Dow went up 129, advancers over decliners 5-2 & NAZ added 97. The MLP index rose 2+ to the 152s & the REIT index climbed 3+ to the 388s. Junk bond funds crawled higher & Treasuries were sold. Oil slid lower but held above 60 & gold recovered 9 to 1784.
AMJ (Alerian MLP index tracking fund)
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US home sales unexpectedly rose in Jan despite tight inventories boosting house prices. The National Association of Realtors said that existing home sales increased 0.6% to a seasonally adjusted annual rate of 6.69M units last month. Sales have been increasing even as contracts have been declining. The forecast sales called for a fall of 1.5% to a rate of 6.61M. Home resales, which account for the bulk of US home sales, surged 23.7% on a year-on-year basis. The housing market, the economy's star performer during the COVID-19 recession, is being supported by historically low mortgage rates & demand for spacious accommodations for home offices & schooling, mostly in the suburbs & other lower-density areas. But demand has far outstripped supply, driving up home prices. About 23.2% of the labor force is working from home. There were a record-low 1.04M previously owned homes on the market in Jan, down 25.7% from one year ago. The median existing house price shot up 14.1% from a year ago to $304K in Jan. The inventory crunch could ease as builders step up construction, though they are facing challenges from record lumber prices as well as shortages of land & labor. The gov reported yesterday that permits for future home building soared in Jan to their highest level since 2006.
US existing home sales unexpectedly rise in January
US business leaders expect to cut fewer jobs & a growing number plan to sharply raise employees' pay in the months ahead as confidence in the economic outlook surges amid the rollout of COVID-19 vaccines, a survey showed. The Conference Board's “Measure of CEO Confidence” showed chief execs were the most confident they had been since 2004. It also indicated that 36% of CEOs planned pay increases for their employees of more than 3% in the next 12 months, up from 22% in the previous survey in Sep. And just 12% expect to cut jobs in the next year, down from 34% previously. The survey, conducted between Jan 14-29, also found that 45% of CEOs expect to increase capital spending, up from 25% in Sep & 47% plan to expand their workforce, up from 33%. In addition, 82% of CEOs expected economic conditions to improve over the next 6 months, up from 63% in the previous survey & those expecting conditions to worsen saw a cut from 15% to 7%.
CEO confidence in U.S. economic outlook reaches 17-year high
Treasury Secretary Janet Yellen said a large stimulus package is still necessary to get the economy back to full strength, despite momentum suggesting that growth is off to a faster start than anticipated in 2021. She said the $1.9T proposal could help the US get back to full employment in a year. “We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing.” “I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run,” she added. Yellen said she’s not worried that all of the gov spending could cause inflation down the road. “Inflation has been very low for over a decade, and you know it’s a risk, but it’s a risk that the Federal Reserve and others have tools to address,” she continued. “The greater risk is of scarring the people, having this pandemic take a permanent lifelong toll on their lives and livelihoods.” Her comments come against the backdrop of a brightening economic picture in the US as the COVID-19 pandemic subsides. Recent data has shown unusual strength in retail sales, albeit thanks to late-2020 stimulus checks from Congress, as well as continued gains in real estate & manufacturing. A tracker from the Atlanta Federal Reserve that gauges GDP growth is indicating a gain of 9.5% in Q1. However, the employment picture remains murky, with 10M workers still out of jobs including Ms relating to business shutdowns instituted by govs in response to the pandemic. Yesterday, the Labor Dept reported another 861K claims for jobless benefits last week, still well above anything seen since the coronavirus hit.
Yellen makes push for major stimulus, sees bigger risk in not doing enough
Strong home sales, confidence by execs & Yellen's comments about more stimulus are bringing out buyers for stocks. The popular averages remain near or at record highs.
Dow Jones Industrials
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