Dow advanced 825 at session highs, advancers over decliners 6-1 & NAZ jumped 360. The MLP index went up 6+ to 212 & the REIT index rose 6+ to the 371s. Junk bond funds were in demand in this rally & Treasuries saw modest buying, reducing yields. Oil was up 2+ to the 86s & gold advanced 30 to 1732 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
As the housing market continues to cool, the economy is expected to slip toward a recession by the start of next year, according to the latest Fannie Mae forecast. The mortgage company said that the combination of high inflation, monetary policy tightening & a slowing housing market could be what tips the economy into a modest recession in 2023, according to the Sep 2022 commentary from its Economic & Strategic Research (ESR) Group. GDP is projected to grow 1.3% in Q3 of this year, followed by 0.7% growth in Q4, Fannie Mae said. The economy will then shrink again in Q1-2023 with a contraction of -0.4%. Because mortgage rates continue to rise, the ESR Group lowered its forecast for total home sales to 5.7M in 2022 & 5.0 in 2023. This is down 17.2% annually & 12.8% annually, respectively. "The rise in rates is having the Fed’s desired effect on housing, as house price growth began to slow in June," Doug Duncan, Fannie Mae senior VP & chief economist, said. "We expect the slowdown in housing to continue through 2023 as affordability constraints mount for potential homebuyers, and considering, too, that refinance activity has been significantly curtailed by the rise in mortgage rates." Interest rates are expected to continue rising in the months ahead as the Federal Reserve continues to fight inflation. The ESR group said it anticipates that the federal funds rate will top out at a range of 3.5-3.75% in early 2023. That's up from the current targeted range of 3-3.25%. "In our view, the recent interest rate surge is due to the market’s recognition of two critical factors: that inflation is indeed not transitory, and that, to tame it, the Federal Reserve will need to be resolute, even at the risk of possible recession," Duncan said.
Housing market likely to tip economy into recession in 2023: Fannie Mae
Ford (F) sales in Q3 increased about 16% compared
with a year earlier, despite a larger-than-expected decline in
Sep. The automaker sold 142K vehicles last month, an 8.9% decline from a year
earlier. The drop caused the automaker to miss quarterly sales
expectations of Cox Automotive & Edmunds, which forecast gains of 19% & 17.8%, respectively. New vehicle demand “remains strong” with retail orders “rapidly
expanding,” according to Andrew Frick, Ford VP of sales,
distribution & trucks — despite rising interest rates & fears of an economic downturn or recession. Quarterly sales outpaced the industry, which auto analysts forecast to
be down by less than 1% compared with a year earlier. Automakers
continue to deal with supply chain issues, from semiconductors & wire
harnesses to smaller parts such as vehicle & company logos. Economic & supply chain issues caused Cox Automotive last month to lower
its 2022 new vehicle sales forecast to 13.7M, representing a
decline of more than 9% from 2021 & the lowest volume in a decade. The stock rose 89¢.
If you would like to learn more about Ford, click on this link:
club.ino.com/trend/analysis/stock/F?a_aid=CD3289&a_bid=6ae5b6f7
Ford’s sales up 16% in third quarter, despite September decline
Ukraine's counteroffensive in the east & south of the country continues to build momentum, with Pres Zelenskyy announcing last night that there were “new liberated settlements in several regions.” Yesterday, Ukrainian forces saw more successes on the battlefield, pushing thru Russian defenses in the south of the country, as well as consolidating their hold on territory around Lyman in the eastern Donetsk region & looking to push further into neighboring Luhansk. Pres Putin announced Russia was annexing both regions last Fri, as well as Kherson & Zaporizhzhia in the south, but Moscow's hold on them looks increasingly fragile with none of the regions fully occupied by Russian forces. In his nightly address, the Ukrainian pres said “fierce fighting continues in many areas of the front” but said an increasing number of occupying forces were trying to escape and “more and more losses are being inflicted on the enemy army.” Zelenskyy said Russian men who had been mobilized to fight in Ukraine just a few weeks ago were already dying in Ukraine. The Biden administration announced another $625M military aid package for Ukraine, bringing the US commitment to more than $16.8B since Russia invaded the country in late Feb.
Gold futures settled at their highest price in about 3 weeks. Analysts attributed the advance in precious metals prices over the past week to a pullback in Treasury yields & the $. Gold futures for Dec advanced $28 (1.7%) to settle at $1730 per ounce, the highest finish for a most-active contract since Sep 12. Gold has kicked off the final qtr of 2022 on a positive note, thanks to a softer $ & subdued Treasury yields. The metal's outlook will be influenced by the US jobs report on Fri.
Gold settles at highest price in 3 weeks as Treasury yields retreat
Oil futures rose, with US prices marking their highest
settlement since mid-Sep.
Reports said the Organization of the Petroleum Exporting Countries &
their allies will consider a production cut of 2M barrels per day
at their meeting tomorrow, higher than previous expectations for a 1M-barrel reduction.
Nov WTI crude rose $2.89 (3.5%) to settle at $86.52 barrel. That was the highest front-month
finish since Sep 14.
U.S. Oil Futures Settle at a Nearly 3-Week High on Bets for a Significant OPEC+ Output Cut
Stocks began the day with sharp gains & held that advance for the entire session. This was the best 2 days since the start of the pandemic. Hopes are running high that the worst of the rate hikes are over. But early inflation data is coming next week & that is not expected to be impressive.
Dow Jones Industrials
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