Good afternoon on this best day of the week, Wednesday,
Overnight stocks sold off with a cratering in crypto (Tesla is down too, and Elon is no longer the wealthiest man on the planet). Bonds were improving early on as well… That is that until the Fed meeting minutes were released. The Fed as Chairman Powell shared in his post meeting conference is on hold. Markets and traders though love volatility and with the minutes, which reflected some dialogue about whether to taper the bond purchase program at some time (no defined timeline) in the future, gave markets that opportunity to create volatility painting the Fed comments with the inflation brush. The 10-yr is selling off as are mortgage bonds. I do think it is temporary but not fun today.
The WSJ shared some interesting economic pieces I am including below to offer some insight as to how the economy is progressing. We need to fill jobs. Until we do, we are not going to move forward meaningfully..
U.S. housing starts declined more than expected in April, a possible sign that builders are increasingly constrained by rising costs for materials and a limited supply of workers. New residential construction fell 9.5% from the previous month, led by a big drop in single-family home building, the Census Bureau said. “This report may be the strongest evidence yet that supply constraints, namely lumber and material prices, labor scarcity and a lack of buildable lots, are weighing meaningfully on homebuilders’ ability to keep up with housing demand,” said Doug Duncan, chief economist at mortgage giant Fannie Mae. Month-to-month figures are often volatile and even with the April setback, overall home-construction levels remain elevated. But demand has been outpacing supply across the housing market, pushing prices for new and existing homes to record levels and preventing some would-be buyers from purchasing a home.
Cargo ships have been delivering their loads later than ever this year, adding to the supply-chain woes that are undercutting efforts by retailers and manufacturers to capitalize on resurgent economic demand. Only about 40% of container ships globally were on time arriving at ports in March, according to an analysis by Denmark-based Sea-Intelligence, with average delays stretching to more than six days. The slowdowns improved from February, but remained far behind reliability levels of the previous two years, when more than 70% of ships arrived on time. The delays around the world, the result of a large-scale restocking by businesses as consumer demand improves, are tying up vessel capacity, adding to a shortage of sea containers needed to move goods and sending shipping costs soaring as container freight rates rise at a historic pace, Costas Paris reports.
For companies shipping goods, the delays are part of an array of headaches disrupting supply chains as U.S., European and Asian economies rebound from the steep retrenchment last year brought on by the Covid-19 pandemic. Rising raw materials costs, shortages of finished goods and components such as semiconductors and lumber, shortfalls in the supply of workers, and capacity crunches in transportation networks have knocked companies off balance as demand across a range of sectors has recovered.
Please remain safe and healthy, make today great!