Today - Monday, November 24, 2014
- It's not about economic fundamentals, says Jeff Gundlach, but the Fed will be forced to hike rates next year because it's what's expected. "The Fed should not be raising interest rates, and yet they don't want to be at zero, they're in a conundrum ... They might raise rates just to see what happens."
- As for the long end, Gundlach's big bat is on a flattening of the curve sometime in the next year of two "at a level previously thought unthinkable."
- Gundlach's Total Return Fund (DBLTX, DLTNX) is on a roll, with nine straight months of inflows, including about $4B in the few weeks following Bill Gross' departure from Pimco.
- ETFs: TBT, TLT, TMV, SHY, IEF, TBF, EDV, PST, TMF, TTT, ZROZ, SBND, TLH, IEI, TYO, VGLT, DLBS, DTYS, BIL, UST, UBT, STPP, TLO, VGSH, PLW, VGIT, SHV, GOVT, FLAT, TBX, SCHO, GSY, TENZ, DTYL, SCHR, TYD, LBND, ITE, DTUS, TYBS, DLBL, SST, DTUL, TUZ, DFVL, FIVZ, TBZ, DFVS, TYNS, TAPR, SYTL
- November US PMI Services Index flash: 56.3 (preliminary) vs. 57.3 consensus, 57.1 in October.
- "A fifth-consecutive monthly slowing in growth in the service sector adds to signs that the economic upturn has lost considerable momentum, though it’s important to note that the pace of expansion remains robust by historical standards", Chris Williamson, chief economist at Markit.
- U.S. imports of crude oil from OPEC nations are at their lowest level in almost 30 years, reports FT, underlining the impact of the shale revolution and advances in hydraulic fracturing.
- In August, OPEC’s share of U.S. crude oil imports dropped to 40% – accounting for 2.9M bpd – the lowest since May 1985. At its 1976 peak it stood at about 88%.
- OPEC leaders will meet in Vienna on Thursday to consider cutting output to shore up prices.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM, TWTI
Friday, November 21, 2014
- President Obama has outlined plans to use executive authority to help millions of illegal immigrants, granting them the chance to apply for work permits and a temporary reprieve from deportation.
- "I will make it easier and faster for high-skilled immigrants, graduates and entrepreneurs to stay and contribute to our economy, as so many business leaders have proposed," Obama announced.
- The move marks the most sweeping changes to the nation's immigration laws in nearly three decades, setting off a fierce fight with Republicans over the limits of presidential powers.
Thursday, November 20, 2014
- The average rate for a 30-year fixed-rate mortgage declined to 3.99% from the prior week's average of 4.01%, according to Freddie Mac's latest weekly report, while the average 15-year fixed fell to 3.17% from 3.20% a week ago.
- A year ago, the 30-year and 15-year mortgages averaged 4.22% and 3.27%, respectively.
Wednesday, November 19, 2014
- October FOMC minutes show officials debated what to say about the pace of coming rate hikes, indicating the Fed still is on track to raise rates next year.
- Fed officials expressed concern that inflation may stay low "for quite some time" despite efforts to jump-start the economy.
- There was a debate over whether to keep references to "considerable time" in keep rates low, with a "couple" opposed to removing them because it would be seen as signaling a significant policy change.
- Alan Greenspan called it a "conundrum," but some just saw it as another failure of the Fed's central planning.
- “We wanted to control the federal funds rate, but ran into trouble because long-term rates did not, as they always had previously, respond to the rise in short-term rates,” recently said the Maestro, harking back to the middle of the last decade when yields at the long end of the curve fell despite the stomping of Greenspan's feet.
- Today's crop of bond investors is again betting on the market instead of the Fed, taking long-term rates down even as central bankers prep hikes on the short end. A rising short end combined with a stable or falling long end could quickly lead to an inverted yield curve, "turn(ing) credit creation on its head," says economics professor Tim Duy. "I'm sort of wondering what's the game plan here."
- One tool today's crop of central bankers has that Greenspan didn't: A $4.49T portfolio accumulated thanks to three rounds of QE. A sale of some of those assets could be a way to lift long-term rates, suggests Barclays' Michael Gapen. Ugh.
- ETFs: TBT, TLT, TMV, IEF, TBF, EDV, PST, TMF, TTT, ZROZ, SBND, TLH, IEI, TYO, VGLT, DLBS, DTYS, UST, UBT, TLO, PLW, VGIT, GOVT, TBX, GSY, TENZ, DTYL, SCHR, TYD, LBND, ITE, DLBL, TYBS, TBZ, DFVL, FIVZ, DFVS, TYNS, TAPR, SYTL
- Single-family starts in October of 696K (the highest pace since Nov. 2013) were up 4.2% from September, while far-more-volatile multi-family starts fell 15.5%.
- Overall housing starts 1.01M were up 7.8% from a year ago.
- Full report
- Home construction ETFs: ITB, XHB
- Previously: Housing starts fall 2.8% in October
- Target (NYSE:TGT) reports a 1.2% gain in comparable-store sales for the U.S. segment in Q3. The mark is better than 0.5% comp that Wal-Mart recorded for an overlapping period.
- U.S. segment transactions -0.4%. Average transaction price +1.6%.
- Sales in the Canada segment were up 44% - slightly below expectations. Gross margin rate in Canada fell in at 14.8%.
- Digital sales rose 30% during the quarter.
- Consolidated SG&A expenses rose 1.1% to $3.894B.
- Inventory +26.2% to $11.066B, due in part to the higher store count in Canada.
- Guidance: Q4 EPS of $1.13-41.23 expected vs. $1.22 consensus and full-year EPS of $3.15-$3.25 vs. $3.19 consensus.
- TGT +2.7% premarket.
Tuesday, November 18, 2014
- “Growing confidence among consumers is what’s fueling this optimism among builders,” says NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, DE. “Members in many areas of the country continue to see increasing buyer traffic and signed contracts.”
- This month''s read of 58 is four points higher than October, and three points better than consensus estimates.
- The index of current sales conditions rose five points to 62, while the index for futures sales gained two points to 66. An index gauging prospective buyer traffic added four points to 45.
- ITB +0.5%, XHB +0.6%
- Previously: NAHB Housing Market Index