Dow sank 388 (near session lows), decliners over advancers a notable 5-1 & NAZ dropped 207. The MLP index declined 3+ to the 243s & the REIT index fell 6+ to the 337s. Junk bond funds were lower & Treasuries had modest selling. Oil climbed well above 90 & gold fell 19 to 1916, a 6 month low (more below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Sales of new US homes unexpectedly dropped in Aug as a spike in mortgage rates weighed heavily on consumer demand. New single-family home purchases plummeted 8.7% to a seasonally adjusted annual rate of 675K units, the Commerce Dept reported. The forecast expected new home sales – which account for a small percentage of total sales, to come in at a rate of 700K units. Sales remain up about 5.8% from the same time one year ago. "The pace of new home construction is slowing, but there is still a large backlog of homes in the funnel that should continue making their way to the market in the coming months, giving more opportunities for home buyers to jump on the new construction train," said Nicole Bachaud, Zillow senior economist. At the current pace of sales, it would take roughly 7.8 months to exhaust the inventory of existing homes. A pace of 6-7 months as a healthy level. The decline in sales indicates that a resurgence in mortgage rates is pushing many would-be buyers out of the market. That slowdown in demand contributed to a decline in prices last month. The median price for a new home fell to $430K from $436K the previous month. Still, that remains far higher than the typical pre-pandemic level. Sales of previously owned homes slid 0.7% in Aug from the previous month to an annual rate of 4.04M units, according to the National Association of Realtors (NAR). On an annual basis, existing home sales are down 15.3% when compared with Aug 2022. "All of the momentum for the housing market early in 2023 has evaporated in the face of rising mortgage rates," said Ben Ayers, Nationwide chief economist. "Overall demand for single-family homes has cratered as the burden of a mortgage payment climbs to unsustainable levels."
Mortgage rate resurgence sends new home sales tumbling
Minneapolis Federal Reserve Pres Neel Kashkari thinks there's nearly a 50-50 chance that interest rates will need to move significantly higher to bring down inflation. In an essay the central bank official posted, he said there's a strong case to be made that the US economy is headed toward a “high-pressure equilibrium.” Such a condition would involve continued growth featuring strong consumer spending & “the economic flywheel spinning.” In that instance, the inflation rate falls but stays above the Fed's 2% target, posing a challenge for policymakers. “The case supporting this scenario is that most of the disinflationary gains we have observed to date have been due to supply-side factors, such as workers reentering the labor force and supply chains resolving, rather than monetary policy restraining demand,” he wrote in a post titled, “Policy Has Tightened a Lot. Is It Enough?” Noting that rate-sensitive areas such as housing & autos have held strong despite Fed tightening, Kashkari remarked, “These dynamics raise the question, How tight is policy right now? If policy were truly tight, would we observe such robust activity?” Services inflation, excluding the cost of renting shelter, has been coming down, but has otherwise remained elevated, raising longer-term concerns. “Once supply factors have fully recovered, is policy tight enough to complete the job of bringing services inflation back to target? It might not be, in which case we would have to push the federal funds rate higher, potentially meaningfully higher,” Kashkari said. “Today I put a 40 percent probability on this scenario.” Of course, that still means he assigns a 60% chance of the Fed sticking its “soft-landing” goal, with inflation coming back to the goal without a harmful recession. He cited “the actual progress we have made against inflation and the actual labor market performance” as factors contributing to policymakers reaching their goal. Several other Fed officials recently have stated they, at the least, expect to keep rates elevated for a prolonged period of time.
Fed’s Neel Kashkari sees 40% chance of ‘meaningfully higher’ interest rates
UPS announced that it's prepared to hire more than 100K workers for the holiday season. The
company is seeking to fill full- & part-time seasonal positions
around the nation & is primarily in need of seasonal delivery drivers,
drivers with a commercial driver's license & package handlers to help
with the influx of packages that are shipped during the season. Permanent positions are also available. UPS, which faces its busiest time during the holidays, said that it is offering "competitive wages and multiple shifts in hundreds of locations across the country." UPS also said that its digital application process takes less
than 20 minutes for most candidates & that nearly 80% of seasonal positions don't require an interview. Its
hiring initiative comes at a time when the company is facing financial
repercussions from the contentious labor negotiations that were resolved
in Jul & finalized last month. CEO Carol Tomé said that the
company is "stronger than ever" & that it will continue to "stay on
strategy to capture growth in the most attractive parts of the market
and make our global integrated network even more efficient." The stock fell 2.40 in a down market.
If you would like to learn more about UPS, click on this link:
club.ino.com/trend/analysis/stock/UPS_aid=CD3289&a_bid=6aeoso5b6f7
UPS hiring over 100,000 holiday workers
Gold futures closed with a loss, even as treasury yields narrowed as the $ rose to near a 10-month high. Gold for Dec closed down $16 to settle at $1919 per ounce. The drop comes as the $ rose, touching highest since Nov, with the ICE dollar index last seen up 0.18 points to 105.18, after earlier touching 106.2. Treasury yields were lower, bullish for gold since it offers no interest. The 2-year note was last seen paying 5.132%, down 1.7 basis points, while the yield on the 10-year note was down 0.2 basis points to 4.539%.
Gold With A Loss Despite Lower Treasury Yields As The Dollar Touches A 10-Month High
West Texas Intermediate (WTI) crude oil closed higher on supply worries even as the $ rose to the highest since Nov. WTI crude for Nov closed up 71¢ to settle at $90.39 per barrel, while Nov Brent crude, the global benchmark, was last seen up 75¢ to $94.04. The rise comes even as the $ touched a 10-month high, making oil more expensive for intl buyers, while concerns over rising interest rates continue to worry investors. Still tight supply is backstopping prices following Saudi Arabia's 1M barrel per day production cut, slated to last to year end, & Russia's 0.3M bpd cut over the same period. Those cuts alone were sufficient for the Intl Energy Agency to earlier this month warn of a "a substantial market deficit" in Q4.
WTI Crude Closes Back Above US$90 on Supply Worries Despite a Strong Dollar and Rate Hike Concerns
There has been a large number of dreary stories recently. High interest rates which have the potential to last for a long time are the common theme & investors are afraid to commit to stocks (i.s. risky investments).Dow Jones Industrials
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