder confidence ends the year on a high even as costs rise and labor is in short supply
Investors are very nervous about what course of action the Fed will take in the PM. The prospects for inflation will be their main topic for discussion. Selling is expected to continue until the Fed speaks later.
Dow Jones Industrials
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