Dow nosedived 513, decliners over advancers a relatively muted better than 4-1 & NAZ dropped 122. The MLP index sank 5+ to the 215s & the REIT index was off 3+ to the 365s. Junk bond funds were also hit with selling & Treasuries shot up causing yields to plunge. Oil continued to slide, off 3+ to 68, & gold advanced 17 to 1928 on demand from nervous investors.
AMJ (Alerian MLP Index tracking fund)
Shares of Credit Suisse plunged to a fresh all-time low for the 2nd consecutive day after a top investor in the embattled Swiss bank said it would not be able to provide any more cash due to regulatory restrictions. Trading in the bank's plummeting stock was halted several times throughout the morning as it fell below 2 Swiss francs ($2.17) for the first time. The share price rout renewed a broader sell-off among European lenders, which were already facing significant market turmoil as a result of the Silicon Valley Bank fallout. Some of the biggest decliners included France's Societe Generale, Spain’s Banco de Sabadell & Germany's Commerzbank. Several Italian banks were also subject to automatic trading stoppages. Credit Suisse's largest investor, Saudi National Bank, said it could not provide the Swiss bank with any further financial assistance, sparking the latest leg lower. “We cannot because we would go above 10%. It’s a regulatory issue,” Saudi National Bank Chair Ammar Al Khudairy said. However, he added that SNB is happy with Credit Suisse's transformation plan & suggested the bank was unlikely to need extra money. The Saudi National Bank took a 9.9% stake in Credit Suisse last year as part of the Swiss lender's $4.2B capital raise to fund a massive strategic overhaul aimed at improving investment banking performance & addressing a litany of risk & compliance failures.
Credit Suisse shares tank after Saudi backer rules out further assistance
Inflation at the wholesale level posted a surprise decline in Feb, a sign that painfully high consumer prices are beginning to loosen their stranglehold on the US economy. The Labor Dept said that its producer price index (PPI), which measures inflation at the wholesale level before it reaches consumers, fell 0.1% in Feb from the previous month. On an annual basis, prices are up 4.6%, well below the 5.7% gain recorded in Jan. Those figures were both lower than the 5.4% headline figure & 0.3% monthly increase forecast, a welcoming sign for the Federal Reserve as it seeks to cool price gains & tame consumer demand with the most aggressive interest rate hike campaign since the 1980s. Excluding the more volatile measurements of food, energy & trade, core inflation rose 0.2% for the month, down from the 0.5% gain in Jan. The reading was up 4.4% on a 12-month basis, unchanged from the previous month. It marked the lowest year-over-year increase since Apr 2021. The data comes a day after the Labor Dept reported that the consumer price index, which measures the prices paid directly by consumers, rose 0.4% in Feb, in line with expectations. The annual inflation rate also came in at 6%. Both releases are considered to be important measurements of inflation, with the PPI believed to be a leading indicator of inflationary pressures as costs work their way down to consumers. The different gauges point to inflation that is running well above the Fed's preferred 2% target, a troubling sign as the central bank has already raised rates 8 straight times. The unexpected decline in the monthly number stemmed from a drop in price pressures for both goods & services, with a notable 36.1% plunge in the cost of chicken eggs. The price of residential natural gas, fresh & dry vegetables, home heating oil, diesel fuel & organic chemicals also fell. Conversely, prices for iron & steel scrap rose 10.6% last month, while the cost of sugar & other confectionery products also rose.
Wholesale prices unexpectedly drop — signaling easing inflation for Americans
Mortgage rates are high & volatile, homes are still pricey, & inflation is not in check, but, even so, the nation's homebuilders are starting to feel better about their business. A monthly gauge of builder confidence in the market for newly built single-family homes rose in Mar, even though analysts expected a drop. The National Association of Home Builders/Wells Fargo Housing Market Index rose 2 points to 44. Anything above 50 is considered positive. It's the 3rd straight monthly increase in builder sentiment. The index stood at 79 in Mar of last year, when mortgage rates were significantly lower. “Even as builders continue to deal with stubbornly high construction costs and material supply chain disruptions, they continue to report strong pent-up demand as buyers are waiting for interest rates to drop and turning more to the new home market due to a shortage of existing inventory,” NAHB Chair Alicia Huey said. “But given recent instability concerns in the banking system and volatility in interest rates, builders are highly uncertain about the near- and medium-term outlook.” Of the index's 3 components, current sales conditions rose 2 points to 49 & buyer traffic rose 3 points to 31. Sales expectations in the next 6 months, however, fell one point to 47. “While financial system stress has recently reduced long-term interest rates, which will help housing demand in the coming weeks, the cost and availability of housing inventory remains a critical constraint for prospective home buyers,” said Robert Dietz, NAHB's chief economist in the release. “A follow-on effect of the pressure on regional banks, as well as continued Fed tightening, will be further constraints for acquisition, development & construction (AD&C) loans for builders across the nation. When AD&C loan conditions are tight, lot inventory constricts and adds an additional hurdle to housing affordability,” said Dietz.
Homebuilders say demand is rising, but they’re concerned about a banking fallout
The Dow is near a 5 month low on the Credit Suisse news. Even the favorable inflation report is getting very little attention. One thing is clear, the Fed will have plenty to discuss at their meeting next week.Dow Jones Industrials
No comments:
Post a Comment