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What to look for at Fed's Jackson Hole symposiumACTION IN JACKSONThe marquee event is Fed Chair Jerome Powell's speech F...
22/08/2024

What to look for at Fed's Jackson Hole symposium

ACTION IN JACKSON
The marquee event is Fed Chair Jerome Powell's speech Friday morning.
Investors hope he will give a clearer steer on whether he feels inflation has cooled enough to justify an interest rate cut next month, and if his worries about a rising unemployment rate could make that first reduction in borrowing costs a big one.

Most analysts expect the former and not the latter, but as Deutsche Bank economists note, "it will be difficult for Powell to pre-commit to a particular trajectory at Jackson Hole." Powell has pledged to be data-dependent, and there is lots of economic data before the Fed's Sept 17-18 meeting.

Testing the watersStock futures were nosing higher this morning as traders awaited comments from Fed chair Powell tomorr...
22/08/2024

Testing the waters

Stock futures were nosing higher this morning as traders awaited comments from Fed chair Powell tomorrow afternoon. According to “those who profess to know” you can take it to the bank (pun intended) that there will be a rate cut in September. The questions remains “how much of a cut? — 25 is odds on favorite with the dark horse coming in at 75. As we used to say “too rich for my blood, see if the ex is interested.” However, “language like “likely be appropriate to lower the key interest rate at September meeting — if data continues to come in as expected,” smells like a bad case of hedging ones bets.

“Traders are turning their attention to Powell's expected speech at the Jackson Hole Economic Symposium on Friday, hoping for further insight into rate policy. Traders are currently pricing in a 100% chance of a rate cut next month, per the CME Group's FedWatch tool, but they are divided when it comes to how large the reduction will be.

"The volatility from the past month has settled as macro fears subside, expectations were reset, and investors used the weakness as an opportunity to add to risk exposure. The next catalyst for markets is Fed data … this likely results in a wait-and-see approach until Friday," said Mark Hackett, chief of investment research at Nationwide.”

Down the Shore, we are testing the waters. Make i.t a great day.

Cramer explains what Home Depot’s quarter says about the housing marketCNBC’s Jim Cramer examined Home Depot’s earnings ...
22/08/2024

Cramer explains what Home Depot’s quarter says about the housing market

CNBC’s Jim Cramer examined Home Depot’s earnings report, saying the retailer’s insights make him think interest rate cuts from the Federal Reserve could stop the housing market from making a hard landing.

“Right now, housing’s waiting for the cavalry to come to the rescue, by which I mean it’s waiting for the Fed to cut rates,” he said. “While that’s not something we desperately need, at least for the moment it could be a major positive catalyst for a huge part of the economy. Yes, lower rates will work, but, alas, not until the Fed gets off the bench and gives them to us.”

The home improvement giant beat earnings expectations on Tuesday but signaled that it expects weaker sales later this year as higher interest rates and a tricky consumer landscape persist.

According to Cramer, if mortgage rates were to come down close to 6.5% for the 30-year fixed, there would be more remodeling and restoration work bolstered by home equity loans. These spending activities were hurt by supply chain issues during Covid and didn’t quite find their footing after the pandemic because of steep rate hikes, he said.

Cramer also said the “golden handcuff” dynamic — where homeowners won’t move because they don’t want to lose low interest rates by doing so — won’t last forever. To him, those homeowners are likely to move when rates decline.

″[Home Depot] gave me hope that we can avoid a hard landing for housing, but only if the Fed unlocks those golden handcuffs that it created by taking rates to super low levels a few years ago,” Cramer said. — CNBC

A Watched Kettle Never BoilsFutures are flat this morning as the Fed’s July meeting minutes go through their last round ...
21/08/2024

A Watched Kettle Never Boils

Futures are flat this morning as the Fed’s July meeting minutes go through their last round of editing before Fed Chair Powell jets off to Jackson Hole where he will deliver a highly anticipated speech. All indications are that it will be a kinder, more lovey dove(y) speech.

"To us, the key will be Chair Powell's tone, which we expect to lean dovish," said Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions. "Simply put, inflation continues to trend towards the 2% target seemingly at a rate exceeding consensus. Combine this with signs that the labor market is softening and one gets the sense that there is little need to retain a hawkish stance."

There’s another meeting going on that bears mention
“August and September historically are two of the three worst months of an election year in terms of price return,” said Sam Stovall, chief investment strategist at CFRA Research. “February, August and September have posted average declines [in election years] since World War II, with September being by far the worst — not only in its average decline, but also it has fallen more frequently than it has risen.

Moreover, history shows that whether the incumbent party ultimately retains the presidency also appears to influence market volatility and stock returns

Since 1927, the S&P 500 has experienced more volatility before the election and in subsequent months during the years when the incumbent party failed to hold on to the White House, perhaps reflecting the uncertainty created by likely policy changes, said Thomas Poullaouec, the head of multi‑asset solutions, Asia Pacific, at T. Rowe Price, and Nathan Wang, a solutions analyst at the investment-management firm”. — MarketWatch.

Down the shore like the market we are treading carefully. Make it a great day.

The case not to cut Rates in September To be sure, not all market participants are on board with a reduction.Even with a...
21/08/2024

The case not to cut Rates in September

To be sure, not all market participants are on board with a reduction.
Even with a growing emphasis on the jobs picture, Powell and the other Fed officials are still unlikely to declare total victory over inflation, and with good reason, said Komal Sri-Kumar, head of Sri-Kumar Global Strategies.

While the aggregate inflation numbers are moving lower, housing-related costs continue to defy expectations that they will trend down, and the strong 1% gain in retail spending in July suggests consumers are withstanding high interest rates, in itself an inflationary trend.

"You [cut] because inflation is below target ... The second reason you should be cutting is because the economy is weak," Sri-Kumar said. "Where is the weakness? I don't think you have signs of weakness in the economy. You don't have signs of inflation being controlled, and you don't have any signal for the Fed to switch focus."

However, Sri-Kumar said he expects the Fed to cut anyway, and for Powell to deliver a strong signal at Jackson Hole that easier policy is on the way.

"He's probably essentially going to give his indication, not only of that, but also pat himself on the back for success on inflation coming down significantly," he said. "So the big market rally does not have to wait until September 18. It has already begun, and he may give it one more piece of stimulus when he speaks in Jackson Hole." — CNBC

https://www.linkedin.com/posts/joseph-murphy-31676aa_mr-powell-were-with-you-win-or-tie-activity-7231423795641622531-148q?utm_source=share&utm_medium=member_desktop

Mr. Powell, “We’re with you win or tie”“A good decision is based on knowledge and not on numbers.””– Plato A big batch o...
19/08/2024

Mr. Powell, “We’re with you win or tie”

“A good decision is based on knowledge and not on numbers.””
– Plato

A big batch of economic news over the past week kicked off a markedly critical period ahead for Federal Reserve policymakers.

First up: Chair Jerome Powell's policy speech next Friday to wrap up the Jackson Hole event, during which he is expected at least to sketch — in pencil, not pen — the likely course ahead, with plenty of flexibility so the Fed doesn't get fooled again, as it did in the early days of the inflation surge.

"He still wants to give himself a little bit of room. We have to remember, the Fed made one mistake, the transitory" call on inflation, said Quincy Krosby, chief global strategist at LPL Financial. "That mistake is in the history books. They were late to what they were supposed to be doing. They don't want to make a mistake on this side of equation."

Specifically, the Fed is faced with how quickly and aggressively it should respond now that the inflation rate is waning.

On balance markets largely feel the Fed can — and should — start lowering interest rates next month.

"This is not an exact science. It's probably as much an art form as it is a science," Krosby said. "The longer they wait, the more they are going to have problems. There will be different problems, but they're going to have problems."

The biggest concern now is that the Fed lowers because it wants to guide the economy in for the vaunted soft landing, rather than having to move dramatically because it is forced to, i.e. should the labor market crater or some other crisis come up.

Dead Cat BounceStock futures are flat this morning as investors brace themselves for a week of FedSpeak, more potential ...
19/08/2024

Dead Cat Bounce

Stock futures are flat this morning as investors brace themselves for a week of FedSpeak, more potential game changing economic releases, the Democratic National Convention, and volatility becoming the new trading norm. I’m tired even thinking about it.

“Stocks have roared back with a vengeance from the worst August start since 2002, but don’t let the bounce disguise a crucial change in the way markets are now interpreting economic data.

“We’re at an important inflection point that consists of markets recognizing that we’re now, number one, in an environment where we’re sort of sticking the landing on inflation, and, number two, a slower economic environment,” said Tony Roth, chief investment officer at Wilmington Trust Investment Advisers, in an interview

As many investors and strategists have argued —and the market itself has demonstrated in recent weeks — bad news is now bad news for stocks, while good news is good news. Previously, bad news was more likely to bolster stocks and other assets perceived as risky because it helped make the case for Fed rate cuts; good economic news tended to have the opposite effect.

ow, bad economic news serves to instead underline recession fears. The switch appeared to flip on Aug. 2, when a somewhat softer-than-expected July jobs report accelerated a stock-market selloff that culminated when markets reopened the following Monday.’ — MarketWatch

Down the shore, Ike the market we are in a bit of a fog mode. Visibility is once again restricted despite the fact that there are blue skies doing their level best to hold sway. Make it a great day.

The Week That Was — “You've got to ac-cent-tchu-ate the positiveE-lim-i-nate the negativeLatch on to the affirmativeDon'...
18/08/2024

The Week That Was — “You've got to ac-cent-tchu-ate the positive
E-lim-i-nate the negative
Latch on to the affirmative
Don't mess with Mr. In-Between”
- Johnny Mercer / Harold Arlen

Stocks had their best week of 2024 on the strength of strong economic data which helped mitigate the big “R” fears. The S&P 500 rose close to 4%, while Nasdaq Composite soared more than 5.2%, and the Dow brought up the rear with a 3% or so increase. The “Main Event(s)” this past week, however took place in the economic arena. To many, “the horse knows the way home from here,” the boxes have been checked, and rate cuts will begin in September. To the cynical, next week’s Fed meetings are going to be standing room only, it’s a log way to Friday, jobless claims, existing and new home sales are on deck, and let’s not forget PRex (PCE) is due out the following week. Seems to me there’s a lot of wiggle room in there.

“Overall, the inflation data this week was welcome news for consumers and the Fed and brings us a step closer to the FOMC's target of 2.0% PCE (personal consumption expenditure) inflation. In fact, the Fed's own PCE "now-casting" model shows that headline PCE inflation is likely to fall to under 2.6% for July, while core PCE inflation (excluding food and energy) is likely to fall to 2.6%. Both of these are now at or below the Fed's own forecast it laid out in its June meeting, calling for 2.6% for headline PCE and 2.8% for core PCE by year-end.

Underneath the surface of the closely watched CPI inflation, the pricing data was mixed but overall promising. We saw lower monthly prices across several categories, including food items (cereals, bakery), apparel, new and used vehicles, and even airline fares. However, inflation still remained elevated in areas like shelter and rent, as well as motor vehicle insurance. While the shelter components of CPI have been slow to move lower, we believe they will continue to play some catch-up with the softer real-time data in the months ahead. Similarly, pricing on insurance broadly has moved sharply higher over the past year but is not likely to continue at this pace. The potential slowing in these two areas should support further moderation in inflation trends, in our view.” — Edward Jones

Enjoy what’s left of the weekend.

Calm  Before the Storm?U.S. stock futures suggest that investors and consumers buying into (pun intended) the latest sle...
16/08/2024

Calm Before the Storm?

U.S. stock futures suggest that investors and consumers buying into (pun intended) the latest slew of economic date releases, and for the moment, the feared R word has been tables. Enter even louder rumblings of a Defo Heffo” (Up the Dubs) rate cut in September. As we say in Dublin, “It’s all over bar the shouting,” or, in this case, the actual amount.

“The S&P 500 responded by continuing the rally that has seen the index recover from the slump caused by the unwinding of the carry trade at the start of August. This rally has seen the S&P 500 advance by almost 7% from the recent lows seen on August 5.

U.S. retail sales data also showed a sharper than expected in July, as a separate report showed the number of first-time unemployment claims also dropped for the second week in a row, in figures that have eased investors' fears around a potential recession.

Investors are now readying themselves for what Federal Reserve chairman Jerome Powell will say at his speech at the upcoming Jackson Hole Economic Symposium next week.

"With stronger-than-expected retail sales and a resilient labor market, quality growth stocks are well-positioned, in our view," UBS analysts, led by Mark Haefele, said in a note. — MarketWatch

Down the Shore, like the market we are in a calm before the storm mode. Ernesto will not affect us directly, but the predicted swells already have the surfers waxing their boards. TGIFF. Make it a great day.

Not for widows or orphans — Ramen Noodles We used to have an expression on Wall Street for speculative (is that still a ...
15/08/2024

Not for widows or orphans — Ramen Noodles

We used to have an expression on Wall Street for speculative (is that still a recognized rating?) stocks that went along the lines of “this stock is not suitable for widows or orphans.” Well it looks like the headline numbers on the economy are also not fit for widows or orphans or low income families for that matter.

According to Yahoo Finance
‘I’m down to eating ramen’: Social Security benefits aren’t keeping up with inflation

Until last year, Janet Albrecht could afford to eat roast beef sandwiches or tuna salad for lunch. But the widowed 78-year-old now has to skimp on her meals because her Social Security benefits haven’t kept up with the rising costs for food, housing and health care in recent years.

Social Security benefits have lost 20% of their buying power since 2010, according to a recent analysis by The Senior Citizens League, an advocacy group. Those who retired that year would need a boost of $370 a month, or $4,440 a year, on average, to regain the lost value.
Put another way, every $100 a household spent in 2010 would only purchase $80 today.

Every January, Social Security recipients get an annual cost-of-living adjustment, known as a COLA, but the increases often don’t keep up with the actual rise in prices – hurting senior citizens, many of whom live on fixed incomes and depend heavily on their Social Security benefits. Eight of the last 15 adjustments have come in lower than inflation for that year.

Social Security benefits have risen by 58% between 2010 and 2024, but the cost of goods and services purchased by typical retirees jumped 73% during that time, the league said. The prices of bread and ground beef, for instance, have shot up nearly 147% and 73%, respectively, over that period.

The surge in inflation in recent years resulted in some of the largest annual adjustments since the early 1980s. Beneficiaries received hefty increases of 5.9% for 2022 and 8.7% for 2023 – but only 3.2% for this year, since inflation has cooled.

Still, over the past five years, only the 2023 adjustment has beaten the rate of inflation, the league said. The COLAs lagged inflation by as much as 1.1 percentage points the other years.

Playing with House Money 🎲 🎤 The consumer price index rose 2.9% in July 2024 from a year earlier, according to the U.S. ...
14/08/2024

Playing with House Money 🎲

🎤 The consumer price index rose 2.9% in July 2024 from a year earlier, according to the U.S. Bureau of Labor Statistics.

🎤That was the lowest reading since March 2021.

🎤Inflation for consumer staples has eased considerably, economists said.

Perhaps the most important thing for consumers is inflation for groceries “continues to grow very slowly,” Zandi said.

Combined with similar good news for other necessities like gasoline and market rents for new tenants, “that’s really encouraging news, particularly for the lower-income consumers that are the most hard pressed,” he added.

Housing is a stumbling block 🏡
Housing is the one major impediment keeping inflation elevated above the Fed’s target right now — on paper, at least, economists said.
Shelter is largest component of the CPI, and therefore has an outsized effect on inflation readings.

The shelter index has risen 5.1% since July 2023, accounting for more than 70% of the annual increase in the “core” CPI, the BLS said Wednesday. (The core CPI is economists’ preferred gauge of inflation trends. It strips out food and energy costs, which can be volatile.)

After declining to 0.2% in June on a monthly basis, shelter inflation jumped back to 0.4% in July, the BLS reported.

Housing inflation moves up and down at glacial speed due to how the government measures it, economists said. Such data quirks mask positive news in the real-time rental market, which has seen inflation flatline for about two years, Zandi said. — CNBC

Can you have too much of a good thing?Stock futures are nudging up this morning as all eyes are on the CPI release.  The...
14/08/2024

Can you have too much of a good thing?
Stock futures are nudging up this morning as all eyes are on the CPI release. The predictions are in, pencils are down, and work books have been closed. Right now, all we can do is wait. Prior results do not guarantee future results apply here as the predicting has been spotty, and we’ll leave it a that. Is the number already baked in on yesterday’s stellar performance? Beats me. And then there’s always the question, what if there’s a sizable upside.

“Upside US CPI surprise would be bad for risk sentiment
Markets are hoping today’s US core CPI number for July will come in at 0.2%, which would strengthen the confidence that the Fed can move forward with a first rate cut in September. The past two CPI readings were jittery and thus some predictability will be welcomed by markets. If economists are right, then the chance of a 0.2% reading is very high, as Bloomberg shows only very few predicting 0.1% or 0.3%.

Having said that, a 0.2% MoM core CPI number won’t change much to the pricing of the near-term rate cuts that we currently see. A total of 102bp is now priced in for the remainder of 2024, and a consensus reading would be nicely consistent with that amount of cuts, in our view. An upward surprise would be the most worrisome outcome, as this would put the Fed in a very awkward position. Hot inflation with a slowing economy could trigger another risk-off event and a flight to safety. In this case, however, bonds are not likely to be on the winning end.” — ING

Down the Shore Like the market, we are getting a little dizzy watching the sandpipers chase the waves back into the ocean and then take off en masse for a more favorable feeding spot. Make it a great day.

Wednesday's big CPI inflation report could mark a change in thinking for the FedEconomists surveyed by Dow Jones expect ...
13/08/2024

Wednesday's big CPI inflation report could mark a change in thinking for the Fed

Economists surveyed by Dow Jones expect the consumer price index, to be released Wednesday at 8:30 a.m. ET, to show 0.2% increases on both the all-items reading and the core measurement.

"At this point, the inflationary pressure that we saw build has really been dissipated significantly," said Jim Baird, chief investment officer at Plante Moran Financial Advisors. "Inflation is almost a nonissue at this point. There's this broad expectation that the worst is easily behind us."

Like others on Wall Street, Baird expects the Fed in September to shift its focus from tight policy to tackle inflation to a somewhat easier stance to head off a potential weakening in the jobs picture

While consumers and business owners continue to express concern over high prices, the trend indeed has shifted. Tuesday's producer price index, or PPI, report for July helped confirm optimism that the elevated inflation numbers that began in 2021 and spiked again in early 2024 are in the rearview mirror.”

The PPI report, seen as a gauge of wholesale inflation, showed prices up just 0.2% in July and about 2.2% from a year ago. That number is now very close to the Fed's 2% goal and indicative that the market's impulse for the central bank to start cutting rates is about on target. — CNBC

Retail therapy — When all else fails, go shoppingStock futures were ringing the register this morning in anticipation of...
13/08/2024

Retail therapy — When all else fails, go shopping

Stock futures were ringing the register this morning in anticipation of some hefty economic releases. PPI and CPI are of course top of the shopping list, but watch out for retail sales later in the week, there may
be a little sticker shock.

“The producer price index — a measure of wholesale prices that's due out at 8:30 a.m. ET — is expected to show a monthly gain of 0.2% in July, in line with the previous month's reading, according to Dow Jones consensus estimates.

The consumer price index that's expected out Wednesday is anticipated to show an increase of 0.2% last month, up from a 0.1% decline in the prior month. The data could give an uncertain market some direction after last week's wild moves.

The retail sales data could be more important this week than the inflation reports, given the revived fears around slowing growth, according to Cameron Dawson, investment chief at NewEdge Wealth.

Because we think that there's a greater risk for downside to growth than there is a risk for upside to inflation, we think retail sales is actually more important," Dawson told CNBC's "Closing Bell" on Monday.
"If retail sales falls off, then we might know that the labor market could be weaker than maybe some of the headline data suggests," Dawson continued. — CNBC

Down the shore, like the market we are in a bit of a purple haze this morning. We know it’s going to be a hot one, but right now are kicking back and enjoying the vibe. Make it a great day.

Affordability Challenges Hinder Summer Housing Market From Gathering Steam: Will Fall Be Better for Buyers?  Part 2Thoug...
12/08/2024

Affordability Challenges Hinder Summer Housing Market From Gathering Steam: Will Fall Be Better for Buyers? Part 2
Though home prices and mortgage rates remain high, there are signs the housing market is moving back into balance—albeit slowly and unevenly across regions.

In the week ending June 27, when mortgage rates were 6.86%, borrowers who put 20% down on a $417,300 median-priced resale home with a 30-year mortgage had to shell out a monthly mortgage payment of $2,189, not including property taxes and insurance.

Someone who purchased a resale home a year ago is paying only $32 less per month.

Even so, the latest NAR Housing Affordability Index shows that challenges remain.

The index receded to a preliminary reading of 93.1 in May. A national index reading below 100 indicates that a median-priced home is unaffordable for the typical family earning a median income.
At the NAR Real Estate State Forecast Summit in July, Yun noted that the current monthly payment for a median-priced house, excluding insurance and property taxes, has more than doubled since 2019.

To add insult to injury, it now costs first-time home buyers $1 million to buy a starter home in over 237 U.S. cities—up from 84 five years ago—according to a Zillow report. Though the national median price for a starter home is an affordable $196,611, it’s probably easier to find a needle in a haystack.

So, when can prospective buyers finally hope to get some relief?
Doug Duncan, senior vice president and chief economist at Fannie Mae, cautions against holding your breath.

“While we expect home price growth to decelerate further in the coming quarters, a still-tight inventory of homes for sale and stretched affordability remain significant challenges and, in our view, are likely to constrain mortgage demand and home sales for the foreseeable future,” he said in a press statement. - Forbes Advisor

The Week That WasRecords were made to be broken 1, 🏅 🏅 🏅 — 40, 🏅 🏅 🏅What a week of highs and lows in the sporting and fi...
12/08/2024

The Week That Was
Records were made to be broken 1, 🏅 🏅 🏅 — 40, 🏅 🏅 🏅
What a week of highs and lows in the sporting and financial worlds. The market and a slew of Olympic records took it on the chin this week, but unfortunately, for investors, the records that were broken were not positive ones while the ones in the Olympics were embraced. But in both cases one has to look beyond the numbers to get a true understanding of what transpired. I remember when a sub two hour marathon was considered ludicrous, and I still have the tee shirt that was distributed when the market topped 10,000. Competitive sports and the market are not for the weak of heart but that does not preclude or exclude weekend warriors and sensible investors from participating.

The market
There's no other way to spin a 1,000-point daily drop in the Dow: it stinks. On Monday, the Dow Jones index shed 1,034 points, the 12th-largest single-day point decline on record. This is not uncharted territory, however1. There have been 25 total daily moves in the Dow of more than 1,000 points, 14 down and 11 up. While the size is eye-catching, keep in mind that last Monday's 1,034-point move was a decline of 2.6%. The similar 1,033-point drop on February 8, 2018, was a 4.2% move.

The Olympic Games

There were 17 world records broken at this year’s Olympics, which is a fabulous number, but is down from the Tokyo games where 20 world records were broken. Have we gone as far as we can — hell no, that’s why we compete.

The Hare and the Tortoise — Slow and steady wins the raceU.S. stock futures pulled a tortoise head retraction maneuver t...
09/08/2024

The Hare and the Tortoise — Slow and steady wins the race

U.S. stock futures pulled a tortoise head retraction maneuver this morning after yesterday’s stellar market performance, stellar, but still lagging week-to-date. The market thought that was a grand idea altogether sneaking out of the gates down 100+ in the early going.
The hares or the buy the dip’ers did not sit down by the side of the road and take a nap, nay, they got back into old favorites and expansed their reach to sectors that were not heretofore in the race this year. Hey, to each his own, and speaking of owning, is it me or has the investing world become a national of day traders or has technology just made it appear so in this roller coaster world we are living in.

"The fundamental backdrop remains favorable for stocks to trend higher, particularly for investors with time horizons that extend to year-end and beyond," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "Near term, heightened levels of volatility are likely to be more the norm versus the exception, as broad-market valuations remain elevated and seasonality trends suggest tempered returns during the 'dog days of summer.'" — CNBC

Down the Shore, like the market we are waiting for the dog days of summer. Every time we get a few good days of good weather, it looks like the sun does a runner and we are left in an Autumn frame of mind. Thank God for the Olympics. Make it a great day.

Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again? — Part 1Summer sales have been tepid thu...
08/08/2024

Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again? — Part 1

Summer sales have been tepid thus far, but there are signs that activity could heat up by the end of the summer as mortgage rates edge down and much-needed resale inventory continues to enter the market, giving buyers more options.

Other good news for home shoppers is the ongoing decline in the median price for a new home—now below the median resale home price—even as builders continue offering buyer incentives.

Nonetheless, experts say the housing market will only see renewed momentum once mortgage rates drop enough to ease affordability challenges and incentivize homeowners locked in at low rates to move so inventory grows substantially to meet demand.

“Affordability is the main constraint on the housing market,” Lisa Sturtevant, chief economist at Bright MLS, said in an emailed statement. “The market will move toward more of a balanced housing market in the second half of the year, but prospective home buyers will still face competition.”

Though affordability obstacles persist for buyers, other indicators suggest that the market is tilting toward buyers. Zillow reports that roughly 25% of its listings saw price cuts in June. The last time the rate was this high for cuts this time of year was in 2018.

Meanwhile, experts are hopeful that the Federal Reserve (Fed) will finally cut the federal funds rate in September, as inflation is cooling down sustainably toward the Fed’s 2% target.

“While we expect home price growth to decelerate further in the coming quarters, a still-tight inventory of homes for sale and stretched affordability remain significant challenges and, in our view, are likely to constrain mortgage demand and home sales for the foreseeable future,” he said in a press statement. — Forbes Advisor

Flight to QualityStock futures were up and the market played a game of follow the leader — up round two bills right out ...
08/08/2024

Flight to Quality

Stock futures were up and the market played a game of follow the leader — up round two bills right out of the gate. Sound familiar, check out our post from yesterday. I’m just sayin” as they used to say in NYPD Blue “Let’s be careful out there.” And let’s not forget, we still have some behemoth earnings releases in the offing.

“Equities rebounded sharply in early trading as data showed US initial jobless claims tumbled by the most in nearly a year, with the numbers also coming below estimates. As economic angst subsided, Treasuries dropped across the curve, with the market also tasked with absorbing a $25 billion sale of 30-year bonds later Thursday.

The number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting fears the labor market is unraveling were overblown and the gradual softening in the labor market remains intact.”

Markets have been on a tailspin since last week’s economic data triggered concerns the Fed is waiting too long to cut rates from a two-decade high, jeopardizing prospects for a soft landing. Those jitters combined with stretched positioning, underwhelming tech earnings and poor seasonal trends were among the factors spurring massive volatility in markets.” — CNBC

Down the Shore, like the market we are in a flight to better weather or better quality stocks — easier said than done. Our weather forecast has us battening down the hatches until the weekend. Make it a great weekend.

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