Dow finished up 10,, advancers over decliners 5-4 & NAZ was settled 14 higher. The MLP index jumped 5+ to the 327s & the REIT index added 1 to the 408s. Junk bond funds remained mixed & Treasuries were sold raising yields. Oil gained 1+ to the 71s & gold soared 53 to 2954 (more on both below).
Dow Jones Industrials
Sentiment among the nation’s single-family homebuilders dropped to the lowest level in 5 months in Feb, largely due to concern over tariffs, which would raise their costs significantly. The National Association of Home Builders' Housing Market Index (HMI) dropped a sharp 5 points from Jan to a reading of 42. Anything below 50 is considered negative sentiment. Last February, the index stood at 48. “While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty and cost factors created a reset for 2025 expectations in the most recent HMI,” said NAHB Chairman Carl Harris. Of the index's 3 components, current sales conditions fell 4 points to 46, buyer traffic fell 3 points to 29 & sales expectations in the next 6 months plunged 13 points to 46. That last component hit its lowest level since Dec 2023. Builders are already facing elevated mortgage rates. The average on the 30-year fixed mortgage rate was above 7% for Jan & Feb after earlier being in the 6% range. Home prices are also higher than they were a year ago, weakening affordability further. While Pres Trump's tariffs on Canada & Mexico, originally proposed to take effect in early Feb, were delayed roughly a month, builders are still expecting higher costs. “With 32% of appliances and 30% of softwood lumber coming from international trade, uncertainty over the scale and scope of tariffs has builders further concerned about costs,” said NAHB chief economist Robert Dietz. Homebuilder sentiment had been gaining steadily since Aug on the expectation of lower mortgage rates &, as the builders noted, potential pro-development policies. Single-family housing starts are trending lower than they were a year ago, despite a lean supply of existing homes for sale. The drop in builder sentiment, coming right before the all-important spring market, signals potentially even less supply in the market. Several homebuilders have noted the pullback in buyer demand in recent earnings reports. This may be because incentives are becoming less effective at attracting buyers, since high prices & high rates have reduced the pool of buyers for whom these benefits move the needle, according to the NAHB.
U.S. homebuilders raise alarm over tariffs as sentiment falls to 5-month lowMexico's Economy Secretary Marcelo Ebrard said that he will meet with Trump administration officials in DC on Thurs in what he called “the first conversation” in a series of negotiations between the 2 countries. The meeting comes at a fragile moment for the 2 neighbors, whose bilateral trade exceeded $800B last year. Pres Trump has threatened to impose 25% tariffs on all imports from Mexico, though so far limited them to steel & aluminum, & signed an exec order to rename the Gulf of Mexico as the Gulf of America. “In our first meeting, we will clarify the proposals put forth by the United States, and what the new administration aims to achieve," Ebrard said. “Then we’ll put Mexico’s arguments on the table, particularly those concerning the (economic) integration between the two nations." Ebrard said he would meet with Secretary of Commerce Howard Lutnick & a number of Trump officials in a conversation that would focus on the steel & aluminum tariffs, as well as the importance of the country's bilateral trade relationship. Ebrard added that he hoped to make a range of other proposals to “improve” the existing trade relationship. Meanwhile, Trump's wider tariff threat looms, something analysts say could trigger a recession in Mexico. The imposition of broader tariffs would likely start a trade war, with Mexico Pres Claudia Sheinbaum promising reciprocal tariffs, both of which would result in price increases for American consumers.
Mexico's economy secretary to meet with Trump officials in US in 'first conversation' on trade
About ½ of the middle managers at Ford (F) will not get stock bonuses this year in what is seen internally as CEO Jim Farley's latest attempt to cut the automaker's bloated costs, according to people familiar with the matter. The stock awards are usually paid in Mar, but senior managers have been told to select which ½ of their middle management staff will receive them. Ford said the change was meant to incentivize an improvement in employee performance. "We are focused on driving a high-performance culture that recognizes and rewards employees for their business contributions," a Ford spokesperson said. The automaker has struggled with inefficient operations, within both its cash-burning electric vehicle division & its fuel-powered vehicle business. Farley has for years told employees & investors that Ford is undergoing a fundamental transformation to become leaner & more competitive, as it races against US rivals as well as Chinese automakers & EV producer Tesla (TSLA). The automaker and its competitors are also navigating the uncertainty of Pres Trump's trade policies, which Farley said have added "a lot of cost and a lot of chaos." The stock was up 10¢.
Ford slashes manager stock bonuses to cut costs, boost performance
Gold prices rose for a 2nd straight session, but traded below the all-time high, as uncertainty around Pres Trump's tariff plans continued to fuel economic growth concerns & safe haven flows into bullion. Spot gold gained 0.6% to $2914 an ounce after hitting a record high of $2942 last week. US gold futures added 1% to $2928. Trump's disruptive & aggressive rhetoric tariffs - whether actual or threatened - could unravel global trade & intricate supply chains. With uncertainty surrounding the global economy & the broader geopolitical landscape in the Trump era, gold is set to remain a natural beneficiary of risk-off flows & central bank buying. Since taking office last month, Trump has swiftly redrawn the global trade battlefield with a series of tariffs, while plans are already in motion for sweeping reciprocal tariffs, aimed squarely at any nation that taxes US products.
Gold extends gains as Trump tariffs fuel safe haven flows
Oil extended gains after a drone attack on an oil pipeline pumping station in Russia reduced flows from Kazakhstan, though prices were kept in check by the prospect of rising supply. Brent crude futures gained 44¢ (0.6%) to $75.66 per barrel. US West Texas Intermediate crude futures were up 91¢ from Fri's close to $71.65 a barrel. There was no settlement for WTI on Mon because of the US Pres Day holiday. The overriding theme driving oil prices lately has been around supply expectations. With the weakness in prices over past weeks, news of a drone strike on Kazakhstan's export pipeline in Russia has provided the catalyst for some bearish sentiment to unwind. A senior Russian official said today that Ukrainian drones had attacked a Russian pipeline that pumps about 1% of global crude supply. The damage could reduce oil transit volumes from Kazakhstan by about 30% & take up to 2 months to deal with, Russian oil transport company Transneft said. Markets were also awaiting news from Russia-Ukraine peace talks between US & Russian officials in Saudi Arabia later today. There is seemingly plenty to be bearish about in the crude market, the biggest factor now being the outcome of Ukraine negotiations.
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