Dow slid back 131, decliners over advancers better than 3-2 & NAZ was off 42. The MLP index fell (along with oil prices) 2+ to the 249s & the REIT index stayed near 356. Junk bond funds inched higher & Treasuries had heavy buying which reduced yields. Oil sank almost 3 to the high 73s & gold rebounded 22 to 1987.
AMJ (Alerian MLP Index tracking fund)
Retail sales may have dropped in Oct
for the first time in 7 months, but Americans' spending spree is
expected to kick back into gear over Thanksgiving weekend during the
unofficial holiday shopping kickoff. The Intl Council of Shopping Centers' (ICSC) latest
Thanksgiving Weekend Intentions survey found that consumers expect to
spend a total of $130B during the period from Thanksgiving Day to
Cyber Monday, which is 4% more than they planned to shell out last
year. "Shoppers continue to remain optimistic about the upcoming holiday shopping weekend despite inflation," ICSC Pres & CEO Tom McGee said. "Although
economic uncertainty is still weighing on consumers, they’re
prioritizing holiday spending during this year’s shopping season and
looking to deals and promotions to guide their spending habits," he said. 99% of survey respondents said they plan to shop over the
Black Friday weekend & 2 in 5 expect to spend more than in 2022. 7 in 10 plan to use promotions to stock up on everyday essentials & 71% said they plan to research the prices of items they want to buy
in advance to get the best deals. Some 90% of those who plan to shop over the Thanksgiving weekend plan to
visit a store either to buy items or pick up an online purchase &
84% plan to make purchases online. The top way consumers plan to pay is
by debit cards (65%), followed by credit cards (49%) & cash (45%). 13% plan to make purchases using buy-now, pay-later options. The survey found that most of the shopping during Thanksgiving weekend
will occur on Black Friday, when 80% of consumers plan to make
purchases & Cyber Monday, when 81% say they will shop. According to a separate survey, consumers are not only planning on
spending more this holiday season than last year, they expect to do so
over a shorter time. Deloitte's
2023 holiday survey found that consumers plan to spend an average of
$1652 over the entirety of the season, surpassing pre-pandemic figures
for the first time. Americans also plan to complete their shopping over
5.8, down from 7.4 weeks pre-COVID.
US consumer spending over Thanksgiving weekend expected to reach $130 billion
High mortgage rates continue to weigh on the nation's homebuilders, leading to an increase in price cuts to lure buyers. But builders are cautiously optimistic about recent signs that interest rates may move lower soon. Homebuilder sentiment fell 6 points to 34 in Nov on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Anything below 50 is considered negative. The forecast expected the number to come in unchanged from Oct. “The rise in interest rates since the end of August has dampened builder views of market conditions, as a large number of prospective buyers were priced out of the market,” NAHB Chair Alicia Huey said. “Moreover, higher short-term interest rates have increased the cost of financing for home builders and land developers, adding another headwind for housing supply in a market low on resale inventory.” This marks the 4th straight month of declines. Sentiment is down 22 points since Jul & is now at the lowest level since the end of last year. The builders did note that nearly all of the monthly data for Nov was collected before the monthly consumer price index, released earlier this week, showed inflation moderating. “While builder sentiment was down again in November, recent macroeconomic data point to improving conditions for home construction in the coming months,” Robert Dietz, NAHB's chief economist, said. “In particular, the 10-year Treasury rate moved back to the 4.5% range for the first time since late September, which will help bring mortgage rates close to or below 7.5%,” he said. “Given the lack of existing home inventory, somewhat lower mortgage rates will price in housing demand and likely set the stage for improved builder views of market conditions in December.” Of the index's 3 components, current sales conditions fell 6 points to 40, sales expectations in the next 6 months dropped 5 points to 39 & buyer traffic fell 5 points to 21. More builders reported cutting prices in Nov – 36%, up from 32% in the previous 2 months. That is the highest share in this cycle tying the previous high 2 years ago. The average price cut was 6%.
Homebuilder sentiment drops to lowest point in a year, but falling rates spur some optimism
Cisco (CSCO), a Dow stock, plunged after
the networking hardware maker issued a glum forecast for the current
qtr & the full fiscal year. Revenue increased by 7.6% in the fiscal first qtr, which ended on Oct 28. EPS of 89¢ rose from 65¢ in the year-ago qtr. During
the qtr, new product orders slowed down, mainly because clients are
busy installing & implementing products after strong delivery in the 3 previous qtrs. “Our
customers and our sales organizations have been very clear with us over
the last 90 days that this is the issue,” CEO Chuck Robbins said. But he added that sales cycles remain
longer than usual. The company is projecting that 1 or 2 qtrs of shipped products are waiting to be implemented. With
respect to guidance, CSCO called for 82-84¢ in adjusted EPS on $12.6-12.8B in the fiscal 2nd qtr. That implies a 6.6% revenue decline. The forecast had expected 99¢ in adjusted EPS on $14.2B. CSCO
reduced its full-year forecast for revenue but bumped up its view for
earnings. The company now sees $3.87-3.93 & adjusted EPS on $53.8-55.0B in revenue. In Aug, it was
looking for $3.19-3.32 in adjusted EPS & $57.0-58.2B in revenue. The forecast had
expected $4.05 in adjusted EPS & revenue of $57.8B. The stock tumbled 6.18 (12%).
If you would like to learn more about CSCO, click on this link:
club.ino.com/trend/analysis/stock/CSCO_aid=CD3289&a_bid=6aeoso5b6f7
Cisco stock plunges on light guidance after product order slowdown
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