Another bout of bond volatility; treasuries yields fell on the week. Despite some rate stabilization, the recent backup in yields remains a key market headwind
Nearly half of S&P companies have reported earnings: the blended S&P 500 earnings growth rate for Q3 rose from -0.4% last week to 2.7%
Big macro week ahead: Powell likely to repeat last week’s messaging signaling the Fed would have to do less at the margin given recent FCI tightening
Summary
US equities were lower this week as the S&P 500 shed more than 2% for the week for a second-straight week and finished the week at the lowest levels since April.
Nasdaq was also lower for a third-straight week and is now ~12% below the recent 21-Jul peak.
Some of the worst performers this week included:
energy
big tech
airlines
rails
parcels and logistics
moneycenter banks
payment rails
semis
OEMs
apparel retail
media and entertainment
chemicals
life sciences
medtech and biotech
pharma
Outperformers included:
credit cards
homebuilders
travel and leisure
department stores
dollar stores
food
telecom
industrial metals
Treasuries were firmer across the curve after reversing an early-week selloff. The dollar index was up 0.4%. Gold finished the week up 0.2%. Bitcoin futures were up 14.5% on ETF approval optimism. WTI crude was down 2.9%.
What Happened
This week saw another bout of bond volatility. Treasuries yields fell on the week, though not before the 10Y yield on Monday rose above 5% for the first time since 2007, while the 2Y/10Y spread at one point fell to around -15 bp, the narrowest since Jul-22.
Despite some rate stabilization, the recent backup in yields remains a key market headwind. The bearish narrative around rates continues to center on factors including positive macro surprise momentum (and in turn the Fed’s hawkish reaction function), rising term premia and elevated Treasury volatility, risks around BoJ intervention (Bloomberg), more debt/deficit and supply concerns, sticky inflation (particularly shelter, energy, and goods), labor market resilience, signaling around the re-steepening of the yield curve, and QT headwinds (Bloomberg).
However, the bullish Treasury narrative got support this week from Bill Ackman, who closed his short on long-dated Treasuries, arguing the economy is slowing faster than recent data suggest.
This week also saw big flows into Treasuries, with Bank of America analysts noting this week’s total $9.2B inflow into Treasury funds was the largest since the March banking crisis, and the $5.6B inflow into long-duration Treasury funds was the largest on record.
Other pieces of the bullish Treasury narrative include geopolitical risks, valuations relative to equities, extended positioning, and some investors including fixed-income funds and foreign buyers starting to test the market again.
Analysts flagged Treasury volatility as a growing headwind for equities (Bloomberg). Stocks were also hit this week by underwhelming earnings and guidance takeaways. With around 49% of S&P 500 companies having reported Q3 earnings, the blended S&P 500 earnings growth rate for Q3 rose from -0.4% last week to 2.7%, and on pace for the first quarter of y/y earnings growth since Q3-22 (FactSet’s Earnings Insight).
However, despite the improvement in some of the headline earnings metrics this week, there has also been a ramp in scrutiny surrounding the magnitude of the expected rebound in Q4 and 2024 given macro uncertainty.
Strategists have also highlighted deteriorating earnings revisions breadth and weaker guidance trends with Q4 earnings growth expectations down ~150 bp in just the last few days. FT also noted that companies that have missed have been hit with unusually harsh stock reactions driven by the high rate backdrop and recession fears. Earnings misses saw average declines of 5.5% in the days following results, above the five-year average of 2.3%.
The Middle East is also becoming a bigger overhang amid fears that the Israel-Hamas war could turn into a wider Middle East conflict (FT).
However, there was a growing focus this week on oversold conditions. Bespoke Investment Group noted this week the S&P 500 is deeply oversold at over two standard deviations below its 50-DMA, while BofA’s Bull & Bear Indicator fell 0.4 points to 1.5, the lowest since last November.
Some other pieces of the bullish narrative around stocks included:
improving sentiment (a JPM survey showed most investors planning to increase equity exposure in a year)
more support for the peak Fed narrative
soft landing/no landing support from this week’s data
consumer resilience
stabilizing oil prices
removal of auto strike and House Speaker overhangs
more China policy support
Big Macro Week Ahead
The big event next week is the November FOMC meeting (1-Nov). Street previews showed no expected changes to the policy rate, while Powell is likely to repeat his messaging from last week’s appearance at the Economic Club of New York, where he signaled the Fed would have to do less at the margin given recent FCI tightening, though also said the current policy isn’t too tight, leaving the door open for more hikes.
Next week also brings the Treasury November refunding announcement (1-Nov), which will be under close scrutiny given Treasury supply is a key piece of the rising yield backdrop (Bloomberg).
Key labor market data next week include ADP payrolls on Wednesday (1-Nov) and nonfarm payrolls on Friday (3-Nov). The consensus is for a net increase of 155K, down from the big September surprise print of 336K.
The unemployment rate is expected to hold at 3.8%, while average hourly earnings are expected to accelerate 0.1pp to 0.3%, which would be the fastest since July.
Other data next week include October Consumer Confidence (31-Oct), October ISM Manufacturing and September JOLTS (1-Nov), and October ISM Services (3-Nov).
The Baker Hughes rig count was up 3 this week. There are 622 oil and gas rigs operating in the US – Down 147 from last year.
Metals Complex
This Week’s Employment Picture
Weekly Unemployment Claims– Released Thursday 10/19/2023 – In the week ending October 14, the advance figure for seasonally adjusted initial claims was 198,000 down 13,000 from the previous week’s revised level. The 4-week moving average was 205,750 a decrease of 1,000 from the previous week’s revised average.
September Jobs Report – BLS Summary– Released 10/6/2023 – The US economy added 336k non-farm jobs in September and the Unemployment rate was unchanged at 3.8%. Average hourly earnings increased 7 cents to $33.88. Hiring highlights include +70k Education and Health Services, +96k Leisure and Hospitality, and +73k Government.
Average hourly earnings increased 7 cents/0.2% to $33.88.
U3 unemployment rate was unchanged at 3.8%. U6 unemployment rate decreased 0.1% to 7.0%.
The labor force participation rate was unchanged at 62.8%.
Average work week was unchanged at 34.4 hours.
Job Openings & Labor Turnover Survey – JOLTS – Released 10/3/2023 – The number of job openings increased to 9.6 million on the last business day of August, the U.S. Bureau of Labor Statistics reported. Over the month the number of hires and total separations were little changed at 5.9 million and 5.7 million, respectively. Within separations, quits (3.6 million) and discharges (1.7 million) changed little.
Employment Cost Index– Released 7/28/2023 – Compensation costs for civilian workers increased 1.0% for the 3-month period ending in June 2023. The 12-month period ending in June 2023 saw compensation costs increase by 4.5. The 12-month period ending June 2022 increased 5.1%. Wages and salaries increased 4.6 percent over the 12-month June 2023 and increased 5.3 percent for the 12-month period ending in June 2022. Benefit costs increased 4.2 percent over the 12-month period ending June 2023 and increased 4.8 percent for the 12-month period ending in June 2022. This report is published quarterly.
This Week’s Economic Data
Existing Home Sales – Released 10/19/2023 – September 2023 brought 3.96 million in sales, a decrease of 2.0% from August. The median sales price was $394,300. The current unsold housing inventory was 3.4 months of inventory.
Housing Starts – Released 10/18/2023 –September housing starts came in at 1,358,000, 7.0% above the August estimate but is 7.2% below the September 2022 rate. Building permits were 4.4% below the August rate at $1,541,000 and 7.2% below the September 2022 rate.
Industrial Production and Capacity Utilization – Released 10/17/2023 – Industrial production increased 0.3% in September and increased 2.5% for the third quarter. Utilities output decreased 0.3%. Manufacturing increased 0.4%. Mining increased 0.4%. Capacity utilization increased to 79.7% in September, in line with its long-run average.
Retail Sales – Released 10/17/2023 – Headline retail sales increased 0.7% in September and are up 3.8% above September 2022.
Recent Economic Data
Consumer Price Index– Released 10/12/2023 – The Consumer Price Index for All Urban Consumers rose 0.4 percent in September on a seasonally adjusted basis, after increasing 0.6 percent in August. Over the last 12 months, the all items index increased 3.7 percent before seasonal adjustment.
Producer Price Index – Released 10/11/2023 – The Producer Price Index for final demand increased 0.5 percent in September, seasonally adjusted. Final demand increased 0.7 percent in August. On an unadjusted basis, the index for final demand moved up 2.2 percent for the 12 months ended in September.
Consumer Credit– Released 10/6/2023 – Consumer credit decreased at a seasonally adjusted annual rate of 3.8 percent in August. Revolving credit increased at an annual rate of 13.9 percent, while nonrevolving credit decreased at an annual rate of 9.8 percent.
U.S. Trade Balance– Released 10/5/2023 –The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $58.3 billion in August, down $6.4 billion from $64.7 billion in July. August exports were $256.0 billion, $4.1 billion more than July exports. August imports were $314.3 billion, $2.3 billion less than July imports. The August decrease in the goods and services deficit reflected an decrease in the goods deficit of $5.5 billion to $84.5 billion and an increase in the services surplus of $1.0 billion to $26.2 billion.
PMI Non-Manufacturing Index – Released 10/4/2023 – Economic activity in the services sector expanded in September for the ninth consecutive month as the Services PMI® registered 53.6 percent, 0.9 percentage points lower than August’s reading of 54.5 percent.
U.S. Construction Spending – Released 10/2/2023 – Construction spending during August 2023 was estimated at a seasonally adjusted annual rate of $1,983.5 billion, 0.5 percent above the revised July estimate of $1,973.7 billion. The August figure is 7.4 percent above the August 2022 estimate of $1,847.3 billion.
PMI Manufacturing Index– Released 10/2/2023 – The September Manufacturing PMI registered 49.0 percent, 1.4 percentage points higher than the 47.6 percent recorded in August. Regarding the overall economy, this figure indicates a month of expansion following nine months of contraction. The New Orders Index remained in contraction territory at 49.2 percent, 2.4 percentage points higher than the figure of 46.8 percent recorded in August. The Production Index reading of 52.5 percent is a 2.5-percentage point increase compared to August’s figure of 50.0 percent.
Chicago PMI – Released 9/29/2023 – Chicago PMI remained in contraction territory in September decreasing to 44.1 points down from 48.7 points in August. The reading marked the 13th consecutive month of contraction in business activity in the Chicago region, and it was stronger than the previous month.
US Light Vehicle Sales – Released 9/29/2023 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 15.035 million units in August.
Personal Income– Released 9/29/2023 – Personal income increased $87.6 billion (0.4 percent at a monthly rate) in August. Disposable personal income (DPI) increased $46.6 billion (0.2 percent). Personal consumption expenditures (PCE) increased $83.6 billion (0.4 percent).
Third Estimate of 2nd Quarter 2023 GDP – Released 9/28/2023 – Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2023, according to the “third” estimate released by the Bureau of Economic Analysis. The GDP estimate released today is based on more complete source data than were available for the “second” and “advance” estimates which had GDP increasing at 2.1 percent and 2.4 percent respectively. In the first quarter, real GDP increased 2.0 percent. The increase in real GDP reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, private inventory investment, and federal government spending that were partly offset by decreases in exports and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased. The update primarily reflected a downward revision to consumer spending that was partly offset by upward revisions to nonresidential fixed investment, exports, and inventory investment. Imports, which are a subtraction in the calculation of GDP, were revised down.
Durable Goods– Released 9/27/2023 – New orders for manufactured durable goods in August, up five of the last six months, increased $0.5 billion or 0.2 percent to $284.7 billion, the U.S. Census Bureau announced today. This followed a 5.6 percent July decrease. Excluding transportation, new orders increased 0.4 percent. Excluding defense, new orders decreased 0.7 percent. Machinery, up four of the last five months, led the increase, $0.2 billion or 0.5 percent to $37.8 billion.
New Residential Sales – Released 9/26/2023 – Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.7 percent below the revised July rate of 739,000 but is 5.8 percent above the August 2022 estimate of 638,000. The median sales price of new houses sold in August 2023 was $430,300. The average sales price was $514,000. At the end of August, the seasonally adjusted estimate of new homes for sale was 436,000, a supply of 7.8 months at the current sales rate.
Consumer Confidence – Released 9/26/2023 – Consumer Confidence decreased for the second consecutive month in September to 103.0, down from 108.7 in August. Expectations fell back below 80, the level that historically signals a recession within the next year. Consumer fears of an impending recession also ticked back up, consistent with the short and shallow economic contraction anticipated for the first half of 2024. Consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates.
Disclaimer
This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any stock, bond, currency or CFD contract.
Some information contained herein has been obtained from third party sources believed to be reliable, but has not been independently verified by us; its accuracy or completeness is not guaranteed. Our commentary is based on information considered to be reliable, but no representation is made that it is accurate or complete, and should not be relied upon as such.
The views expressed represent the opinions and beliefs at the time of this commentary and are not meant as a market forecast. These views are subject to change at any time based on market or other conditions and Good Life Advisors disclaims any responsibility to update such views. This information may not be relied on as advice or as an indication of trading intent on behalf of any portfolio. Portfolio investments may change at any time.
Economic and performance information referenced is historical and past performance does not guarantee future results. References to future returns are not promises or estimates of actual returns we may achieve, and should not be relied upon.
No investment strategy or risk management process can guarantee returns or eliminate risk in any market environment. Investing in securities involves risk of loss. Stock and Bond prices can decline significantly in response to adverse market conditions, company-specific events, and other domestic and international political and economic developments. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future.
While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Weekly Market Update | Week 43, 2023
Week 43 Key Talking Points
Summary
US equities were lower this week as the S&P 500 shed more than 2% for the week for a second-straight week and finished the week at the lowest levels since April.
Nasdaq was also lower for a third-straight week and is now ~12% below the recent 21-Jul peak.
Some of the worst performers this week included:
Outperformers included:
Treasuries were firmer across the curve after reversing an early-week selloff. The dollar index was up 0.4%. Gold finished the week up 0.2%. Bitcoin futures were up 14.5% on ETF approval optimism. WTI crude was down 2.9%.
What Happened
This week saw another bout of bond volatility. Treasuries yields fell on the week, though not before the 10Y yield on Monday rose above 5% for the first time since 2007, while the 2Y/10Y spread at one point fell to around -15 bp, the narrowest since Jul-22.
Despite some rate stabilization, the recent backup in yields remains a key market headwind. The bearish narrative around rates continues to center on factors including positive macro surprise momentum (and in turn the Fed’s hawkish reaction function), rising term premia and elevated Treasury volatility, risks around BoJ intervention (Bloomberg), more debt/deficit and supply concerns, sticky inflation (particularly shelter, energy, and goods), labor market resilience, signaling around the re-steepening of the yield curve, and QT headwinds (Bloomberg).
However, the bullish Treasury narrative got support this week from Bill Ackman, who closed his short on long-dated Treasuries, arguing the economy is slowing faster than recent data suggest.
This week also saw big flows into Treasuries, with Bank of America analysts noting this week’s total $9.2B inflow into Treasury funds was the largest since the March banking crisis, and the $5.6B inflow into long-duration Treasury funds was the largest on record.
Other pieces of the bullish Treasury narrative include geopolitical risks, valuations relative to equities, extended positioning, and some investors including fixed-income funds and foreign buyers starting to test the market again.
Analysts flagged Treasury volatility as a growing headwind for equities (Bloomberg). Stocks were also hit this week by underwhelming earnings and guidance takeaways. With around 49% of S&P 500 companies having reported Q3 earnings, the blended S&P 500 earnings growth rate for Q3 rose from -0.4% last week to 2.7%, and on pace for the first quarter of y/y earnings growth since Q3-22 (FactSet’s Earnings Insight).
However, despite the improvement in some of the headline earnings metrics this week, there has also been a ramp in scrutiny surrounding the magnitude of the expected rebound in Q4 and 2024 given macro uncertainty.
Strategists have also highlighted deteriorating earnings revisions breadth and weaker guidance trends with Q4 earnings growth expectations down ~150 bp in just the last few days. FT also noted that companies that have missed have been hit with unusually harsh stock reactions driven by the high rate backdrop and recession fears. Earnings misses saw average declines of 5.5% in the days following results, above the five-year average of 2.3%.
The Middle East is also becoming a bigger overhang amid fears that the Israel-Hamas war could turn into a wider Middle East conflict (FT).
However, there was a growing focus this week on oversold conditions. Bespoke Investment Group noted this week the S&P 500 is deeply oversold at over two standard deviations below its 50-DMA, while BofA’s Bull & Bear Indicator fell 0.4 points to 1.5, the lowest since last November.
Some other pieces of the bullish narrative around stocks included:
Big Macro Week Ahead
The big event next week is the November FOMC meeting (1-Nov). Street previews showed no expected changes to the policy rate, while Powell is likely to repeat his messaging from last week’s appearance at the Economic Club of New York, where he signaled the Fed would have to do less at the margin given recent FCI tightening, though also said the current policy isn’t too tight, leaving the door open for more hikes.
Next week also brings the Treasury November refunding announcement (1-Nov), which will be under close scrutiny given Treasury supply is a key piece of the rising yield backdrop (Bloomberg).
Key labor market data next week include ADP payrolls on Wednesday (1-Nov) and nonfarm payrolls on Friday (3-Nov). The consensus is for a net increase of 155K, down from the big September surprise print of 336K.
The unemployment rate is expected to hold at 3.8%, while average hourly earnings are expected to accelerate 0.1pp to 0.3%, which would be the fastest since July.
Other data next week include October Consumer Confidence (31-Oct), October ISM Manufacturing and September JOLTS (1-Nov), and October ISM Services (3-Nov).
S&P 500 Sector Performance
Outperformers:
Underperformers:
Fixed Income
Yield Curve
July FOMC Statement July Fed Minutes Balance Sheet Reduction Plan Credit, Liquidity and Balance Sheet Federal Reserve Dot Plots Treasury.gov yields FOMC Policy Normalization Statement Longer- Run Goals Jan 2022
Foreign Exchange Market
Energy Complex
The Baker Hughes rig count was up 3 this week. There are 622 oil and gas rigs operating in the US – Down 147 from last year.
Metals Complex
This Week’s Employment Picture
Weekly Unemployment Claims – Released Thursday 10/19/2023 – In the week ending October 14, the advance figure for seasonally adjusted initial claims was 198,000 down 13,000 from the previous week’s revised level. The 4-week moving average was 205,750 a decrease of 1,000 from the previous week’s revised average.
September Jobs Report – BLS Summary – Released 10/6/2023 – The US economy added 336k non-farm jobs in September and the Unemployment rate was unchanged at 3.8%. Average hourly earnings increased 7 cents to $33.88. Hiring highlights include +70k Education and Health Services, +96k Leisure and Hospitality, and +73k Government.
Job Openings & Labor Turnover Survey – JOLTS – Released 10/3/2023 – The number of job openings increased to 9.6 million on the last business day of August, the U.S. Bureau of Labor Statistics reported. Over the month the number of hires and total separations were little changed at 5.9 million and 5.7 million, respectively. Within separations, quits (3.6 million) and discharges (1.7 million) changed little.
Employment Cost Index – Released 7/28/2023 – Compensation costs for civilian workers increased 1.0% for the 3-month period ending in June 2023. The 12-month period ending in June 2023 saw compensation costs increase by 4.5. The 12-month period ending June 2022 increased 5.1%. Wages and salaries increased 4.6 percent over the 12-month June 2023 and increased 5.3 percent for the 12-month period ending in June 2022. Benefit costs increased 4.2 percent over the 12-month period ending June 2023 and increased 4.8 percent for the 12-month period ending in June 2022. This report is published quarterly.
This Week’s Economic Data
Existing Home Sales – Released 10/19/2023 – September 2023 brought 3.96 million in sales, a decrease of 2.0% from August. The median sales price was $394,300. The current unsold housing inventory was 3.4 months of inventory.
Housing Starts – Released 10/18/2023 – September housing starts came in at 1,358,000, 7.0% above the August estimate but is 7.2% below the September 2022 rate. Building permits were 4.4% below the August rate at $1,541,000 and 7.2% below the September 2022 rate.
Industrial Production and Capacity Utilization – Released 10/17/2023 – Industrial production increased 0.3% in September and increased 2.5% for the third quarter. Utilities output decreased 0.3%. Manufacturing increased 0.4%. Mining increased 0.4%. Capacity utilization increased to 79.7% in September, in line with its long-run average.
Retail Sales – Released 10/17/2023 – Headline retail sales increased 0.7% in September and are up 3.8% above September 2022.
Recent Economic Data
Consumer Price Index – Released 10/12/2023 – The Consumer Price Index for All Urban Consumers rose 0.4 percent in September on a seasonally adjusted basis, after increasing 0.6 percent in August. Over the last 12 months, the all items index increased 3.7 percent before seasonal adjustment.
Producer Price Index – Released 10/11/2023 – The Producer Price Index for final demand increased 0.5 percent in September, seasonally adjusted. Final demand increased 0.7 percent in August. On an unadjusted basis, the index for final demand moved up 2.2 percent for the 12 months ended in September.
Consumer Credit – Released 10/6/2023 – Consumer credit decreased at a seasonally adjusted annual rate of 3.8 percent in August. Revolving credit increased at an annual rate of 13.9 percent, while nonrevolving credit decreased at an annual rate of 9.8 percent.
U.S. Trade Balance – Released 10/5/2023 – The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $58.3 billion in August, down $6.4 billion from $64.7 billion in July. August exports were $256.0 billion, $4.1 billion more than July exports. August imports were $314.3 billion, $2.3 billion less than July imports. The August decrease in the goods and services deficit reflected an decrease in the goods deficit of $5.5 billion to $84.5 billion and an increase in the services surplus of $1.0 billion to $26.2 billion.
PMI Non-Manufacturing Index – Released 10/4/2023 – Economic activity in the services sector expanded in September for the ninth consecutive month as the Services PMI® registered 53.6 percent, 0.9 percentage points lower than August’s reading of 54.5 percent.
U.S. Construction Spending – Released 10/2/2023 – Construction spending during August 2023 was estimated at a seasonally adjusted annual rate of $1,983.5 billion, 0.5 percent above the revised July estimate of $1,973.7 billion. The August figure is 7.4 percent above the August 2022 estimate of $1,847.3 billion.
PMI Manufacturing Index – Released 10/2/2023 – The September Manufacturing PMI registered 49.0 percent, 1.4 percentage points higher than the 47.6 percent recorded in August. Regarding the overall economy, this figure indicates a month of expansion following nine months of contraction. The New Orders Index remained in contraction territory at 49.2 percent, 2.4 percentage points higher than the figure of 46.8 percent recorded in August. The Production Index reading of 52.5 percent is a 2.5-percentage point increase compared to August’s figure of 50.0 percent.
Chicago PMI – Released 9/29/2023 – Chicago PMI remained in contraction territory in September decreasing to 44.1 points down from 48.7 points in August. The reading marked the 13th consecutive month of contraction in business activity in the Chicago region, and it was stronger than the previous month.
US Light Vehicle Sales – Released 9/29/2023 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 15.035 million units in August.
Personal Income – Released 9/29/2023 – Personal income increased $87.6 billion (0.4 percent at a monthly rate) in August. Disposable personal income (DPI) increased $46.6 billion (0.2 percent). Personal consumption expenditures (PCE) increased $83.6 billion (0.4 percent).
Third Estimate of 2nd Quarter 2023 GDP – Released 9/28/2023 – Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2023, according to the “third” estimate released by the Bureau of Economic Analysis. The GDP estimate released today is based on more complete source data than were available for the “second” and “advance” estimates which had GDP increasing at 2.1 percent and 2.4 percent respectively. In the first quarter, real GDP increased 2.0 percent. The increase in real GDP reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, private inventory investment, and federal government spending that were partly offset by decreases in exports and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased. The update primarily reflected a downward revision to consumer spending that was partly offset by upward revisions to nonresidential fixed investment, exports, and inventory investment. Imports, which are a subtraction in the calculation of GDP, were revised down.
Durable Goods – Released 9/27/2023 – New orders for manufactured durable goods in August, up five of the last six months, increased $0.5 billion or 0.2 percent to $284.7 billion, the U.S. Census Bureau announced today. This followed a 5.6 percent July decrease. Excluding transportation, new orders increased 0.4 percent. Excluding defense, new orders decreased 0.7 percent. Machinery, up four of the last five months, led the increase, $0.2 billion or 0.5 percent to $37.8 billion.
New Residential Sales – Released 9/26/2023 – Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.7 percent below the revised July rate of 739,000 but is 5.8 percent above the August 2022 estimate of 638,000. The median sales price of new houses sold in August 2023 was $430,300. The average sales price was $514,000. At the end of August, the seasonally adjusted estimate of new homes for sale was 436,000, a supply of 7.8 months at the current sales rate.
Consumer Confidence – Released 9/26/2023 – Consumer Confidence decreased for the second consecutive month in September to 103.0, down from 108.7 in August. Expectations fell back below 80, the level that historically signals a recession within the next year. Consumer fears of an impending recession also ticked back up, consistent with the short and shallow economic contraction anticipated for the first half of 2024. Consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates.
Disclaimer
This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any stock, bond, currency or CFD contract.
Some information contained herein has been obtained from third party sources believed to be reliable, but has not been independently verified by us; its accuracy or completeness is not guaranteed. Our commentary is based on information considered to be reliable, but no representation is made that it is accurate or complete, and should not be relied upon as such.
The views expressed represent the opinions and beliefs at the time of this commentary and are not meant as a market forecast. These views are subject to change at any time based on market or other conditions and Good Life Advisors disclaims any responsibility to update such views. This information may not be relied on as advice or as an indication of trading intent on behalf of any portfolio. Portfolio investments may change at any time.
Economic and performance information referenced is historical and past performance does not guarantee future results. References to future returns are not promises or estimates of actual returns we may achieve, and should not be relied upon.
No investment strategy or risk management process can guarantee returns or eliminate risk in any market environment. Investing in securities involves risk of loss. Stock and Bond prices can decline significantly in response to adverse market conditions, company-specific events, and other domestic and international political and economic developments. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future.
While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Data Sources:
Conference Board Economic Indicators Bureau of Economic Analysis (BEA) Congressional Budget Office (CBO) U.S. Bureau of Labor Statistics (BLS) Federal Reserve Economic Data (FRED Charts)
CME Fed Watch U.S. Treasury – Yields U.S. Census Bureau Institute for Supply Management (ISM) Weekly DOL Employment Data BLS Monthly Jobs Report JOLTS All capital in one visualization 2020
US Energy Admn (EIA) BLS Consumer Price Index CPI BLS Producer Price Index PPIAtlanta Fed GDPNOW NY Fed Nowcast GDP US Census Bureau Housing Starts U.S. Energy Admn
Consumer Credit USCB Retail Sales Construction Spending Federal Reserve Dot Plots 2017 NY Empire Index Philadelphia Federal Reserve P/E Ratio Data -Yardeni Research
Technical Analysis Info: Koyfin.com StockCharts.com – Financial Charts Exponential vs Simple Moving Average
Other links: 1973 Arab Oil Embargo Hunt Brothers Silver Asian Contagion Long-Term Capital bailout
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