Afternoon Note
Jay Powell was upbeat about the economy in his semi-annual report before the Senate banking committee today. Equities rallied during his testimony. Here are some excerpts from what Chairman Powell had to say:
When Fed Chief Powell began his testimony, the Dow was down 50 points, which was the low of the day. Currently, the Dow is up 60 points. The big reversal came in the semiconductor sector. The PHLX Semiconductor Index, SOX, open lower by 0.75% and then proceeded to march higher and is now up 1.15%. Tomorrow is the start of semiconductor earnings season with ASML (ASML) reporting before the bell. FAANG also made a massive comeback, and Netflix (NFLX), which was down $56 points is now only down $21.
NAHB
The National Association of Home Builders/Wells Fargo Housing Market Index was unchanged at 68 in July. The index measures builder confidence in the newly-built single-family home market. Demand for single-family homes remains robust as unemployment drops and wages rise. While the appetite for new housing increases, builders are struggling with the rising cost of material cost. Lumber alone is up 52% year over year. NAHB Chief Economist Robert Dietz stated, “Builders need to manage these cost increases as they strive to provide competitively priced homes, especially as more first-time home buyers enter the housing market.”
Key Components:
The report shows builder confidence remains high and foot traffic is strong. Traffic has been expanding for nine months straight, the longest steak since December 2016. Remember, traffic was in contraction for 11 straight years until December 2016, the month after the election.
If homebuilders can get enough supply on the market, then home pricing increases may subside, which will help affordability for home buyers, especially first-time home buyers. Homebuilders have responded nicely following the release. The Dow Jones Home Construction Index, DJUSHB, is higher by 2.23%. D.R. Horton (DHI), a position in our Hotline portfolio, is up 2.22%. If you are not currently a Hotline subscriber, contact your representative or email us at info@wstreet.com to get started today.
Industrial Production and Capacity Utilization
Industrial production in June bounced back from a downwardly revised May. June increased 0.6% following May’s revised -0.5% (from -0.1%). Manufacturing in June increased 0.8% after declining 1.0% in May. Utilities output was lower by 1.5% as lower electric utilities output outweighed an increase for gas utilities. Mining increased 1.2% surpassing its previous peak in December 2014. Mining capacity is running at 92.7%. Capacity utilization increased 0.3% to 78%, which is 1.8% below the long-run average.
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4/22/2024 1:22 PM | Pins and Needles |
4/22/2024 9:30 AM | LIVE BY THE SWORD … |
4/19/2024 1:20 PM | Fair Chunk of Rotation |
4/19/2024 9:35 AM | DON’T OVERREACT |
4/18/2024 1:37 PM | Didn’t Break Down |
4/18/2024 9:40 AM | MARKET OFF SCRIPT |
4/17/2024 1:59 PM | Facing Pressure |
4/17/2024 9:37 AM | POWELL STILL WANTS TO HELP |
4/16/2024 1:35 PM | Muted |
4/16/2024 9:42 AM | FEAR ARRIVES |
4/15/2024 1:17 PM | Making a Statement |
4/15/2024 9:45 AM | Equal Opportunity Drubbing |
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4/12/2024 9:42 AM | WHO YA GONNA CALL? |
4/11/2024 1:38 PM | No Urgency |
4/11/2024 9:27 AM | Tough Sledding |
4/10/2024 1:22 PM | Hang In There |
4/10/2024 9:51 AM | HERE COMES THE LATEST RATIONALE FOR PERSISTENT INFLATION |
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