We get the Fed FOMC (Federal Open Market Committee) minutes this afternoon, and it will be interesting to see if there is any acknowledgment by the Fed of soft areas in the economy, particularly housing.  This morning’s report of housing starts of an annualized rate of 1.21 million units was slightly below consensus of 1.22 million.  Building permits were lower by 0.6% to an annual rate of 1.24 million.  The decline was mainly attributable to a 9.3% decline in 5 units or more.  Single-family permits were up 2.9% to 851,000. 

Allowances need to be made for the impact of Hurricane Florence, which played a role in the south posting its biggest decline since October 2015.

This problem was also highlighted in mortgage applications, which plunged 7.1% in the most recent week, and it declined eight of the last twelve weeks, with only three weeks had increases.

Where’s the Beef?

It’s going to be important for the Fed to acknowledge the relatively low inflation in historic context. 

The list of food items that declined in September from August.   

 

EIA Weekly Petroleum Status Report

The Energy Information Administration reported that crude inventories increased by 6.5 million barrels last week.  Analysts had been expecting a rise of 1.88 million barrels.  The larger than expected draw pressured crude oil lower.  West Texas Intermediate crude oil is trading lower by $2.00, 2%, @ $69.92.    

Gasoline inventories fell by 2.0 million barrels, while analysts had been looking for a decline of 1.52 million barrels.  Distillates stockpiles fell by 800,000 barrels versus expectations of a decline of 1.5 million barrels.          

 

Petroleum Report	Change	Estimate	Total Inventory
Crude Oil	6,500,000	1,880,000	416.4 million
Distillates	-800,000	-1,500,000	132.6 million
Gasoline	-2,000,000	-1,520,000	236.2 million

Once again, dip buyers stepped in to buy equities.  The Dow Jones Industrial Average was trading lower by 320 points, 1.24%, before buyers stepped in to rally the Dow to unchanged. 

• The Dow is lower by 0.18%
• The S&P 500 is unchanged
• The Nasdaq is lower by0.17%
• The Russell 2000 was lower by 0.60%

Breadth:

• NYSE declines are 1,770 to advancers of 1,151; new 52-week highs 13 to new lows 101
• Nasdaq declines 1,715 to advancers of 1,202; new 52-week highs 10 to new lows 79

Let’s keep our powder dry for the remainder of the session. 

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