Stocks Dropped After Oil Prices Topped A Hundred A Barrel

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Rob Black (0:11)

I'm seeing a lot of red on the screen this morning. The S&P 500 is down one half of a percent. The Dow Jones Industrial Average is down one half of a percent. The NASDAQ is down, weirdly, one half of a percent. And the Russell 2000 breaks it by going down two thirds of one percent. Gold sits down about one point three percent, so not a lot of fear of inflation going on there. Bitcoin is down one point seven seven percent. Overall, it's a weekday, unless your name is OIL, oil, of four point two percent. Then let's take a look at the Treasury bonds. Treasury bonds are telling us the 10-year Treasury sits at four point nine one percent.

That's an area where I'll park some money in cash in a money market versus putting money into the stock market. And I would say that conviction goes higher as the 10-year goes from four point nine to five to five point one to five point two. Five point two would be an area that I'm not even going to look at the stock market. Four point eight, four point nine, I'll look, but it has to be the exact right situation to put new money to work. Take a look at stocks. I'm seeing momentum names like SanDisk and Micron down about four percent. So it's a risk off day there. But I'm seeing names like Metta up, a little bit of shopping going on. Google slightly down, Qualcomm slightly up, Apple up seven today, having a nice day. Sitting at three hundred and twenty two dollars, more on Apple in a couple of moments. I do have a seminar coming up in Lafayette on the Saturday. It's a great time for you to sign up today at robblackshow.com. It's in Lafayette, California. It's been a rough week for the stock market. Unfortunately, the market apparently decided the holiday shortage week that needs a little bit more drama today with the 10-year hitting 4.9%. 30 years, it's at 5.34%, the highest level since 2007 Inflation is just not going to go away quietly. August producer prices rose 0.4% month over month and 5.4% from a year ago level.

Core CPPI rose 4.6%.

4.6%, so investors are not getting much evidence that inflation is ready to behave itself.

Jobless claims on the other hand remain remarkably calm with initial claims at 206,000, basically telling the Federal Reserve, the labor market, not falling off a cliff. Put those two numbers together and you get a tricky environment for the Federal Reserve. Inflation is still elevated. Employment is still holding up and interest rates are moving higher before next week's September 16th Fed decision. And then this morning you add in again, oil at $100 a barrel. The conflict involving Iran continues to disrupt global energy markets because apparently the economy doesn't have enough things to worry about. You gotta throw in a $100 barrel of oil and crack spread on diesel, hitting an all time high yet again today, telling us shipping costs and transportation costs in trucks and boats.

It's gonna continue to be inflationary. The 10-year treasury approaching 5%, that's important because when you can earn nearly 5% from the US government, stocks just, they have to work a little bit harder to justify their valuations. Housing is not helping this morning with existing home sales, falling 2% in August to an annualized 3.9 million. As high mortgage rates and limited inventory continue to keep buyers and sellers stuck in what looks increasingly like a very expensive game of financial chicken. So let's take a look a little bit closer at those existing home sales numbers down 2% month over month. Seasonally adjusted 3.98 million. Key takeaway from the report is that home sales remain pressured by high mortgage rates and limited inventory, especially at the lower end. Sales of homes priced at 500,000 and below have faced the most pressure, while sales of homes priced over a million have seen up 3.9% year over year. I get a kick out looking at median home prices. In the Northeast, the median home price was up 4.3% to 556,900.

Half the people who bought a home in the Midwest and half the people who bought below, they saw sales up 3.3% in cost to $340,400.

In the West, the median home was $619,100.

In the South, it was $366,500.

There's a 4.9-month supply of unsold inventory. Six-month supply is typically equated with a more balanced market. First-time buyers accounted for roughly 30% of sales versus 29% in July and 28% a year ago. Cash sales represented 27% of transactions versus 26% in July and 28% a year ago.