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DOW + 12 = 16,817
SPX – 2 = 1961
NAS + 2 = 4485
10 YR YLD – .02 = 2.26%
OIL – .52 = 79.92
GOLD – 5.90 = 1226.10
SILV – .10 = 17.21
In economic news: The National Association of Realtors reports pending home sales rose 0.3% in September, hitting the second highest level for this year. The index of pending home sales reached a seasonally adjusted 105 in September, compared with 104.7 in August. Slower price growth and more homes for sale are likely supporting pending home sales. Pending sales typically close within 2 months, and so this gauge augurs well for actual sales.
Financial data firm Markit said its preliminary or ‘flash’ services sector purchasing managers index slipped to 57.3 last month, the lowest reading since April, from 58.9 in September. A reading above 50 signals expansion in the services sector. The index has been gradually declining for 4 months. The October readings would indicate fourth quarter GDP slowing to about 2.5%.
Goldman Sachs analysts revised their price outlook for oil; they are decidedly more bearish, predicting $75 a barrel for the first quarter and second half of next year. The thinking is that US shale oil will be enough to keep prices down, and non-OPEC countries will continue to provide plenty of supply, so even if OPEC wants higher prices, they will find it difficult. Oil prices hit a 28 month low today, breaking a key area of support at $80 a barrel. So, that started a big debate over how low oil can go. One of the more interesting arguments comes from Dennis Gartman, publisher of the Gartman Report, who says the era of oil is over. At one point, Gartman went so far as to compare crude oil to whale oil, which became obsolete following the advent of crude in the early 20th century.
This week’s economic calendar includes reports on durable goods orders and also consumer confidence tomorrow. The durable goods report has been all over the place, so we’ll try to smooth out those numbers; companies probably increased spending and investment in September, after stripping out the volatile airline and auto sectors. Consumer confidence is projected to move from 86 to 87. Friday brings reports on consumer spending and consumer confidence and the core PCE inflation numbers. Wednesday brings the first estimate of third quarter GDP; look for 3% growth, which would be down from 4.6% second quarter GDP growth, but still pretty good. Just the kind of sluggish, mediocre growth that has characterized the recovery. There is a very good chance that 2014 GDP will come in just under 2.5%. One area of concern for the GDP number is whether the strong dollar has hurt exports. Also, there will likely be a little less spending on automobiles, which enjoyed a big sales boom in the second quarter. And lower oil prices actually might trim GDP.
