Third-Quarter GDP Rose 2.6%, Led by a Shrinking Trade Gap… Imports fell 6.9% while exports rose 14.4%, contributing 2.8% to the quarterly GDP growth.
What it means— Third-quarter GDP growth wasn’t exactly strong, with the falling trade deficit making up more than 100% of the gain, but it was better than losing ground. Still, with residential investment declining as mortgage rates jump and consumer spending expected to remain muted, we haven’t turned the corner to a new chapter in economic growth. There are plenty of economic obstacles to deal with this winter that could derail GDP growth and the markets. While this might be a good time to start buying low, equities can go lower before they reach the bottom.
New-Home Sales Fell 10.9% in September… The drop reversed half the gains made in August when new home sales jumped from 543,000 to 677,000.
What it means— The new-home sales number, like that for housing starts, is noisy. We have to watch it for several months to establish a trend. While new-home sales are down by 17.6% over this time last year, the median price is just 2% off of the record high set in July and up 7.8% over the median sale price in August. The number of new homes for sale equates to 9.2 months’ worth of supply at the current sales rate. We’re getting conflicting data, but with mortgage rates over 7%, it seems likely that builders are trying to get inventory out of the door. Expect the sales rate and median price paid to turn lower over the next few months but not to become a bloodbath.
European Central Bank Raises Rates 0.75% But Removes Some Hawkish Language From Statement… The ECB raised rates as expected but removed language that referred to raising rates at the “next several meetings” from its policy statement.
What it means— It’s getting lonely for the Fed at the front of the global fight against inflation. While the ECB raised rates, it took a softer stance on future rate hikes, noting that it would evaluate potential moves meeting by meeting. Maybe the central bankers at the Federal Reserve were reading the tea leaves concerning other central bank moves when they telegraphed to the Wall Street Journal that they intend to raise rates by 0.75% next week but then move more slowly in December. Whatever it is that’s making central banks more cautious, investors are taking it as a good sign. It might not be a full pivot, but it’s enough to give investors the confidence to buy again.
Woman Fends Off Black Bear by Punching It in the Nose… An adult female black bear attacked a woman in Leavenworth, Washington, as the woman let her dog out early Saturday morning. The woman reported that she didn’t see the bear until the animal knocked her down, so she didn’t have a chance to retreat or take any defensive measures. Once on the ground with the bear on top of her, the woman did the first thing that came to mind, she punched it hard in the nose. Surprised, the bear shook its snout and took off.
Data supplied by HS Dent Research
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