Markets pause ahead of tomorrow's inflation report

Dow gained 54, advancers barely ahead of decliners & NAZ gave back 30.  The MLP index went up 1 to the 246s & the REIT index remained weak, down 3 to 336.  Junk bond funds drifted lower & Treasuries were pretty much steady ahead of tomorrow's inflation report.  Oil rose 1+ to the 78s & gold was up 13 to 1950 (more on both below).

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Amid a volatile interest rate environment &, a housing market battered by high home prices, many real estate agents expect homebuying to remain at slow pace thru the end of 2023, according to a survey by Bright MLS – a real estate company covering the Mid-Atlantic region.  Nearly a 3rd of Bright agents expect buyer activity to be "low to very low" over the next 3 months, the survey said.  That is up 10 percentage points from the previous month.  Additionally, only 25.7% said they expect the market to be "high to very high," down from 34.9% in Aug.  The agency attributes these sentiments to various factors including home prices, mortgage rates & housing inventory.  "With mortgage rates remaining at or above 7% for the foreseeable future at a time when seasonality impacts the housing market, an increasing number of real estate agents are expecting the Mid-Atlantic housing market to remain slow through the remainder of 2023," Bright MLS said.  65% of Bright MLS agents forecast "low to very low" seller activity & only 5.4% predict a "high to very high" number of home sales thru the rest of 2023.  The number of active listings for homes decreased by nearly 21% year-over-year in Aug, according to a report by Redfin.  And as many sellers remain reluctant to put their homes on the market & give up lower mortgage rates they closed on before the spike, they're contributing to an inventory shortage affecting the market.  "With interest rates hovering at a 21-year high, home prices at near records and just a fraction of homes typically on the market to choose from, the housing market is contracting on both sides," Bright MLS Chief Economist Lisa Sturtevant said.  "Buyers are increasingly getting priced out, but potential sellers are also staying on the sidelines with little incentive to sell if it means trading a 3% rate for a 7% mortgage. This will put a damper on the Mid-Atlantic housing market through the year-end. However, next year could be different as many of the agents surveyed believe 2024 will bring both more buyers and sellers."  And many sellers may need to jump back into the market soon.  "New listings have likely bottomed out," Redfin Economics Research Lead Chen Zhao said.  "Most of the homeowners who feel handcuffed by high rates have already made the decision not to sell. That means many of today’s sellers are putting their homes on the market because they have to, in some cases due to divorce, family emergencies or return-to-office policies."

Homebuying to remain slow through 2023: agent survey

As Americans grapple with record-high debt & stubborn inflation, many also struggle with credit card debt.  61% of Americans have credit card debt today & they owe an average of $5875, according to a survey by Clever.  And many aren't just using plastic for luxury.  About 48% turn to their cards to cover essential living expenses such as rent, food and utilities.  Some are falling behind.  About 28% of card users say they find it difficult to make the minimum payments on their credit cards & 14% say they've missed a payment this year.  On average, Americans spend $1506 on their credit cards each month.  "Headlines hammering the uncertainty of the economy have put even cautious card users on edge," Clever said in its report.  Of the 39% of Americans who aren't in credit card debt, about one-third (31%) worry they'll go into debt in the next five years."  For the first time, Americans collectively amassed more than $1T in credit card debt in the 2nd qtr of 2023, according to a report by the Federal Reserve Bank of New York. And many find themselves turning to credit cards at an alarming rate. 2 in 5 Americans with credit cards said they are more dependent on their credit cards than ever before, according to a survey by Quicken.   And 35% said they won't be able to pay off their credit card debt before the end of the year.kl  In addition, another 35% of respondents said they'd likely max out at least one credit card by the end of 2023.  "This increased reliance on credit cards is likely to lead many even deeper into debt –which is especially troublesome with interest rates well into the double digits," Quicken said in its survey report.  While the Federal Reserve paused its interest rate hikes in Sep, inflation remains high, many consumers are taking advantage of personal loans.

Alarming number of Americans fall deeper into credit card debt each month: survey

Amazon (AMZN) announced it will cut more than 180 jobs in its Amazon Games division as it refocuses its efforts on Prime Gaming, according to an internal company memo.  The company will close its Game Growth & Crown Channel initiatives as part of the restructuring.   Now, AMZN will focus on upcoming launches such as “Throne and Liberty”& “Blue Protocol,” as well as future initiatives such as “Tomb Raider” & “The Lord of the Rings” games, Christoph Hartmann, VP of Amazon Games, wrote in a memo to employees.   “I know this is difficult news and that the impact will be felt widely,” Hartmann added.  “It never feels good to say goodbye to colleagues. This isn’t a decision the leadership team came to quickly; it was the result of extensive considerations and road mapping for our future.”  The latest job cuts at AMZN come as CEO Andy Jassy has been in cost-cutting mode over the past year as the company has battled high interest rates & inflation.  As a result, AMZN has carried out the largest layoffs in its history, cutting 27K jobs since last fall.  The company also froze corp hiring & Jassy has looked to trim expenses in units across the company.  In Oct, AMZN reported 3rd-qtr earnings that suggested its cost cutting has been paying off.  Revenue rose 13% to $143B, while net income more than tripled to $9.9B from $2.9B a year earlier.  The stock fell 97¢.
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Amazon cuts more than 180 jobs in gaming division

Gold rose as traders await the release of US inflation data tomorrow that may signal the Federal Reserve's path forward on interest rates.  The consumer price index excluding food & fuel, a measure favored by economists as a better indicator of underlying inflation, is seen increasing 0.3% for a 3rd month, which could support a hawkish stance from Federal Reserve officials.  Higher rates are typically negative for non-interest bearing gold.  Even as markets lean more dovish on the rates outlook, the precious metal lately has come under pressure amid increasing doubts over whether monetary tightening has ended.  Fed Chair Jerome Powell said last week the central bank won't hesitate to hike further if needed.  Bullion surged to more than $2000 an ounce in the wake of last month's conflict in the Middle East.  Fears of a wider escalation have subsided in the past 2 weeks, easing demand for safe-haven assets such as gold.  Treasury yields slipped after advancing earlier along with the $, helping lifting bullion prices.  Spot gold edged up 0.3% to $1946 an ounce.

Gold, Copper Advance as Markets Look Ahead to US Inflation Data

Oil futures settled with a gain & extended their advance into a 3rd session in a row, after posting losses in each of the last 3 weeks.  The market continues to believe that robust demand, slowing US supply growth & low OPEC supply together imply a modest 2024 deficit & gently declining inventories.   Dec West Texas Intermediate crude rose $1.09 (1.4%) to settle at $78.26 a barrel.

Oil prices settle higher after 3 consecutive weekly losses

Dow remained in the black for most of today's session & did not stray far away from breakeven.  Everybody is waiting to see tomorrow's inflation report.

Dow Jones Industrials