Dow rose 101 (300 below the opening highs), advancers over decliners about 2-1 & NAZ slid back 56. The MLP index went up 3+ to the 194s & the REIT index added 2+ to the 417s. Junk bond funds crawled higher & Treasuries had more selling, driving interest rates higher. Oil climbed above 110 & gold was of 3 to 1821.
AMJ (Alerian MLP index tracking fund)
Business leaders' confidence in the outlook of the economy has plummeted over the past year according to JPMorgan Chase, which found that optimism among execs of mid-sized firms has reached a record low as soaring inflation & labor shortages continue to take a toll. JPMorgan's 2022 Business Leaders Outlook Pulse, found that only 19% of respondents are optimistic about the national economy for the year ahead, which marks the lowest reading in the survey's 12-year history. The bleak outlook is vastly different from last year's survey, when 75% of respondents expressed optimism for the economy looking forward. At top of mind for business leaders now is inflation – which sits at a 4-decade high – with 71% citing rising costs as their most significant challenge & 99% reporting that their cost of doing business is up. Labor market issues were the 2nd-biggest concern cited by respondents, with 70% saying they were facing challenges in areas like recruitment & retention. "The first half of 2022 has really tested business leaders with pricing pressures and increased interest rates, on top of the supply chain- and labor-related issues they were already facing," said Ginger Chambless, head of research, JPMorgan Chase Commercial Banking. "While it’s surprising to see how drastically sentiment has shifted, it is important to note that business leaders are still mostly upbeat when it comes to their companies and areas that they can more directly control," Chambless added. 71% of respondents expressed confidence about their own firms' performance in the coming year, down from 88% last year. The latest showed that a majority, 55%, were optimistic about their respective industries, down from 82% last year. The National Federation of Independent Business (NFIB) Optimism Index released Jun 14 showed that small business optimism dropped for the 5th-straight month to a ecord low of 93.1 for the index & the University of Michigan consumer sentiment index last week showed that the figure dropped 14.4% between May & June to 50 – the lowest reading since the survey began in the late 1970s.
Business leader optimism hits record low as inflation soars
New York Federal Reserve Pres John Williams said he expects the US economy to avoid recession even as he sees the need for significantly higher interest rates to control inflation. “A recession is not my base case right now,” Williams said, “I think the economy is strong. Clearly financial conditions have tightened and I’m expecting growth to slow this year quite a bit relative to what we had last year.” Quantifying that, he said he could see GDP gains reduced to about 1-1.5% for the year, a far cry from the 5.7% in 2021 that was the fastest pace since 1984. “But that’s not a recession,” Williams noted. “It’s a slowdown that we need to see in the economy to really reduce the inflationary pressures that we have and bring inflation down.” The most commonly followed inflation indicator shows prices increased 8.6% from a year ago in May, the highest level since 1981. A measure the Fed prefers runs lower, but is still well above the central bank's 2% target. In response, the Fed has enacted 3 interest rate increases this year totaling about 1.5 percentage points. Recent projections from the rate-setting FOMC indicate that more are on the way. Williams said its likely that the federal funds rate, which banks charge each other for overnight borrowing but which sets a benchmark for many consumer debt instruments, could rise to 3%-3.5% from its current target range of 1.5%-1.75%. He added “we’re far from where we need to be” on rates. “My own baseline projection is we do need to get into somewhat restrictive territory next year given the high inflation, the need to bring inflation down and really to achieve our goals,” Williams continued. “But that projection is about a year from now. Of course, we need to be data dependent.”
New York Fed President John Williams says a U.S. recession is not his base case
Home price increases slowed ever so slightly in Apr, but it is the first potential sign of a cooling in prices. Prices rose 20.4% nationally in Apr compared with the same month a year ago, according to the S&P CoreLogic Case-Shiller Index. In Mar, home prices grew 20.6%. The last slight deceleration was in Nov of last year. The 10-city composite annual increase was 19.7%, up from 19.5% in Mar. The 20-city composite posted a 21.2% annual gain, up from 21.1% in the previous month. In a change from the last 5 months, when most of the 20 cities saw month-to-month price gains, only nine cities saw prices rise faster in Apr than they had done in Mar. Cities in the South continued to see the strongest monthly gains. “April 2022 showed initial (although inconsistent) signs of a deceleration in the growth rate of U.S. home prices,” Craig Lazzara, managing director at S&P DJI, said. “We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April. April’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them.” Not only are these price gains for Apr, but the index is a 3-month moving average. The average rate on the 30-year fixed mortgage just crossed the 5% mark in Apr after rising from around 3% in Jan. By Jun it had crossed 6%. “We noted last month that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that had only just begun when April data were gathered,” said Lazzara. “A more challenging macroeconomic environment may not support extraordinary home price growth for much longer.”
Home price increases slowed in April for the first time in months, S&P Case-Shiller says
Dow Jones Industrials
No comments:
Post a Comment