Dow rose 75, decliners over advancers about 3-2 & NAZ slid back 22. The MLP index was off 3+ to 280 & the REIT index drifted back 1+ to 370 following recent strength. Junk bond funds hardly budged & Treasuries saw selling which increased yields. Oil added pennies in the 79s & gold jumped 26 to 2366.
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Hong Kong led Asia-Pacific stocks higher as markets tracked US gains, with renewed hopes for rate cuts by the Federal Reserve bolstering market sentiment. The Hang Seng index hit its highest level in 10 months, up 2.3% after a report that regulators were considering a proposal to exempt individual investors from paying taxes on divs earned from Hong Kong stocks bought via Stock Connect. Mainland China's CSI 300 marginally rose to hit its highest level since Oct 2023, ending at 3666. Meanwhile, Japan's overall household spending in Mar fell 1.2% year on year, less than the 2.4% expected. However, on a month-on-month basis, household spending rose 1.2%, compared with estimates of a 0.3% drop. Japan’s Nikkei 225 rose 0.4% to end at 38,229, while the broad-based Topix gained 0.5% to close at 2728. South Korea's Kospi closed 0.6% higher at 2727, but the small-cap Kosdaq fell 0.7%, ending at 864. The Australian S&P/ASX 200 ended up 0.4% at 7749. Overnight in the US, all 3 major indices climbed as fresh weekly jobless claims data came in at the highest level since Aug, raising expectations that central bankers might cut interest rates at some point this year. The 30-stock Dow jumped 0.9% to notch its longest win streak since a 9-day run in Dec & the S&P 500 added 0.5%, while NAZ gained 0.3%.
A new report finds that the percentage of US mortgages considered to be "seriously underwater" rose in the first qtr of 2024, while the proportion of "equity-rich" mortgages fell for the 3rd consecutive qtr. The report by property & real estate data firm ATTOM found that the portion of mortgaged homes that were seriously underwater rose slightly in the first qtr of 2024 from 2.6% to 2.7% of all residential mortgages. It defines "seriously underwater" as mortgages with a loan-to-value ratio of 125% or more, meaning property owners owe at least 25% more than the estimated market value of the property. The trend of seriously underwater mortgages increasing prevailed in 37 states during the first qtr. Among 107 metropolitan areas with populations greater than 500K residents, the metros with the largest shares of mortgages that were seriously underwater were Baton Rouge (13.4%) & New Orleans (7.3%) in Louisiana, followed by Jackson, Mississippi, (6.5%), Little Rock, Arkansas, (6%) & Syracuse, New York (5.6%). The percentage of residential mortgages that were considered "equity-rich" – meaning that owners had a loan-to-value ratio of 50% or lower, so the owner has at least 50% equity – in Q1 2024 slid to 45.8%, a decline from 46.1% in the prior qtr & 47.2% from Q1 2023. That means the national proportion of equity-rich mortgages hit the lowest level in 2 years. Equity-rich levels declined in 26 states on a quarterly basis & 25 states from the same qtr a year ago. "Homeowner balance sheets continue to benefit in a huge way from the boom times in the form of elevated equity that can be used to finance all kinds of things, from home renovations to business startups," ATTOM CEO Rob Barber said. "Still, the windfalls are starting to erode bit by bit amid mounting signs that the market is no longer so superheated." "It's too early to make any broad statements about the market direction, especially coming off the typically slower Fall and Winter months. But amid the recent trends, this year's Spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing," Barber added.
Percentage of US mortgages considered 'seriously underwater' rises
Federal Reserve Bank of Minneapolis Pres Neel Kashkari said that the US has an ongoing home supply issue that was being complicated by the high rates currently being imposed by the central bank. The Fed needs these rates to lower inflation & “it’s really a timing issue” where the housing sector will do better when the central bank can eventually lower rates, Kashkari said before a meeting of Minnesota's Technology Advisory Council. But he noted monetary policy isn't the whole story & given issues faced by the housing sector, even lower rates wouldn’t push up home supply “in a reasonable period of time.”
Fed's Kashkari: High Fed rates complicating supply of housing
Stock markets are heavily overbought, signally a correction is overdue. Wars around the globe along with high interest rates & inflation will be a drag going forward.Dow Jones Industrials
