Dow went up 160, advancers over decliners better than 3-1 & NAZ frll 23. The MLP index rose 2+ to the 247s following strength in oil & the REIT index recovered 3+ to the 362s. Junk bond funds were mixed & Treasuries saw buying which reduced yields. Oil slid back pennies in the 91s after its recent rise & gold gained 11 to 1965.
AMJ (Alerian MLP Index tracking fund)
Ford narrowly avoided a dual labor strike in the US & Canada with the automaker and the Canadian union, Unifor, announcing a tentative deal yesterday. Unifor, which represents roughly 18K workers at Ford (F), General Motors (GM) Stellantis (STLA) plants in Canada, threatened to go on strike at all 3 of Ford's plants in the country if a deal was not reached by yesterday. "We leveraged our union’s most powerful weapon: the right to strike," Unifor said of the tentative deal. "The gains achieved were hard fought for over weeks of negotiation." A Unifor strike would have impacted Ford's Oakville Assembly Plant which produces the Ford Edge & Lincoln Nautilus crossovers as well as 2 engine plants that produce V8 engines. The agreement remains subject to ratification by Unifor members, Ford's Canada unit said. Due to the tentative agreement, the strike's deadline has been extended for 24-hours. Unifor said that workers are seeking wage increases of 36% over 4 years, improved pensions, as well as support in the transition to electric vehicles & additional investment The union said that their tentative agreement with will act as a model with GM & STLA, whose deadlines had been extended while the Ford talks proceed.commitments by Ford. The stock fell 31¢.
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Ford reaches tentative agreement with Canadian auto workers
The Federal Reserve will publish shortly its latest economic forecasts. There
will be an intense focus on the Summary of Economic Projections, which
is the Fed's own estimates for GDP growth, the unemployment rate,
inflation & the appropriate policy interest rate. The summary will be released as an addendum to the statement following the Federal Open Market Committee meeting. Investors will carefully study these projections & they will likely move the market. But should you change your investment portfolio based on the Fed's projections? You probably should not. Larry
Swedroe, head of financial & economic research at Buckingham
Strategic Wealth, for decades has studied economic forecasts of everyone
from stock-picking gurus to the Federal Reserve. He has this piece of advice: Don't base your investment decisions on what the Fed says. Or anyone else, for that matter. Swedroe
recently said after he looked at one simple metric: the
Fed's effort to project its interest rate increases for 2022. Swedroe
noted that at the end of 2021, the Federal Reserve forecast that it
would need to raise rates 3 times & that its policy target rate
would end 2022 below 1%. What actually happened? The Federal
Reserve raised the Fed funds rate 7 times in 2022, ending the year
with the target rate at 4.25%-4.50%.
Take the Fed forecast with a grain of salt. It has a terrible track record
Mortgage rates rose again last week & so did demand for refinances, which at face value doesn't make a lot of sense. Applications to refinance a home loan jumped 13% last week compared with the previous week, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index. Application volume was still 29% lower than the same week one year ago. Refinancing demand usually moves in the opposite direction as mortgage rates, but that was not the case. Last week the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726K or less) increased to 7.31% from 7.27%, with points remaining unchanged from 0.72 (including the origination fee) for loans with a 20% down payment. It may be that borrowers are concerned rates could go even higher, so they're jumping in now. It may also be that the number of refinances are so small right now that any minor change results in a big percentage move. Applications for a mortgage to purchase a home increased 2% for the week & were 26% lower than the same week one year ago. “Purchase applications increased for conventional and FHA loans over the week,” said Joel Kan, an MBA economist. “Homebuyers continue to face higher rates and limited for-sale inventory, which have made purchase conditions more challenging.” With home prices now rising again, the average loan size on a purchase application was $416K, the highest level in 6 weeks. Demand may be coming back, because more homes have recently come on the market. The overall level of supply, however, is still quite low, which is leading to bidding wars again.
Weekly mortgage demand increases, driven by a strange surge in refinancing
Dow Jones Industrials
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