Archive - Nov 17, 2015

Despite plunges in new and pending home sales (current) and lumber prices (forward-looking), Homebuilder Sentiment surged in October to its highest in over 10 years. November appears to be ushering in some sense of reality check. Having revised up October to 65 (from 64), November saw sentiment drop to 62 - the first drop since May. The Southern and Midwest regions saw overall drops in sentiment as The West rose to new cycle highs. Both current and future sales expectations dropped notably but - despite all the blather about weather - prospective buyer traffic rose to its highest since October 2005!

If you follow geopolitics and the oil market (and really, you can’t follow the latter without following the former) you might be wondering whether the tragedy that took place in Paris last Friday may be enough to override the fundamentals for a while. As it turns out, even the start of a global conflict may not be enough to spark a sustained upturn when only around 47-m bbls of available ex-US commercial storage remain.

"Apparently terrorist attacks are supportive of stocks… apparently! We have been wrong in times past, and we have been wrong badly before, but we cannot recall every having been as wrong as we were yesterday for we were certain that terrorism is a bad thing for equity investment... We were clearly and obviously wrong, and when wrong the only possible action to take is to get less wrong; to cover that which had been done and to retreat to the sidelines." - Dennis Gartman

Yesterday's surge-pricing in US equities driven tick-for-tick by a remarkable rip in WTI crude prices (as despite 3 billion barrels of excess inventory, decided to rip on Mid-East war tensions) appears to be losing its anchor. Once again, USDJPY 123.00 will be all that matters...

Following September's 0.2% MoM drop, October's Industrial Production dropped a further 0.2% (missing expectations of a 0.1% rise by a mile). This is the 9th MoM drop in the 10 months of this year. Utilities (-2.5%) and Mining (-1.5%) were big drivers, as year-over-year, IP rose just 0.34% - the weakest growth since January 2010 - is flashing recessionary signals loud and clear.

The Turkish authorities warned their French counterparts twice in the past year about one of the attackers, Ismaël Omar Mostefaï, a 29-year-old French citizen who was known by the authorities as someone who had radical Islamist beliefs, an official said on Monday. The official, speaking on the condition of anonymity, in line with government protocol, said the government never heard back from France and only received an “information request” about Mr. Mostefaï after the Paris attacks.

The cost of 'living' in America in anything but a cardboard box under an overpass is rising at its fastest rate in 8 years. Both overall "shelter" and "rent" inflation are running at their hottest pace of the 'recovery'... and this is happening as wage growth remains stagnant despite the promises that any minute now it will rise. Well done Janet...

-If you're thinking of buying that dream house on the ocean in the Sunbelt, wait a year - there will be some bargains. If you're a seller - call the broker soon....

Following September's strongest Core CPI gain since June 2014, October accelerated that modestly with CPI ex food and energy rising 1.9% YoY. Broad CPI rose 0.2% YoY (slightly better than the 0.1% expected rise) - the highest sicne December. Month-over-month saw new and used vehicle prices drop, Apparel prices drop 0.8% (most since Dec 2014), PCs drop 0.9%, but was notably offset by the bigger-weighting in Medical Care which rose 0.7% MoM (3.0% YoY) and Shelter rose 3.2% YoY.

The just concluded 13-F bonanza shows that "some of the world’s top hedge fund managers scaled back their U.S. stock investments last quarter as markets tumbled." Below, courtesy of Bloomberg, is the full summary of what the most prominent hedge fund names did in Q3...

• France, Russia strike Islamic State in Syria, EU aid invoked (Reuters)
• Pressure Grows for Global Response Against Islamic State After Paris Attacks (WSJ)
• Weakened Hollande Faces Election Backlash in Wake of Attacks (BBG)
• French Official Calls for Metal Detectors at Train Stations (NYT)
• Belgium Raises Terror Threat Level, Cancels Soccer Game vs Spain (BBG)
• Foreign Companies Scrap Paris Events After Terror Attacks (BBG)

Who would have thought terrorism is so good for stocks.

Once you examine the finer details, it quickly becomes clear that there are five key reasons that the Fed is unlikely to raise rates anytime soon.

Moments ago the Kremlin confirmed for the first time on Tuesday that a bomb did bring down a Russian passenger plane that crashed over the Sinai Peninsula in Egypt on Oct. 31, killing all 224 people on board. "One can unequivocally say that it was a terrorist act," Alexander Bortnikov, the head of Russia's FSB security service, told a meeting chaired by President Vladimir Putin, according to a transcript published on the Kremlin's web site.