Dow dropped 249 (over 500 below early highs), decliners over advancers 5--2 & NAZ declined 120. The MLP index fell 1+ to the 227s & the REIT index pulled back 4+ to 400. Junk bond funds continued weak & Treasuries were sold in the PM. Oil was off a fraction to the 77s & gold fell 17 to 1873 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The average long-term US mortgage rate began to rise after 4 weeks of contraction, a possible sign of stability that could draw in home shoppers with spring buying season weeks away. The big rise in mortgage rates during the past year has throttled the housing market, with sales of existing homes falling for 11 straight months to the lowest level in more than a decade. The average rate on a 30-year fixed mortgage rose to 6.12% from 6.09% last week, according to mortgage buyer Freddie Mac. A year ago, the average rate was 3.69%. The 15-year fixed-rate mortgage averaged 5.25%, up from last week when it averaged 5.14%. A year ago at this time, the 15-year FRM averaged 2.93%. Mortgage buyer Freddie Mac said that the average on the benchmark 30-year rate inched up to 6.12% this week from 6.09% last week. The average rate a year ago was 3.69%. The average long-term rate reached a 2-decade high of 7.08% in the fall as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy & bring down stubborn, &-decade-high inflation. "Following an interest rate hike from the Federal Reserve and a surprisingly strong jobs report, mortgage rates increased slightly this week," said Sam Khater, Freddie Mac's Chief Economist. "The 30-year fixed-rate continues to hover close to six percent, and interested homebuyers are easing their way back to the market just in time for the spring homebuying season." Khater continued. The big rise in mortgage rates during the past year has devastated the housing market, with sales of existing homes falling for 11 straight months to the lowest level in more than a decade. Higher rates can add hundreds of a $s a month in costs for homebuyers, on top of already high home prices. The National Association of Realtors reported earlier this month that existing US home sales totaled 5.03M last year, a 17.8% decline from 2021. That is the weakest year for home sales since 2014 & the biggest annual decline since 2008, during the housing crisis of the late 2000s.
Rising mortgage rates create major headaches for homebuyers
General Motors (GM)
has signed a long-term agreement with GlobalFoundries to establish exclusive production capacity of U.S.-produced semiconductor chips, the companies announced. The
deal, which they’re calling an industry first, comes as automakers
continue to battle thru supply chain problems, including a yearslong global shortage of semiconductor chips that has sporadically idled factories during the Covid pandemic. The
chip manufacturer will establish dedicated production capacity
exclusively for key auto suppliers of GM at its
semiconductor facility in upstate New York. “The
supply agreement with GlobalFoundries will help establish a strong,
resilient supply of critical technology in the U.S. that will help GM
meet this demand, while delivering new technology and features to our
customers,” Doug Parks, GM exec VP of global product
development, purchasing & supply chain, said. The
deal is a win for the Biden administration, which has been pushing for
companies to reestablish American production of semiconductor chips,
including the CHIPS Act that was signed into law in Aug Parks
said GM expects its usage of semiconductors to more than double over
the “next several years” as it increases the technological capabilities
in its vehicles, specifically all-electric cars & trucks that require more chips than traditional vehicles. The
companies expect the deal will enable chip production in
higher volumes as well as offer “better quality and predictability,
maximizing high value content creation for the end customer.” The
exclusive production of chips for GM will be an expansion of the company's operations, according to GlobalFoundries CEO Thomas
Caulfield. The deal could be a framework for other deals for
GlobalFoundries, according to Caulfield. It provides the best economics
for both companies & a road map for future materials needed to produce
the chips. “This is a first-of-a-kind deal, not a last of its
kind. This is a solution to a problem,” he said. “We believe it’s a
framework for others to leverage as well.” Caulfield said the exclusive production for GM is expected to take 2-3 years to really ramp up. GM stock was up 4¢.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM_aid=CD3289&a_bid=6ae5b6f7
General Motors signs deal with GlobalFoundries for exclusive U.S. semiconductor production
US spirits
achieved record market share & sales in 2022 as demand persisted,
underscoring the sector's resiliency within the challenging
environment. Even with inflation dampening
discretionary spending, there has been continued consumer interest in
premium spirits, which in turn has helped to "bolster the fragile US
hospitality industry," according to the Distilled Spirits Council of the
US (DISCUS). During the Distilled Spirits Council
annual economic briefing, CEO Chris Swonger reported that
spirits supplier sales in the US increased 5.1% in 2022, reaching a
total of $37.6B. Volumes also rose 4.8% to 305M 9-liter
cases, Swonger reported. 2022 was the
13th year in a row that spirits gained market share of the total US
beverage alcohol market. It was also the first time that spirits
supplier revenues surpassed beer, which accounts for 41.9% of the market
share. Christine LoCascio, DISCUS chief of public policy & strategy,
noted that more than 60% of the spirits sector's total revenue derived
from sales of high-end & super-premium spirits, in particular, tequila & American whiskey. Over the year, tequila & mezcal sales were up 17.2% while American whiskey sales were up 10.5%. Swonger noted that this thriving cocktail culture has helped to buoy the entire hospitality industry, which was hit particularly hard due to virus-related shutdowns & restrictions in the early days of the pandemic. Although sales volumes at on-premise establishments are still below
pre-pandemic levels, the trade association says they are rebounding. Meanwhile, off-premise sales volumes saw sharp gains in 2020 & remained steady in 2021 & 2022. The Labor Dept reported earlier this month that employment in
leisure & hospitality in Jan was still below the Feb 2020
level by 495K (2.9%). However, the "recovery of hospitality businesses is trending in the right direction," Swonger said. Last month, leisure & hospitality added 128K jobs. That is up from an average of 89K jobs per month in 2022.
US spirits reach record sales in 2022, boosting 'fragile' hospitality industry
Gold futures declined, marking their first loss in 4
sessions. Gold prices are trying to ride the choppy waters that represent waves
coming from multiple directions, with investors trying to find the
key to what is going to drive prices either way. Gold fell $12 (0.7%) to settle at
$1878 an ounce, a day after logging the highest for a
most-active contract since Feb 2.
Gold futures post first loss in 4 sessions
Oil futures finished lower, easing back in the wake of 3 consecutive session gains. The price decline comes a day after official gov data revealed a 7th straight weekly rise in US crude inventories. West Texas Intermediate crude for Mar fell 41¢ (0.5%) to settle at $78.06 a barrel & Apr Brent crude, the global benchmark, shed 59¢ (0.7%) to $84.50 a barrel.
Oil prices finish lower after a 3-session climb
Today, buyers came out in the first hour. Then sellers took over until the last hour brought out bargain hunters. Nothing decided & Dow continues its sideways trend. It's good to hear the booze business is doing fairly well.
Dow Jones Industrials
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