Afternoon Note
Mortgage Applications
Mortgage rates rose 4 basis points last week, the 30-year fixed rate mortgage rose from 4.80% to 4.84%. Refinance demand fell 6% for the week and was 39% lower than a year ago when rates were considerably lower. Purchase applications rose 1% and were 4% above a year ago. Lenders are bearish on demand according to a recent report by Fannie Mae. One-third of lenders cited consumer loan demand as a concern. This was the first time this year that lenders mentioned demand as a reason for a downbeat outlook.
Banks are laggards today as loan growth is expected to slow according to a survey by Fannie Mae.
Producer Price Index (PPI)
Manufacturers saw pricing pressure relief in the month of August. The Producer Price Index (PPI) declined by 0.1% in August from July, compared to consensus of +0.2%. Core PPI, less food and energy, also declined by 0.01% (consensus +0.2%). The decline was mainly driven by final demand for trade services, which fell by 0.9%. Trade services measure margins received by wholesalers and retailers. Prices for energy increased 0.4% month-over-month, offset by a 0.6% decline in foods. Year-over-year PPI was up 2.8% versus 3.3% in July. Core PPI year-over-year was up 2.3% versus 2.7% in July. The decline in PPI is welcome news after wage growth came in hotter than expected in Friday’s nonfarm payroll report. This was the first decline in PPI since February 2017.
Semiconductors are on the defense after Goldman Sachs downgraded Micron (MU) from Buy to Neutral and semi equipment industry to Neutral from Attractive . The Philadelphia Semiconductor Index, SOX, is down 1.8%, but well off its lows of down 3.3%. The turn in semi’s coincided with a turn in AAPL ahead of its product event at 1 pm today. AAPL had been down 1.8%, and it is currently down 0.50%.
Energy and consumer staples are getting a boost in anticipation of Hurricane Florence hitting the Mid-Atlantic coast. Crude oil is up close to 5% on the week on supply concerns as sanctions on Iranian oil and Hurricane Florence approach.
Telecom services are garnering attention as investors rotate into safe-haven sectors. AT&T (T) is up 2.34% and Sprint (S) is up 3.75%.
Equity markets are mixed:
Breath:
We are not forcing the issue this afternoon.
Comments |
Micron suffered ip theft by the Chinese, who patented thier stolen ip and sued Micron. China has to pay recompense. Ken Knight on 9/12/2018 2:49:57 PM |
Charles you were great last night ( I am in Thailand 13 hours difference with NY) on Varney! No dough I am an avid watcher of Fox Business. Your show, after the market close, is too early for me, 5AM here. Keep the good work, I love it? Marcel Depart on 9/12/2018 8:11:19 PM |
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