Dow gained256, advancers over decliners about 3-1 & NAZ was off 120. The MLP index was up 1+ to the 222s & the REIT index jumped 6+ to the 498s after yesterday;s big rise. Junk bond funds continued in demand & Treasuries were purchased, taking the yield on the 10 year Treasury down 4 basis points to 2.87%. Oil was fractionally higher to the 103s & gold slid lower by 4 to 1954.
AMJ (Alerian MLP index tracking fund)
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Sales of existing homes dropped 2.7% in Mar to a seasonally adjusted, annualized rate of 5.77M units, according to the National Association of Realtors. Feb's reading was also revised downward with a larger-than-usual dent, from 6.02M units to 5.93M. Mar sales were 4.5% lower than the same period in 2021. The reading is based on closings, meaning the contracts were likely signed in Jan & Feb, when mortgage rates began to rise but had not yet shot up sharply as they did in Mar. The average rate on the 30-year fixed mortgage stood at 3.29% at the beginning of Jan & rose to 3.9% by the end of Feb, according to Mortgage News Daily. The 30-year fixed rate now stands at 5.35%. Higher rates exacerbated an already pricey market for buyers. The median price of an existing home sold in Mar was $375K, an increase of 15% from Mar 2021, the highest median price ever recorded by the Realtors. With rates rising, and prices significantly higher, the average borrower is paying about 38% more on the monthly payment now than they would have for the same home one year ago. Prices continue to rise because the supply of homes for sale is still incredibly low amid strong demand from millennials. At the end of Mar there were 950K homes for sale, a decrease of 9.5% year over year. At the current sales pace that represents a 2-month supply. The supply of homes for sale is worst at the lowest end of the market, skewing sales toward the more expensive end. Sales of homes priced $100-250K were 21% lower compared with a year ago, while sales of homes priced $750K - $1M rose 30%. Homes priced above $1M saw a 25% sales jump. “We know that the builders have been underproducing since the foreclosure crisis, which is the reason we have this shortage,” said Lawrence Yun, chief economist for the National Association of Realtors. “But when mortgage rates increase, we have seen several months of inventory rising.”
The price of a home sold in March set a new record, as inventory dwindled and sales fell
Procter & Gamble (PG), a Dow stock & dividend Aristocrat, earnings & revenue beat expectations as price hikes helped to offset widespread inflation & a
margins crunch. The consumer goods giant reported a qtr
riddled with economic challenges. Elevated commodity & freight costs
dented company margins, but higher prices & productivity savings
helped counteract some of the drag on profits. Gross margin fell 4 percentage points compared with the year-ago
period, although its operating margin dropped just 0.1 percentage point
in the qtr. “If we look at the current situation in the
markets — the imbalance between supply and demand, geopolitical
disruption, the need to disrupt supply chains, higher energy costs due
to the war between Ukraine and Russia — all of those will continue to
put pressure on the cost side,” CFO Andre Schulten said. Despite raising its fiscal 2022 revenue growth
outlook, PG said it expects its core EPS for the
year to be on the lower end of its prior range. Fiscal Q3 EPS was
$1.33, up from $1.26 a year
earlier. Excluding items, the EPS was $1.33, topping the $1.29 expected. Net sales rose
7% to $19.4B, beating expectations of $18.7B. Organic revenue climbed 10% in the qtr, although volume,
which strips out the impact of currency & price changes, was up just
3%. “So far our volume assumptions that we made going into the
year were more conservative than what we’re seeing in the market,
playing out,” Schulten said. “As we’ve taken pricing across the year, so
far we see price elasticities — the consumer reaction relative to the
increase we’re taking — to be about 20% to 30% more favorable than we
would’ve assumed, based on historical data.” PG reiterated its core EPS forecast for fiscal
2022 but said it's expecting the lower end of its predicted range of 3-6% growth, citing inflation & currency headwinds. It's
predicting a $2.5B hit from higher commodity costs, $400M
from increased freight costs & $300M from foreign currency
headwinds. It marks the 3rd consecutive qtr that the company has
raised its full-year inflation forecast. The stock went up 4.20.
If you would like to learn more about PG click on this link:
club.ino.com/trend/analysis/stock/PG_aid=CD3289&a_bid=6ae5b6f
Procter & Gamble tops estimates as price hikes counteract higher costs
Mortgage demand continued to crumble last week, as mortgage rates climbed to their highest level since 2010. Total application volume fell 5% last week compared with the previous week & was nearly ½ of what it was one year ago, according to the Mortgage Bankers Association's seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647K or less) increased to 5.20% last week from 5.13%, with points rising to 0.66 from 0.63 (including the origination fee) for loans with a 20% down payment. One year ago, the rate was exactly 200 basis points lower at 3.20%. “Ongoing concerns about rapid inflation and tighter U.S. monetary policy continued to push Treasury yields higher, driving mortgage rates to their highest level in over a decade. Rates increased across the board for all loan types,” said Joel Kan, MBA's associate VP of economic & industry forecasting. With rates now rising quickly after a prolonged period of hitting record lows, very few borrowers are now able to benefit from a refinance. That demand therefore fell another 8% for the week & was 68% lower than the same week one year ago. It marks 6 straight weeks of declines in refinancing. The refinance share of mortgage activity decreased to 35.7% of total applications from 37.1% the previous week. Mortgage applications to purchase a home fell 3% for the week & were 14% lower than the same week one year ago. That annual decline is now beginning to grow, as housing becomes even more pricey. “In a housing market facing affordability challenges and low inventory, higher rates are causing a pullback or delay in home purchase demand as well. Home purchase activity has been volatile in recent weeks and has yet to see the typical pickup for this time of the year,” added Kan. Mortgage rates continued to climb this week, as Treasury yields rose. Higher rates now appear to be hitting the nation’s homebuilders.
Mortgage demand falls to nearly half of what it was a year ago
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