Dow finished down 158 but off early lows, decliners over advancers better than 3-2 & NAZ retreated 110. The MLP index was even in the 236s & the REIT index fell 2+ to the 372s, Junk bond funds inched higher & Treasuries saw more buying, reducing yields. Oil was up 1 to the high 82s & gold remained weak, down 9 to 1960 (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)
As if higher mortgage rates weren't enough, it was harder even to qualify for a mortgage in Jul than it has been in a decade, according to the Mortgage Bankers Association (MBA). Its monthly index measuring credit availability dropped in Jul to the lowest level since 2013, indicating that lending standards are tightening even further. While availability for all loan types dropped, the component of the index for jumbo loans fell the most, as banks face increasing liquidity issues. Jumbo loans cannot be sold to Fannie Mae & Freddie Mac, so they are usually held on bank balance sheets. Higher mortgage rates have caused demand for home loans to drop. Mortgage applications to purchase a home are 26% lower than they were a year ago & refinance demand is off 32%, according to the MBA's most recent weekly survey. “Declining origination volumes have led to lower profitability for many lenders, resulting in narrower loan product offerings to reduce operational costs,” said Joel Kan, an MBA economist. A decline in cash-out refinance programs was a major component of the overall drop in credit availability. The average rate on the 30-year fixed mortgage is now hovering around 7%, more than double what it was just 2 years ago when refinancing was booming. Most borrowers today would rather not have to trade out a 3% rate for a 7% rate just to pull cash out of their homes. They are instead turning to home equity lines of credit, which are 2nd liens.
Mortgage credit availability sinks to decade low
Boeing (BA), a Dow stock, delivered 43 aircraft to customers last month as it tries to ramp up output with airline customers clamoring for new jets. The
handovers were down from 60 in Jun but brought BA's total
deliveries in the first 7 months of the year to 309, an increase of
nearly 28% from the same period in 2022. Last
month, BA said it was transitioning production of its bestselling
737 Max plane to a pace of 38 a month from 31. Despite production problems earlier this year & a brief strike at a key supplier, CFO, Brian West, last month reiterated the company still expects to deliver 400-450 Max jets this year. BA's chief rival, Airbus, last week said it has handed over 381 planes in the first 7 months of the year. Net orders were for 52 aircraft in Jul, which included a
firmed-up order from Saudi Arabian Airlines (Saudia) for 39 BA
787 Dreamliners, a deal first announced in Mar. The stock was off 22¢.
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA_aid=CD3289&a_bid=6aeoso5b6f7
Boeing aircraft deliveries fall in July as company plans to raise output
Tyson (TSN) announced that it will close 4 more chicken plants in the US to cut costs. The company said it will move the work performed inside the North
Little Rock, Arkansas; Corydon, Indiana; Dexter, Missouri & Noel,
Missouri, plants to newer locations closer to its customer base. "The
difficult decision to close four chicken facilities… demonstrates our
commitment to bold action and operational excellence as we drive
performance, including lower costs and improving capacity utilization,
and build on our strategy of making Tyson Foods stronger in the
long-term," CEO Donnie King said. Tyson said in Apr it would cut roughly 10% of corp jobs &
15% of senior leadership roles, while also laying off corp
employees in Chicago & South Dakota who declined to relocate to it's headquarters in Arkansas. Also
in Apr, about 150 employees at a TSN chicken plant in Van
Buren, Arkansas, went on strike for better treatment before the company
shut down the facility on May 12, eliminating jobs for 969 employees as it seeks to improve performance in its chicken business. "While current market dynamics remain challenging, Tyson Foods is fully
committed to our vision of delivering sustainable, top-line growth and
margin improvement," King said. "I’m encouraged by the improvements we
made this quarter, including our Tyson Core Business lines that continue
to outpace our peers in volume growth." The stock rose 76¢.
If you would like to learn more about TSN, click on this link:
club.ino.com/trend/analysis/stock/TSN_aid=CD3289&a_bid=6aeoso5b6f7
Tyson Foods shutting down four plants as sales slump
Gold prices fell as the $ moved sharply higher amid fresh worries over the health of the US banking sector. Gold for Dec closed down $10 to settle at $1959 per ounce. The drop comes as the $ strengthened after Moody's Investor Service downgraded its ratings on the debt of 10 US banks & changed its outlook to negative for another 11 banks. The downgrades refresh memories of the turmoil that followed the collapse of Silicon Valley Bank & Signature Bank earlier this year. The $ was sharply higher following the rating agency's measures, making gold more expensive for intl buyers. The ICE $ index was last seen up 0.5 points to 102.55. Bond yields weakened, bullish for gold since it offers no interest. The US 2-year note was last seen paying 4.758%, down 1.3 basis points, while the yield on the US 10-year note was down 5.9-basis points to 4.032%.
Gold Trading Lower as the Dollar Surges After Moody's Downgraded Some US Banks
Oil prices edged higher, as a US gov agency projected a rosier outlook on the economy, but bearish data on China's crude imports & exports weighed. Brent crude futures gained 83¢ to settle at $86.17 a barrel. West Texas Intermediate crude rose 98¢ to $82.92. Both contracts fell by $2 earlier in the session. Prices reversed course after a monthly report from the US Energy Information Administration projected GDP growth to rise by 1.9% in 2023, up from 1.5% in a previous forecast. The EIA also expects Brent crude oil prices to average $86 in H2, up about $7 from the previous forecast. US crude production is expected to rise by 850K barrels per day to record 12.7M bpd in 2023, the report added, overtaking the last peak at 12.3M bpd in 2019.
Oil Edges Up on Higher US Economic Growth Outlook; China Import Slump Weighs
Excitement over Moody's warning for some medium size US banks stabilized in the PM & bargain hunters trimmed losses. However China's economy is having difficulties & that is weighing on the stock market. The pause in the recent rise in stocks should be healthy for the longer term.
Dow Jones Industrials
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