Dow recovered 422, advancers over decliners better than 4-1 & NAZ jumped 259. The MLP index went up 1 to 198 & the REIT index rose 4+ to 477. Junk bond funds inched higher & Treasuries had a little selling. Oil was up pennies in the 87s after a major rally & gold added 2 to 1845.
AMJ (Alerian MLP index tracking fund)
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The number of Americans filing for unemployment benefits unexpectedly climbed to the highest level since mid-Oct as an unprecedented surge in Covid-19 cases driven by the highly contagious omicron variant threatened to undermine the economy's recovery. Figures from the Labor Dept show that applications last week jumped to 286K from a revised 231K a week earlier, sharply missing the 220K forecast. Continuing claims, the number of Americans who are consecutively receiving unemployment aid, rose to 1.6M, an increase of 84K from the week's previous level. The report shows that roughly 2.1M Americans were collecting jobless benefits for the latest week, an increase of 180K from the previous week. By comparison, just a little over one year ago, an estimated 16.9M Americans were receiving benefits. Claims have largely moderated near pre-pandemic levels as the economy recovers & Americans continue traveling, shopping & eating out. Businesses have struggled to keep up with the demand, however & have reported difficulties in onboarding new employees. This report suggests that companies are making an effort to retain the workers they already have. There is growing unease on Capitol Hill over a stunning rise in cases driven by the highly transmissible omicron variant. The US is now reporting a 7-day moving average of more than 122K cases. While it's still unclear what the fast-spreading variant will ultimately mean for the health of the economy, its effects on daily life have already been felt. Thousands of flights have been canceled, Broadway shows are shuttering their doors & a growing number of schools have postponed reopenings. The White House has maintained that it has the resources needed to respond to any disruptions caused by the omicron spread.
Jobless claims swerve higher as omicron threatens Biden recovery
Closed sales of previously owned homes in Dec fell 4.6% to a seasonally adjusted, annualized rate of 6.18M units, according to the National Association of Realtors (NAR). Sales were down 7.1% year-over-year. Still, Dec rounded out a year of strong sales, much of that fueled by the pandemic & by the largest generation, millennials, aging into their homebuying years. Full-year 2021 sales came in at 6.12M, an increase of 8.5% from 2020, the strongest sales year since 2006. Sales could likely have been higher were it not for incredibly low supply. There were just 910K homes for sale at the end of Dec, a drop of 14.2% from Dec 2020. At the current sales pace, that represents a 1.8-month supply. A balanced market between buyers & sellers is usually a 4-6 month supply. Both the total supply & month's supply are at all-time lows on the NAR's inventory count, since it began tracking in1982. “Home builders have already made strides in 2022 to increase supply, but reversing gaps like the ones we’ve seen recently will take years to correct,” said Lawrence Yun, chief economist for the Realtors. Low supply continued to put pressure on prices. The median price of an existing home sold in Dec was $358K, an increase of 15.8% compared with Dec 2020. This is a slight reacceleration of home price gains, implying that demand is still quite strong. For the full year, the median price came in at $347K, a record high & the fastest price growth since 1999. With the price up 17% year-over-year, the average homeowner gained $50K in housing wealth just last year. Home prices have been soaring over the last 2 years, in part due to very low interest rates. That may be about to change. The average rate on the popular 30-year fixed mortgage in Oct & Nov, when most of Dec sales contracts were signed, was about 60 basis points lower than it is today. Mortgage rates have been rising quickly over the last month & some expect that to take some of the heat out of home prices going forward.
December home sales drop 4.6%, as supply hits record low`
As Covid-19 cases surge across the nation, Rep & Dem governors alike are issuing new or reinstated emergency health orders in an effort to slow the spread of the omicron variant & alleviate the strain on hospitals. Officials from Maryland, Virginia, New Jersey, Kansas & California have all announced exec measures — some of which are renewals of emergency orders that are expiring or have been lifted — since the start of the month. Instead of ordering lockdowns & business closures, which devastated the economy at the beginning of the pandemic, the fresh round of orders is designed to free up resources so state & local agencies can prepare for the onslaught of cases & potentially overwhelmed hospitals. New Jersey Gov Phil Murphy said the state had to “commit every resource available to beating back the wave” when he renewed his public health emergency & state of emergency declarations last week. Murphy had said the declarations “won’t even have any new impact at all” on residents’ day-to-day lives. “This is what this does not mean: It does not mean any new universal mandates or passports,” he said. “It does not mean lockdowns. It does not mean any business restrictions or gathering limits.” The US has reported an average of more than 743K cases per day over the past week, according to data compiled by Johns Hopkins University. That marks more than 3 times the level reported during last winter's previous record.
GOP and Democratic governors reinstate Covid emergency orders to combat omicron surge
The rally today is difficult to understand. High inflation & the war with Covid are disrupting the economic recovery & there are no easy solutions. One thing is sure, higher interest rates are coming & they will hurt.
Dow Jones Industrials
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