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1. Tapping the brakes: The American economy is soaring, but yellow lights are flashing in t...

Posted: Oct 29, 2018 11:37 AM
Updated: Oct 29, 2018 11:37 AM

1. Tapping the brakes: The American economy is soaring, but yellow lights are flashing in two critical industries that boomed during the era of easy money.

Auto and home sales have sputtered in recent months despite high consumer confidence and low unemployment.

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The slowdowns have been driven at least in part by the Federal Reserve's efforts to wean the economy off near-zero rates. Higher borrowing costs are squeezing the auto and real estate industries that benefited from a decade of cheap money.

"It's very clear that higher interest rates are having an effect on the economy," said Nicholas Colas, co-founder of DataTrek Research. "The two most expensive purchases a consumer makes are a house and a car. Both are credit sensitive."

Now that the economy has recovered from the Great Recession, the Fed is trying to take the training wheels off. That delicate task is even trickier now because of how low rates got -- and how long they stayed there.

The auto and real estate industries are at the frontlines of this shift in borrowing costs. Mortgage rates recently topped 5% for the first time since 2011. Even though mortgage rates are still low historically, homebuyers are taking notice.

New home sales tumbled 5.5% in September to the lowest level in nearly two years, the Commerce Department said last week. Sales plunged nearly 41% in the Northeast and dropped 12% in the West, though they rose modestly in the Midwest. New home sales are now 22% below their recent peak in November 2017, according to Barclays.

And it's tough to blame the slump on tight supply, which rose to the most since 2011.

"With rising mortgage rates and high prices, conversations about the possible benefits of renting over buying have begun to pop up," Lawrence Yun, the chief economist of the National Association of Realtors, said in a report last week.

The S&P Case-Shiller Home Price Index, due out on Tuesday, is expected to show price gains decelerated in August.

Wall Street has punished housing stocks. The SPDR S&P Homebuilders ETF (XHB) has plunged nearly 30% since late January. Toll Brothers (TOL), a luxury homebuilder, has tumbled 31%, KB Home's (KBH) stock has been nearly halved.

Prominent auto stocks are also in a bear market. Ford (F) has lost a third of its value since January, while General Motors (GM) is down 28% from its peak last October.

Higher borrowing costs have added to the headaches in the auto world, which is also grappling with rising costs caused by tariffs.

GM suffered a 16% plunge in sales in September, while Ford's sales dropped 11%. Toyota and Honda also experienced declines. October sales figures are set to be released on Thursday. GM is scheduled to report earnings on Wednesday.

The auto and housing slumps underscore the growth fears at the heart of the recent market mayhem. Is the Fed moving too fast? Are the best days of the recovery over?

"It's not a death knell for the bull market or the economy," said Colas, "but it does give people concern that we are beyond the peak of the economic cycle."

2. Jobs report: Fresh numbers on the state of the economy are due out on Friday when the Bureau of Labor Statistics releases its October jobs report.

If last month is any indication, the economy is maintaining its strong momentum. The US economy added 134,000 jobs in September and the unemployment rate fell to 3.7%, the lowest level since December 1969. The bad news, however, was wage growth isn't growing as fast.

3. General Electric earnings: Recently named CEO Larry Culp's first earnings report arrives on Tuesday. The struggling multinational company desperately needs new direction -- it has shed half a trillion dollars from its market value over the past 18 years.

Wall Street is cautiously optimistic Culp is the right person for the job. GE shareholders are anxious to hear about whether Culp plans to cut the dividend and go forward with plans to break up the conglomerate.

4. Food earnings: Set the table for a platter of edible earnings from food companies. IHOP-owner Dine Brands, Denny's, Yum! and Cheesecake Factory will all report next week.

But the biggest shaker will be Starbucks, which reports on Thursday. Investors will be seeing if Starbucks' new-ish CEO Kevin Johnson is turning the brand around, which has been marred with controversy, sluggish sales and saddled with underperforming stores. Its stock is up just 1% for the year.

5. Apple event: Apple is hosting an event on Tuesday in Brooklyn. The company is expected to announce more product updates before the holiday shopping season kicks into high gear. Expected to debut are new iPads, Macs and perhaps second-generation AirPods.

On Thursday, Apple will report its fourth quarter earnings with expected revenue between $60 and $62 billion -- a sizable increase of its 2017 fourth quarter earnings when it reported $53 billion in revenue. Investors will also get a glimpse of how its new batch of iPhones are selling.

6. Coming this week:

Monday — Mondelez (MDLZ), Rockwell Collins (COL) and Wingstop (WING) earnings

Tuesday — Electronics Arts (EA), Under Armour (UAA), Aetna (AET), Caesars Entertain Group (CZR), Tribune (TPCO), Coca-Cola (KO), Hyatt (H), Denny's (DENN), Fiat Chrysler (FCAU), Cheesecake Factory (CAKE), eBay (EBAY), Herbalife Nutirtion (HLF), GE (GE), Yelp (YELP), T-Mobile (TMUS), Sony (SNE) earnings; Apple product event in Brooklyn

Wednesday — Allstate (ALL), Anthem (ANTM), Yum! Brands (YUM), Dine Brands (DIN), Express Scripts (ESRX), Clorox (CLX), General Motors (GM), Fitbit (FIT), Pandora Media (P), NXP Semiconductors (NXPI) earnings

Thursday — Apple (AAPL), AMC Networks (AMC), Progressive (PGR), CBS Corp. (CBS), Cigna (CI), Starbucks (SBUX), Shake Shack (SHAK), Kraft Heinz (KHC), GoPro (GPRO), Wayfair (W), IHeartMedia (IHRTQ), and Spotify (SPOT) earnings

Friday — Chevron (CVX), Exxon (XOM), Newell Brands (NWL), United States Steel Corp (X), MSG Networks (MSGN), and Seagate Technology (STX) earnings; Jobs report

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 708779

Reported Deaths: 13226
CountyCasesDeaths
Marion966191721
Lake51761946
Allen39224672
Hamilton34549405
St. Joseph34157541
Elkhart27356432
Vanderburgh22081394
Tippecanoe21853212
Porter17935299
Johnson17544374
Hendricks16822310
Clark12697190
Madison12353337
Vigo12219244
Monroe11469166
LaPorte11162204
Delaware10366184
Howard9664211
Kosciusko9134114
Hancock7990139
Bartholomew7893155
Warrick7691155
Floyd7563176
Wayne6906198
Grant6844171
Boone6556100
Morgan6405138
Dubois6085117
Marshall5786108
Dearborn570376
Cass5685102
Henry5579101
Noble542683
Jackson493569
Shelby479495
Lawrence4342118
Gibson429089
Harrison428570
Clinton419753
Montgomery418086
DeKalb411184
Whitley380239
Huntington379880
Miami372865
Knox366689
Steuben365757
Putnam353160
Jasper350946
Wabash347878
Adams338052
Ripley334668
Jefferson313180
White308454
Daviess289499
Wells286481
Decatur279092
Fayette277262
Greene270785
Posey268833
Scott261153
LaGrange253670
Clay253544
Randolph235680
Washington231031
Spencer228031
Jennings225047
Fountain208845
Sullivan207942
Starke204752
Owen192356
Fulton192039
Jay186429
Carroll185920
Perry180736
Orange177853
Rush170724
Vermillion166043
Franklin165635
Tipton161043
Parke144616
Blackford133831
Pike130334
Pulaski113845
Newton104234
Brown100140
Crawford97614
Benton97113
Martin82915
Warren79715
Switzerland7698
Union69910
Ohio55811
Unassigned0408

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1054807

Reported Deaths: 18991
CountyCasesDeaths
Franklin1225191356
Cuyahoga1074592069
Hamilton783261168
Montgomery50176996
Summit45557909
Lucas40298765
Butler37768570
Stark31513895
Lorain24246473
Warren23910293
Mahoning20946583
Lake20067362
Clermont19459229
Delaware18085130
Licking16149207
Fairfield15757197
Trumbull15627460
Medina14922259
Greene14706236
Clark13660293
Wood12806185
Portage12431196
Allen11352229
Richland11067198
Miami10548214
Muskingum8717127
Wayne8594209
Columbiana8569226
Pickaway8439121
Marion8390135
Tuscarawas8387240
Erie7600154
Hancock6730123
Ross6707146
Geauga6553146
Ashtabula6530165
Scioto6295101
Belmont5634158
Union558447
Lawrence5470102
Jefferson5343147
Huron5314114
Darke5273121
Sandusky5189120
Seneca5139120
Washington5087107
Athens503856
Auglaize476284
Mercer471984
Shelby456590
Knox4397108
Madison423959
Putnam421799
Ashland413488
Fulton410567
Defiance404296
Crawford3883101
Brown386955
Logan374476
Preble371098
Clinton362160
Ottawa357978
Highland347459
Williams328674
Champaign321557
Jackson308551
Guernsey307549
Perry290549
Fayette278048
Morrow275939
Hardin264764
Henry264366
Coshocton259857
Holmes253499
Van Wert239262
Pike233831
Gallia233446
Adams229152
Wyandot227553
Hocking209759
Carroll189447
Paulding168838
Meigs141738
Noble132937
Monroe128941
Morgan106823
Harrison105636
Vinton81614
Unassigned02
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