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Tag: commodity

  • How one big stock-market investor is positioning for a decade of inflation

    How one big stock-market investor is positioning for a decade of inflation

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    With the threat of inflation back at the forefront for many investors, there’s one large stock-market investor positioning for it to be a decade-long phenomenon. In a note posted to the firm’s website, Chief Investment Officer William Smead of Phoenix-based Smead Capital Management, which oversees $5.83 billion in assets, said “we are loaded with inflation beneficiary stocks like oil and gas stocks and useful real estate.” The firm likes home builder D.R. Horton DHI; Simon Property Group SPG, a real estate investment trust…

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  • U.S. stocks end lower as tech sector drops sharply amid rising bond yields

    U.S. stocks end lower as tech sector drops sharply amid rising bond yields

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    U.S. stocks finished lower Wednesday, with shares of technology companies dropping sharply, as the S&P 500 booked back-to-back losses amid a rise in Treasury yields. The Dow Jones Industrial Average DJIA fell 0.6%, while the S&P 500 SPX dropped 0.7% and the tech-heavy Nasdaq Composite COMP sank 1.1%, according to preliminary data from FactSet. Information technology was the S&P 500’s worst-performing sector on Wednesday with a loss of around 1.4%. In the U.S. bond market, the yield on the 10-year Treasury note rose for a third straight day on Wednesday to 4.289%, according to Dow Jones Market Data.

    …

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  • A recession could be nine months away, according to this telltale gauge

    A recession could be nine months away, according to this telltale gauge

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    The roughly $25 trillion Treasury market first began flashing this telltale sign that a U.S. recession likely lurks on the horizon almost a year ago, according to Bespoke Investment Group.

    It was late October of 2022 when the 3-month Treasury yield BX:TMUBMUSD03M first eclipsed the 10-year Treasury yield BX:TMUBMUSD10Y, resulting in an “inversion” of a key part of the yield curve that’s been a reliable predictor of past recessions.

    Where…

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  • U.S. oil prices score longest streak of daily gains in over 4 years

    U.S. oil prices score longest streak of daily gains in over 4 years

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    Oil futures settled higher on Wednesday, with U.S. prices posting a ninth consecutive climb — the longest streak of daily gains since early 2019.

    Prices for U.S. and global benchmark crude futures marked fresh settlement highs for the year so far, following the recent extension of supply cuts by Saudi Arabia and Russia.

    Price action

    Market drivers

    “Saudi…

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  • How the U.S. housing market got stuck in the ’80s

    How the U.S. housing market got stuck in the ’80s

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    The Federal Reserve’s inflation fight has been particularly brutal for anyone not already a U.S. homeowner before interest rates and mortgage rates rose to 15-year highs.

    With mortgage rates around 7.2% to kick off the post–Labor Day period, the difference between the rates on a new 30-year home loan and on all outstanding U.S. mortgage debt (see chart) has not been so wide since the 1980s.

    It’s the 1980s again in the U.S. housing market.


    Glenmede, FactSet

    “Generally, climbing interest rates curb demand and cause housing prices to fall,” Glenmede’s investment strategy team wrote, in a Tuesday client note, but not this time.

    Instead, U.S. homes remain in critically low supply after more than a decade of underbuilding, and with most homeowners who already refinanced at low pre-pandemic rates being “reluctant to leave their homes,” wrote Jason Pride, chief of investment strategy and research, and his Glenmede team.

    Also, while homes prices have come off their prepandemic highs, they still were fetching $416,000 in the second quarter, based on median sales prices, above $358,700 in the fourth quarter of 2020, according to U.S. Census and HUD data.

    “Until the supply gap is filled by new construction, home prices and building activity are unlikely to decline as meaningfully as they normally would given the headwind from rising rates,” the Glenmede team said.

    Read: Housing affordability is now at its worst level since 1984, Black Knight says

    The Glenmede team, however, does expect more pressure on consumers in the coming months, particularly as student-loan payments resume in October and if the Fed keeps interest rates high for a while, as increasingly expected. The benchmark 10-year Treasury yield
    BX:TMUBMUSD10Y,
    which underpins the U.S. economy, was back on the climb at 4.26% Tuesday.

    Meanwhile, shares of home-vacation rental platform Airbnb Inc.
    ABNB,
    +7.23%
    rose 7.2% on Tuesday, after the Labor Day weekend, and 66.4% higher on the year so far, according to FactSet.

    Don’t miss: New York City cracks down on Airbnb and other short-term-rental listings

    Shares of Invitation Homes Inc.
    INVH,
    -0.91%    ,
    which grew out of the last decade’s home-loan foreclosure crisis to become a single-family-rental giant, were up 14.3% on the year, according to FactSet.

    Dallas Tanner, CEO of Invitation Homes, said he expected “the rising costs and the burden of homeownership” to continue to benefit his company, in a July earnings call. The company recently bought a portfolio of about 1,900 homes and has been snapping up newly constructed homes. Companies can borrow on Wall Street at much lower rates than individuals.

    Stocks closed lower Tuesday, with the Dow Jones Industrial Average
    DJIA
    off 0.5%, and the S&P 500 index
    SPX
    0.4% lower and the Nasdaq Composite Index
    COMP
    down 0.1%, according to FactSet.

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  • Manchester United’s stock suffers record selloff after report that sale of club is off

    Manchester United’s stock suffers record selloff after report that sale of club is off

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    The U.S.-listed shares of Manchester United PLC suffered a record beating Tuesday, after a report that the iconic English football club was set to be taken off the market.

    Manchester United MANU UK:MNL fell 18.2% on the day to log its biggest one-day selloff since the company went public in August 2012. The previous record drop was 13.8% on March 12, 2020, at the outset of the coronavirus pandemic.

    The…

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  • U.S. factory orders plunge in July after four straight gains

    U.S. factory orders plunge in July after four straight gains

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    Orders for U.S. manufactured goods fell a sharp 2.1% in July, the Commerce Department said Tuesday. This is the first decline after four straight monthly gains.

    Economists surveyed by the Wall Street Journal were expecting a 2.3% fall in July.

    Excluding transportation, orders rose 0.8% in July after a 0.3% gain in the prior month.

    Economists said that higher interest rates are putting pressure on business equipment spending.

    Durable-goods orders fell 5.2 % in July, unrevised from the data that was released on Aug. 24. Non-durable goods orders rose 1.1%. 

    Orders for nondefense capital goods, excluding aircraft, rose 0.1% in July, also unrevised from prior estimate. 

    U.S. stocks
    DJIA

    SPX
    were trading lower on Tuesday following the long holiday weekend.

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  • U.S. stock futures slide as sour news on global economy hits sentiment

    U.S. stock futures slide as sour news on global economy hits sentiment

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    U.S. stock index futures slipped early Tuesday as rising bond yields defied dour economic news from China and Europe.

    How are stock-index futures trading

    • S&P 500 futures
      ES00,
      -0.19%
      dipped 20 points, or 0.4%, to 4502

    • Dow Jones Industrial Average futures
      YM00,
      -0.07%
      fell 119 points, or 0.3%, to 34763

    • Nasdaq 100 futures
      NQ00,
      -0.38%
      eased 95 points, or 0.6%, to 15421

    On Friday, the Dow Jones Industrial Average
    DJIA
    rose 116 points, or 0.33%, to 34838, the S&P 500
    SPX
    increased 8 points, or 0.18%, to 4516, and the Nasdaq Composite
    COMP
    dropped 3 points, or 0.02%, to 14032. U.S. markets were closed on Monday for the Labor Day break.

    What’s driving markets

    U.S. traders returned from the Labor Day holiday with global markets in a generally risk-off mood after more disappointing news from the world’s second biggest economy.

    A Caixin survey showed China’s service sector expanded in August at its slowest pace in eight months, providing further evidence that the country’s post-pandemic recovery is faltering.

    Also, a eurozone survey showed output in the bloc contracting at its fastest pace in nearly three years.

    Asian and European bourses mostly turned lower, affecting U.S. equity index futures.

    “Sentiment has turned downbeat again on China as fresh brushstrokes are painted on the picture of its slowing economy,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

    “The data has overshadowed relief that the struggling property giant Country Garden
    2007,
    -0.98%
    has managed to make key interest payments on its debt, reducing, for now, concerns about contagion in the financial sector. China appears to be taking one step forward, but two steps back, as optimism one day turns to pessimism the next,” Streeter added.

    Concerns about economic growth might be expected to support sovereign debt markets, but here too the tone was grim, with Treasury yields rising amid concerns recent increases in oil prices
    CL.1,
    -0.35%
    –though down a bit on Tuesday — may revive inflationary pressures.

    “Oil prices have surged to reach new highs in 2023, a development poised to have significant repercussions on the upcoming August consumer price index reports…[which] presents a fresh challenge for central banks as they continue their diligent efforts to bring inflation levels back in line with their desired targets,” said Stephen Innes, managing partner at SPI Asset Management.

    “This growing concern has notably impacted sovereign bonds, triggering a sell-off primarily driven by heightened inflation expectations. And, of course, stocks do not like the cut of that new inflation jib,” Innes added.

    U.S. economic updates set for release on Tuesday include July factory orders, due at 10 a.m. Eastern.

    Companies in focus

    Blackstone Inc.
    BX,
    -1.77%
    rose 4% in premarket trade, while shares of Airbnb Inc.
    ABNB,
    +0.87%
    were up 5% after S&P Dow Jones Indices announced that both names would gain inclusion in the S&P 500 index. The changes take effect before the start of trading Sept. 18.

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  • Is the Stock Market Open Today? These Are the Trading Hours for Labor Day.

    Is the Stock Market Open Today? These Are the Trading Hours for Labor Day.

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    Is the Stock Market Open Today? These Are the Trading Hours for Labor Day.

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  • This hadn’t happened on the U.S. Treasury market in 250 years. Now it’s about to.

    This hadn’t happened on the U.S. Treasury market in 250 years. Now it’s about to.

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    The 10-year Treasury bond is on track for a third year of losses in 2023, something that hasn’t happened in 250 years of U.S. history.

    In short, it has never happened, say strategists at Bank of America.

    The return for investors putting money in that bond
    BX:TMUBMUSD10Y
    stands at negative 0.3% so far in 2023, after a 17% slump in 2022 and a 3.9% drop in 2021, the bank’s strategists, led by Michael Hartnett, pointed out in a note on Friday.

    Here’s a visual on that:

    That reflects a “staggering 40% jump in U.S. nominal GDP growth” — factoring in growth and inflation — “since the COVID lows of 2020,” they said, providing this chart:

    Bond returns have suffered this year as the Federal Reserve has continued its interest-rate-hiking campaign aimed at getting inflation under control. The “big picture in the 2020s vs. the 2010s is lower stock and bond returns, which we would expect to continue given political, geopolitical, social [and] economic trends,” said Hartnett and the team.

    This year has been better for stocks
    DJIA

    SPX,
    but the bounce since COVID pandemic restrictions began to be lifted has been very concentrated in U.S. stocks, especially the technology sector, with breadth in global markets “breathtakingly bad,” the analysts said. Breadth refers to the number of stocks actively participating in a rally.

    Breadth is the worst since 2003 for the MSCI ACWI, which captures large- and midcap-stock representation across 23 developed markets and 24 emerging ones.

    As for the latest weekly flows into funds, Bank of America reported that $10.3 billion went to stocks, $6.5 billion to cash and $1.7 billion to bonds, with $300 million draining from gold
    GC00,
    -0.06%    .

    The yield on the 10-year Treasury was holding steady on Friday at 4.102% after data showed the U.S. economy generated 187,000 jobs in August, but the unemployment rate rose to 3.8% from 3.5%, and job gains were revised lower for July and June.

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  • As U.S. stock-market investors celebrate soft economic data, is bad news becoming bad news again on Wall Street?

    As U.S. stock-market investors celebrate soft economic data, is bad news becoming bad news again on Wall Street?

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    With second-quarter earnings season now largely behind the market, stock investors have been focusing on the latest economic data. 

    They have, for the most part, been reacting positively to “bad economic news,” or any data that may point to an economic slowdown. 

    It’s been almost nine months since the trend emerged, as softening economic data and lower inflation may mean the Federal Reserve can stop raising interest rates, said Chris Fasciano, portfolio manager at Commonwealth Financial Network.

    Traders in federal-funds futures, as of Friday, are pricing in an over 90% chance that the Fed will hold its policy interest rate unchanged at its September meeting, and a roughly 35% likelihood that the U.S. central bank will raise interest rates by 25 basis points in November. 

    Read: The Fed’s monetary policy has lost some of its potency and interest rates may need to rise much higher as a result, economist says

    U.S. stocks closed the week higher ahead of the Labor Day holiday weekend, after data released Friday indicated a cooling labor market, though there was speculation that a “mirage” concerning the conclusion of summertime jobs may have factored. The U.S. created 187,000 new jobs in August, while the unemployment rate jumped to 3.8% from 3.5%.

    The data support the narrative of a gradual slowdown in the labor market, but there are no signs that the economy is weakening significantly, according to Richard Flax, chief investment officer at Moneyfarm.

    Also read: ‘Near perfect’ jobs report has traders expecting Fed to be done hiking rates this year

    “The economic data has not been bad. It is just softening. If you saw really bad economic data, that wouldn’t be taken particularly positively,” Flax said. 

    Meanwhile, “what we’re experiencing is a rolling recession,” said Jamie Cox, managing partner at Harris Financial Group. “Recession activity actually goes from sector to sector, but it doesn’t translate into this big broad-based decline.”

    However, if investors see a significant decline in the housing and labor markets, that could change the narrative, Cox noted. 

    Read: Fed rate hikes can end now that U.S. job gains are the size of an economy like Australia’s, says BlackRock

    To break the cycle in which bad economic news is good news for stocks, economic data have to be much worse than now, indicating more damage from high interest rates, noted Flax. 

    The trend may also reverse if there is a “meaningful downgrade” of corporate earnings expectations, said Flax. “I think you need to see it when macro data translates into weakened profitability.”

    Investors should also be alert of the possibility that inflation may accelerate again, according to David Merrell, founder and managing member at TBH Advisors. 

    Data showed that the personal consumption expenditures price index rose a mild 0.2% in July, but the yearly inflation rate crept up to 3.3% from 3%, the government said Thursday.

    “Inflation overall has been trending down nicely. But if it starts to kick back up, that could mean bad news becomes bad news now,” said Merrell. 

    If investors start to treat bad economic news as bad news for the stock market, it could put pressure on the 2023 stock-market rally, with the S&P 500
    SPX
    up 17.6% since the start of the year and the Nasdaq Composite
    COMP
    up 34%.

    In the past week, the Dow Jones Industrial Average
    DJIA
    climbed 1.4%, the S&P 500 advanced 2.5% and the Nasdaq gained 3.2%, according to Dow Jones Market Data. The S&P 500 posted its biggest weekly gain since the week ending June 16.

    This week, investors will be expecting data on the July U.S. international trade deficit and the ISM services sector activity for August on Tuesday, weekly initial jobless benefit claims data on Thursday, and the July wholesale inventories data on Friday. They will also tune into the speeches of a number of Fed speakers, looking for clues on whether the central bank is ready to be done with its rates hikes.

    Economic calendar: On this week’s economic-data docket are the Fed Beige Book, factory orders, unemployment claims and more

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  • Wall Street is raising quarterly profit forecasts for the first time in two years, and executives are relaxing about recession prospects

    Wall Street is raising quarterly profit forecasts for the first time in two years, and executives are relaxing about recession prospects

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    After nearly two years of concerns about a recession, growing optimism about the economy is starting to filter down into Wall Street’s expectations for individual companies’ quarterly results, with analysts growing more upbeat about corporate profit in the months ahead

    While expectations for those quarterly results usually trend lower as earnings season arrives, analysts over the past two months have actually nudged their profit forecasts higher for the first time in two years, according to a FactSet report released Friday….

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  • This hadn’t happened on the U.S. Treasury market in 250 years. Now it’s about to.

    This hadn’t happened on the U.S. Treasury market in 250 years. Now it’s about to.

    [ad_1]

    The 10-year Treasury bond is on track for a third year of losses in 2023, something that hasn’t happened in 250 years of U.S. history.

    In short, it has never happened, say strategists at Bank of America.

    The return for investors putting money in that bond
    BX:TMUBMUSD10Y
    stands at negative 0.3% so far in 2023, after a 17% slump in 2022 and a 3.9% drop in 2021, the bank’s strategists, led by Michael Hartnett, pointed out in a note on Friday.

    Here’s a visual on that:

    That reflects a “staggering 40% jump in U.S. nominal GDP growth” — factoring in growth and inflation — “since the COVID lows of 2020,” they said, providing this chart:

    Bond returns have suffered this year as the Federal Reserve has continued its interest-rate-hiking campaign aimed at getting inflation under control. The “big picture in the 2020s vs. the 2010s is lower stock and bond returns, which we would expect to continue given political, geopolitical, social [and] economic trends,” said Hartnett and the team.

    This year has been better for stocks
    DJIA

    SPX,
    but the bounce since COVID pandemic restrictions began to be lifted has been very concentrated in U.S. stocks, especially the technology sector, with breadth in global markets “breathtakingly bad,” the analysts said. Breadth refers to the number of stocks actively participating in a rally.

    Breadth is the worst since 2003 for the MSCI ACWI, which captures large- and midcap-stock representation across 23 developed markets and 24 emerging ones.

    As for the latest weekly flows into funds, Bank of America reported that $10.3 billion went to stocks, $6.5 billion to cash and $1.7 billion to bonds, with $300 million draining from gold
    GC00,
    +0.02%    .

    The yield on the 10-year Treasury was holding steady on Friday at 4.102% after data showed the U.S. economy generated 187,000 jobs in August, but the unemployment rate rose to 3.8% from 3.5%, and job gains were revised lower for July and June.

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  • Airbnb, Blackstone to join S&P 500, while Deere will replace Walgreens in S&P 100

    Airbnb, Blackstone to join S&P 500, while Deere will replace Walgreens in S&P 100

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    Shares of investment giant Blackstone Inc. and vacation-home rental platform Airbnb Inc. rallied after hours on Friday after both won the nod to join the S&P 500 index
    SPX
    later this month.

    The announcement, from S&P Dow Jones Indices, said that the change would take hold before the start of trading on Monday, Sept. 18. The move, among others announced Friday, will “ensure each index is more representative of its market-capitalization range,” according to a release.

    Airbnb
    ABNB,
    +0.87%
    currently has a market value of $83.98 billion, and its shares are up 64.7% so far this year. Blackstone
    BX,
    -1.77%    ,
    currently worth $129.29 billion, has seen its stock rise 43.6% year-to-date.

    Shares of Airbnb and Blackstone were up 5.7% and 4.8%, respectively, after hours on Friday.

    Blackstone and Airbnb will replace Lincoln National Corp.
    LNC,
    +2.14%
    and Newell Brands Inc.
    NWL,
    +1.23%
    in the index, S&P Dow Jones Indices said on Friday. In the process, Lincoln and Newell will join the S&P SmallCap 600.

    Blackstone in July said it had reached $1 trillion in assets under management, aided by a growth trajectory that it said had outpaced its private equity rivals.

    “We’ve established an unparalleled global platform of leading business lines, offering over 70 distinct investment strategies,” Chief Executive Stephen Schwarzman told analysts. “We believe our clients view us as the gold standard in alternative asset management.”

    Meanwhile, Airbnb last month said that travelers were seeking longer stays and bigger properties in pricier areas, as the rebound in travel endures despite a tidal wave of inflation last year. The company’s second-quarter results and third-quarter sales forecast topped Wall Street’s estimates.

    Meanwhile, S&P 500 member Deere & Co.
    DE,
    +1.94%
    will replace Walgreens Boots Alliance Inc.
    WBA,
    -7.43%
    in the S&P 100, S&P Dow Jones Indices said on Friday. That change also takes hold on Sept. 18. S&P Dow Jones Indices said Walgreens “is no longer representative of the megacap market space” but will stay in the S&P 500.

    Shares of Deere fell 0.2% after hours. Walgreens stock was up 0.4%.

    Don’t miss: Walgreens CEO Roz Brewer steps down with stock at decade-and-a-half low

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  • Intuit braces for negative FTC ruling on free tax prep advertising, vows appeal

    Intuit braces for negative FTC ruling on free tax prep advertising, vows appeal

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    More than a year ago, the Federal Trade Commission sued Intuit Inc., the maker of TurboTax, for allegedly tricking people into thinking they could file their income taxes for free with the tax-preparation giant.

    Now, an administrative judge inside the agency has ruled against Intuit — and the company said in a Friday afternoon SEC filing that it’s going to keep fighting the case, even if that means incurring “significant costs.”

    “We expect to appeal this decision to the FTC Commissioners and, if necessary, then to a federal court of appeals. We intend to continue to defend our position on the merits of this case,” the company said in its 10-K filing.

    “There is no monetary penalty, and Intuit expects no significant impact to its business,” Intuit spokesman Rick Heineman said in a statement. The company will appeal “this groundless and seemingly predetermined decision by the FTC to rule in its own favor,” he said.

    Intuit already reached a $141 million settlement with state attorneys general about the allegations of deceptive advertising. The company says it has been clear and upfront with customers about costs. It did not admit liability in the settlement.

    The FTC could not be immediately reached for comment Friday afternoon.

    In March 2022, the regulator sued Intuit in federal court to immediately stop commercials that repeated “free” over and over. Intuit pulled some of the advertising and after filing season ended, a San Francisco federal judge said the FTC bid for emergency halts didn’t need to happen under the circumstances.

    FTC lawyers also lodged an internal administrative complaint. “Intuit widely disseminated ads on television, on the radio, and online that gave consumers the impression that they could use TurboTax for free, even though two-thirds of taxpayers don’t qualify for Intuit’s free TurboTax offerings,” they wrote in administrative complaint proceedings.

    The ongoing legal fight is happening while the broader fight over of free tax preparation is heating up. The Internal Revenue Service is planning to test its own pilot program in the upcoming filing season where taxpayers can file their taxes directly with the IRS instead of through tax preparation companies or individual preparers.

    TurboTax and the tax software industry oppose the proposed IRS direct file system. So do Congressional Republicans.

    One sticking point in the looming government shutdown is how much money the IRS should be getting in its budget. The House appropriations bill would forbid the IRS from using any money to build the direct file system.

    Intuit Inc.
    INTU,
    +1.44%
    shares closed 1.4% higher Friday, at $549.60, and the disclosure didn’t seem to be having much effect on the shares in after-hours trading. Shares are up 41% year to date, while the Dow Jones Industrial Average
    DJIA
    is up 5% and the S&P 500
    SPX
    is up 17.6%.

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  • China ETFs book best day in a month after PBOC vows to support weak yuan with forex reserve ratio cut

    China ETFs book best day in a month after PBOC vows to support weak yuan with forex reserve ratio cut

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    U.S. exchange-traded funds that invest in Chinese stocks notched their best day in a month after China ramped up its efforts to support the country’s flagging currency as investors’ concerns over the economic weakness persist.

    The People’s Bank of China said Friday it will lower the amount of foreign-exchange deposits financial institutions are required to hold for the first time in 2023, a move seen as a bid to shore up the Chinese yuan, which has tumbled this year as the world’s second largest economy has faltered due to a property-market downturn, sluggish domestic consumption, and the ballooning local government debt pile. 

    The Invesco Golden Dragon China ETF
    PGJ,
    which tracks the American depositary shares of companies based in China, rose 3% on Friday, while the KraneShares CSI China Internet ETF
    KWEB,
    which offers exposure to Chinese software and information technology stocks, gained 3.5%. The iShares MSCI China ETF
    MCHI
    advanced nearly 2.2% and the SPDR S&P China ETF
    GXC
    surged 2%, according to FactSet data.

    The iShares MSCI China ETF and the KraneShares CSI China Internet ETF booked their biggest daily percentage advance since August 3, according to FactSet data.

    China’s central bank will cut the foreign-exchange reserve requirement ratio to 4% from 6% beginning Sept. 15. The move is expected to increase the supply of foreign currencies available in local markets, making the Chinese yuan more appealing for domestic investors.

    See: China’s central bank to cut FX reserve ratio

    Based on about $822 billion foreign-exchange deposits in July, the 200-basis-point cut in the reserve requirement ratio could release about $16 billion, which will improve the supply of the U.S. dollar onshore, and could move spot USDCNY lower, said strategists at Citigroup led by Johanna Chua, chief Asia economist.

    “In a broader picture, this can be also seen as part the current round of accelerated policy rollout which works more directly on asset markets. If the accelerated pace [of policy rollout] continues, it may help stabilize sentiment to some extent and prevent outsized bearish moves on China risk assets including the RMB FX,” they wrote in a Friday note.

    The onshore yuan
    USDCNY,

    weakened around 1.7% against the dollar in August, extending its losses for the year to nearly 5%, according to FactSet data. The offshore yuan
    USDCNH,
    -0.03%
    was trading at 7.27 per dollar Friday afternoon.

    See: Chinese Property Stocks Gain on Stimulus Measures

    Friday’s change to reserve requirement ratio came a day after Chinese authorities announced that homebuyers’ minimum down payment will be reduced to 20% for first-time home purchases, and 30% for second-home purchases nationwide, according to a joint statement from the People’s Bank of China and National Administration of Financial Regulation late Thursday.

    Currently, homebuyers in largest cities such as Beijing and Shanghai have a 30% down payment ratio for first homes, and 40% or more for second homes.

    Separately, big banks, such as Industrial & Commercial Bank of China
    601398,
    -1.08%
    and Bank of China
    601988,
    -1.07%    ,
    have said they would cut their one-year yuan deposit rate by 10 basis points to 1.55% and their two-year yuan deposit rate by 20 basis points to 1.85%. The banks also plan to cut mortgage rates to boost consumption and aid the troubled property sector.

    The broader U.S. stock market finished mostly higher on Friday as traders weighed the latest jobs report to conclude the final trading day before the Labor Day holiday weekend. The S&P 500
    SPX
    was up 0.2%, while the Dow Jones Industrial Average
    DJIA
    advanced 0.3% but the Nasdaq Composite
    COMP
    ended nearly flat.

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  • Fed rate hikes can end now that U.S. job gains are the size of an economy like Australia’s, says BlackRock

    Fed rate hikes can end now that U.S. job gains are the size of an economy like Australia’s, says BlackRock

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    The Federal Reserve can probably end its inflation fight now that the U.S. labor market is cooling after generating a historic 26 million jobs in roughly the past three years, according to BlackRock’s Rick Rieder.

    “In fact, 26 million jobs is like adding an economy the size of Australia or Taiwan (including every man, woman, and child),” said Rieder, BlackRock’s chief investment officer in global fixed income, in emailed commentary following Friday’s monthly jobs report for August.

    The August nonfarm-payrolls report showed the U.S. adding 187,000 jobs, slightly more than had been forecast, but also pointing to an uptick in the unemployment rate to 3.8% from 3.5%.

    “Remarkably, 22 million people were hired between May 2020 and April 2022, and 11 million were added to the workforce from June 2021 to May 2023, as the economy has opened up massive amounts of roles for fulfillment,” said Rieder.

    He expects wage pressures to ease, he said, and thinks the “economy may now have fulfilled many of its needs,” which should make the Fed feel more confident in “the permanence of lower levels of inflation,” so that it can slow or stop its interest-rate rises by year-end.

    Hiring in the U.S. has slowed, except in education and in healthcare services, when looking at private payrolls based on a three-month moving average.

    Payrolls are slowing in many sectors, expect education and healthcare


    Bureau of Labor Statistics, BlackRock

    The Fed has already raised interest rates in July to a 5.25%-to-5.5% range, a 22-year high, with traders in federal-funds futures on Friday pricing in only about a 7% chance of a Fed rate hike in September and favoring no hike again at the central bank’s November policy meeting.

    Rieder of BlackRock, one of the world’s largest asset managers with $2.7 trillion in assets under management, said he thinks a Fed pause or outright end to rate hikes could calm markets, even if the Fed, as BlackRock expects, keeps rates high for a time.

    U.S. closed mostly higher Friday ahead of the Labor Day holiday weekend, with the Dow Jones Industrial Average
    DJIA
    up 0.3%, the S&P 500 index
    SPX
    up 0.2% and the Nasdaq Composite Index
    COMP
    0.02% lower, according to FactSet.

    The 10-year Treasury yield
    BX:TMUBMUSD10Y
    was at 4.173%, after hitting its highest level since 2007 in late August, adding to volatility that has wiped out earlier yearly gains in the roughly $25 trillion Treasury market.

    Read on: This hadn’t happened on the U.S. Treasury market in 250 years. Now it has.

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  • U.S. stock futures edge higher ahead of data that could show hiring slowdown

    U.S. stock futures edge higher ahead of data that could show hiring slowdown

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    U.S. stock futures pointed higher on Friday, ahead of data that could show a slowing pace of hiring, which would reassure investors that the Federal Reserve won’t take interest rates much higher.

    What’s happening

    • Dow Jones Industrial Average futures
      YM00,
      +0.39%
      rose 78 points, or 0.2%, to 34869.

    • S&P 500 futures
      ES00,
      +0.34%
      gained 9 points, or 0.2%, to 4525.

    • Nasdaq 100 futures
      NQ00,
      +0.17%
      increased 12 points, or 0.1%, to 15551.

    On Thursday, the Dow Jones Industrial Average
    DJIA
    fell 168 points, or 0.48%, to 34722, the S&P 500
    SPX
    declined 7 points, or 0.16%, to 4508, while the Nasdaq Composite
    COMP
    gained 16 points, or 0.11%, to 14035.

    What’s driving

    Ahead of Friday’s barrage of heavy-hitting economic data, U.S. stocks saw modest pressure, as inflation data was largely benign but jobless claims dented an emerging picture of an economic slowdown. Dollar General’s
    DG,
    -12.15%
    profit warning, however, pointed to a consumer under pressure.

    Friday will see the release of nonfarm payrolls data at 8:30 a.m. Eastern, with expectations that 170,000 jobs were created in August. That would be the weakest showing since Dec. 2020, a month that saw 268,000 jobs lost.

    “There have been indicators that the U.S. jobs market is finally starting to lose some of its tightness, and if the NFP print confirms this trend, it will be one less thing for the FOMC to worry about given labor market resilience has long been a source of inflationary pressure,” said Tim Waterer, chief market analyst at KCM Trade.

    There’s also the Institute for Supply Management’s manufacturing index, as well as monthly auto sales, that will get released. Thursday’s after hours releases saw mixed responses, with Dell Technologies
    DELL,
    +0.99%
    stock rallying but Broadcom shares
    AVGO,
    +3.43%
    wilting after results.

    In China, August Caixin manufacturing PMI came in above expectations, rising to 51, a level that indicates improving conditions, as the country also lowered down-payment requirements on homes. The Hong Kong market was shut over storm-related concerns.

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  • Labor Day is just a ‘milestone’ in the marathon to get workers back to the office

    Labor Day is just a ‘milestone’ in the marathon to get workers back to the office

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    The U.S. Labor Day holiday will mark another milestone in the marathon to bring workers back to the office, but it won’t be a quick fix for landlords, according to Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics.

    Employers from Facebook parent Meta
    META,
    +0.27%
    to Goldman Sachs
    GS,
    -0.26%
    recently laid out mandates for staff to return to the office more frequently, starting this fall, including the big one — the federal government.

    “A lot of companies are saying that after Labor Day, ‘We expect more out of you,” LaSalvia said, referring to days in the office. Still, office attendance, he argues, likely only stages a fuller comeback if a job or promotion is on the line.

    Amazon.com Inc.’s
    AMZN,
    +2.18%
    Chief Executive Andy Jassy has been trying to drive home the point by warning staff to return at least three days a week, or face the consequences.

    That could prove difficult, with Friday’s U.S. jobs report for August expected to show U.S. unemployment at a scant 3.5%, near the lowest levels since the late 1960s, even if hiring has been slowing. The labor market, so far, appears unfazed by the Federal Reserve’s benchmark rate reaching a 22-year high.

    It has been a different story for landlords facing a roughly 19% vacancy rate nationally and piles of debt coming due, especially for owners of older Class B and C office buildings with a bleak outlook or properties in cities with wobbling business centers.

    See: San Francisco’s office market erases all gains since 2017 as prices sag nationally

    As with shopping malls, LaSalvia said it’s largely a problem of oversupply, with many office properties at risk of becoming obsolete as tenants flock to better buildings and locations staging a rebirth. The trend can be traced in leasing data since 2021, with Class A properties in central business districts (blue line) showing a big advantage over less desirable buildings in the heart of cities (orange line).

    Return to office isn’t going to save the entire office property market


    Moody’s Analytics

    “Little by little, we are finding the office isn’t dead,” LaSalvia said, but he also sees more promise in neighborhoods with a new purpose, those catering to hybrid work and communities that bring people together.

    Another way to look at the trend is through rents. Manhattan’s Penn Station submarket, with its estimated $13 billion overhaul and neighboring Hudson Yards development, has seen asking rents jump 32% to $74.87 a square foot in the second quarter since the fourth quarter of 2019, according to Moody’s Analytics. That compares with a 2% bump in asking rents in downtown New York City to $61.39 a square foot for the same period.

    The push for a return to the office also doesn’t mean a repeat of prepandemic ways. Goldman Sachs analysts estimate that part-time remote work in the U.S. has stabilized around 20%-25%, in a late August report, but that’s still up from 2.6% before the 2020 lockdowns.

    Furthermore, the persistence of remote work will likely add another 171 million square feet of vacant U.S. office space through 2029, a period that also will see tenants’ long-term leases expire and many companies opting for less space. The additional vacancies would roughly translate to 57% of Los Angeles roughly 300 million square feet of office space sitting empty.

    “The fundamental reason why we had offices in the first place have not completely disintegrated,” LaSalvia said. “But for some of those Class B and C offices, the writing was on the wall before the pandemic.”

    U.S. stocks were mixed Thursday, but headed for losses in a tough August for stocks, with the S&P 500 index
    SPX
    off about 1.5% for the month, the Dow Jones Industrial Average
    DJIA
    2.1% lower and the Nasdaq Composite
    COMP
    down 2% in August, according to FactSet.

    Related: Some employers mandate etiquette classes as returning office workers walk barefoot, burp loudly and microwave fish

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  • Salesforce ‘very thirsty’ to be AI CRM leader, Benioff says following strong outlook, improved margins

    Salesforce ‘very thirsty’ to be AI CRM leader, Benioff says following strong outlook, improved margins

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    Salesforce Inc. shares rallied in the extended session Wednesday after the customer-relations management software giant’s earnings outlook topped Wall Street expectations two weeks ahead of its annual confab.

    Salesforce CRM shares rallied more than 6% after hours, and held steadily in that range during the conference call with analysts, following a 1.5% rise to close the regular session at $215.04.

    The…

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