Good Friday AM and last trading day of September,

Starting off with a did you know…

U.S. homes in 2023 are collectively valued at around $52 trillion, a 50% increase since January 1st, 2020, according to an analysis by Zillow.

Some (mostly) helpful data out this am and bonds are slightly positive. The 10-yr is still at an unbelievable 4.57%. For reference, we started the month at what I thought was already way over-exaggerated yield of 4.20. The government has a few hours left to avoid a shutdown but, while it is of course possible, hopes are dim and dimming fast. I would like to see where this market goes from here. It is not investing at this point as it is a guess, but with a few Fed officials out today saying that the UAW strike and Government shutdown could (would) cause a reduction in inflation and give the Fed reason to pause, we could see some rate help… I don’t expect much but every little piece, helps.

• PCE MOM 0.4 vs 0.5
• Core PCE MOM 0.1 vs 0.2
• Personal Incomes 0.4 vs 0.4
• Personal Spending 0.4 vs 0.4
• Chicago PMI 44.1 vs 47.6

More on the shutdown from Bloomberg..

While a potential US government shutdown would land at an awkward time for the bond market, it would be even more awkward for the Fed. In the case of a shutdown that lasts longer than a few days, the publication of key economic data would be delayed — meaning policymakers might be flying partially blind at October’s meeting. “They might not have all the data they would ideally like to be making decisions and certainly in a period where we’ve having labor strikes, high gas prices, student loans restarting, the shutdown itself,” “It’s not a good time to have a lack of clarity for a data-dependent Fed.”

Here’s a short list of potential delays:

• The jobs report on Oct. 6;
• CPI on Oct. 12;
• Retail sales on Oct.17;
• PCE on Oct. 27.
• Not to mention, data collection would be put on hold as well. As pointed out by Bloomberg Economics, the collection period for the household survey that will generate October’s unemployment rate is scheduled to commence on Oct. 15.

Obviously, that creates a unique headache for the Fed, which is in the throes of trying to determine how close the finish line is in the fight against inflation. But there was a somewhat optimistic take to be found in recent comments from Minneapolis Fed President Neel Kashkari — the economic hit from a government shutdown or prolonged auto strikes would potentially do some of the Fed’s work.

“If these downside scenarios hit the US economy, we might then have to do less with our monetary policy to bring inflation back down to 2% because the government shutdown or the auto strike may slow the economy for us,” he said in an interview Wednesday on CNN. “I’m not hoping for that, but there’s an interaction there.”

This was startling…

The U.S. lost more than seven million workdays because of labor disputes this year through August, more than any full year since 2000—and the figures don’t include the United Auto Workers strike that started earlier this month. More walkouts could be coming. The union representing housekeepers, bartenders and other workers in Las Vegas voted to authorize a strike to demand higher wages and better working conditions; workers at Kaiser Permanente could go on a three-day strike next week; and more than 26,000 flight attendants at American Airlines have voted to authorize a strike.

And a little industry insight to wrap up the day:

When loans go bad, rather than forcing the borrower into bankruptcy, lenders can do what is known as “extend and pretend” and hope that granting the borrower extra time helps the borrower regain solvency. Through 9/20/23, the number of such loan deals is almost 400. For the decade ending 2019, the number rarely exceeded 200 for an entire year. The last time E&P was this popular was 2009.

Please remain safe and healthy, enjoy the weekend, make today great!