Consumer Confidence

Consumer confidence rose a healthy 3.7 points from 134.7 to 138.4 in September.  This is the highest level since September 2000.  In May of 2000, the index recorded its all-time high of 144.7. 

• Present Situation Index inched up to 173.1 from 172.8
• Future Expectations Index climbed to 115.3 from 109.3

Americans believe they will have job security and they say there are plenty of jobs available.  They also believe their own finances will improve as incomes rise.  This is good news for retailers who plan on hiring a significant number of workers for the holiday season.  

S&P CoreLogic Case-Shiller

Home prices rose at a slower pace in July according to S&P Corelogic Case-Shiller.  The national index rose 6.0% year-over-year in July versus 6.2% in June, while the 20-city index was up 5.9% in July compared to 6.4% in the prior month.   Economists at Freddie Mac are expecting home prices to increase 5.5% for this year and 4.5% in 2019, compared to the 7.2% rise in 2017.   They further expect the 30-year fixed rate mortgage to average 4.5% this year and 5.1% next year, compared to 4.0% in 2017. 

Buyers are reaching a point where they don’t want to pay higher prices, and sellers in some states are having to reduce their listing prices.  According to a report from Redfin, there has been an increase in price drops on listings.  Furthermore, in support of this Case-Shiller said 15 of 20 cities experienced smaller increased in July 2018 as compared to July 2017.    David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices says, “Rising homes prices are beginning to catch up with housing.” 

Top five cities; 12-month change:

• Las Vegas +13.7%
• Seattle +12.1%
• San Francisco + 10.8%
• Denver + 8.0%
• Phoenix + 7.5%

“Since home prices bottomed in 2012, 12 of the 20 cities tracked by the S&P Corelogic Case-Shiller indices have reached new highs before adjusting for inflation. The eight that remain underwater include the four cities which led the home price boom: Las Vegas, Miami, Phoenix and Tampa. All are enjoying rising prices, especially Las Vegas which currently has the largest year-over-year increases of all 20 cities. The other cities where prices are still not over their earlier peaks are Washington DC, Chicago, New York and Atlanta.”

Shortly before the open, Sonic (SONC) was halted for “news pending.”  The pending news was that Inspire Brands, owner of Arby’s, Buffalo Wild Wings and Rusty Taco, was acquiring burger chain Sonic. SONC shareholders will receive $43.50 per share in cash, a 19% premium from Monday’s close.  Inspired is owned by private equity firm Roark and was formed after Arby’s acquired Buffalo Wild Wings in February. 

Equities are little changed ahead of tomorrow’s Fed announcement on interest rates.  The Fed is widely expected to announce a quarter-point rate hike at the end of its two-day meeting.   This will raise the Fed funds target rate to 2%-2.25%.  Investors will be paying close attention to any clues on further rate hikes.  Currently, the 10-year Treasury note is trading at a 3.10% rate, up from 2.80% at the end of August.  

Breadth: Mixed

• NYSE advances 1,485 to declines 1,417; new 52-week highs 65 to new lows 99
• Nasdaq advances 1,642 to declines 1,255; new 52-week highs 64 to new lows 44