Investors got a report from the Conference Board showing its index of Leading Economic Indicators rose 0.2% in September, the smallest gain in seven months, after increasing 0.8% in August.  Anecdotal evidence suggests that bottlenecks are not easing, and survey evidence indicates that many businesses anticipate disruptions to last throughout 2022.

The median home price jumped to $352,800 last month, a 13.3% increase from September last year. The rise in prices continued to weigh on first-time buyers, who accounted for 28% of all sales last month. That’s the lowest level since July 2015.  Homes purchased in cash rose 23% in September from the previous month. Individual investors, who account for many cash sales, accounted for 13% of all home sales last month.

The Federal Reserve announced sweeping new rules for its top officials Thursday, banning trading in individual stocks and bonds.  Those new rules come on the heels of a swelling ethics controversy over whether central bank officials should be able to trade while their policies can, and often do, move markets.  Officials will be restricted primarily to owning mutual funds, which they will have to hold for a year and will need permission to buy or sell.

U.S. housing starts decreased in September, driven by a pullback in multifamily construction, as lingering supply-chain constraints, shortages of skilled labor and elevated materials costs continue to challenge builders.  Residential housing starts fell 1.6% last month to a 1.56 million annualized rate.  Applications to build, a proxy for future construction, fell 7.7% to an annualized 1.59 million units in September, the largest monthly decline since February. The drop was driven by a sharp decrease in multifamily permits.  Cheap borrowing costs and a pandemic-fueled migration to the suburbs supported housing demand and construction through late 2020 and earlier this year. But high materials costs, unpredictable supply-chain delays and labor shortages have strained builders’ ability to keep up with still-solid demand in more recent months.

The consumer products giant Procter & Gamble reported better-than-expected 3^rd quarter earnings but the stocks sold off after the company said they were going to have to raise prices to cover rising commodity and freight costs, noting inflation looks like it’s here to stay.

Oregon’s jobless rate continued falling last month, dipping to 4.7%, according to new state data.  That’s down from a revised figure of 5.0% in August and reflects an economy that has enjoyed a dramatic recovery from the pandemic’s early days, when unemployment hit a record 13.2%. Oregon’s jobless rate has only occasionally been this low during the 45 years for which Oregon has comparable records.

The nation’s homebuilders aren’t seeing any relief from supply chain issues that have slowed construction recently, but high buyer demand appears to be making up for it.  Builder confidence in the single-family home construction market rose 4 points to 80 in October on the National Association of Home Builders Housing Market Index. That is still down from 85 in October 2020 and from the record high 90 in November of last year. Anything above 50 is considered positive.

China's GDP is growing at the slowest pace in a year as a massive energy crunch, shipping disruptions and a deepening property crisis take their toll on the world's second largest economy.  The Chinese economy expanded by just 4.9% in the third quarter, compared with the same period a year earlier. That's much slower than the 7.9% increase China registered in the second quarter. It's also the weakest rate of growth since last year's July-to-September period, when GDP also grew 4.9%.

The first U.S. bitcoin futures exchange-traded fund will start trading today, a milestone for the cryptocurrency industry.  The long-awaited ProShares ETF will offer exposure to bitcoin futures contracts — agreements to buy or sell the asset later for an agreed-upon price — rather than bitcoin itself.  Buyer beware.
 

Stocks posted their best week in months last week on the back of better than expected earnings reports from some major companies.  Earnings season is now in full swing, and a number of big names are set to report in the coming week.  So far 41 S&P 500 companies have reported third-quarter results, with 80% of them topping earnings per share expectations.

Sales at retailers rose sharply in September in a sign that Americans are spending enough money to sustain an economic recovery, but they are also paying more because of the highest U.S. inflation in three decades.  Retail sales climbed 0.7% last month after after a nearly 1% gain in August.

U.S. consumer sentiment fell unexpectedly in early October to the second-lowest level since 2011, as Americans grew more concerned about both current conditions and the economic outlook.  The University of Michigan’s preliminary sentiment index fell to 71.4 from 72.8 in September.  Consumers expect inflation to rise 4.8% over the next year, the highest since 2008. Buying conditions were seen as less favorable, especially for vehicles.

The US stock market had its best day since March on Thursday, as investors’ worries about inflation and potential interest rate increases were tempered by upbeat corporate earnings reports. The S&P 500 closed 1.7 per cent higher, its biggest one-day rise in seven months, though the blue-chip index remains about 2.4 per cent below its all-time high hit in early September.

It's been a solid first week of Q3 earnings so far as the largest U.S. banks posted another robust round of quarterly results. A rebounding economy allowed lenders to release more cash they had set aside for pandemic losses, while equity financing and trading boosted bottom lines. Don't forget about the deal bonanza that continued to ring the register for the banks' Wall Street operations, with a hefty quarter for mergers-and-acquisitions fees.

Consumers spent at a much faster pace than expected in September, defying expectations for a pullback amid pervasive supply chain problems, the Census Bureau reported Friday. Retail sales for the month increased 0.7%. Compared to a year ago, sales were up 13.9% on the headline number and 15.6% ex-autos. The increase came during a month when the government ended the enhanced benefits it had been providing during the Covid-19 pandemic and against forecasts that growth would slow in the third quarter.

The Port of Los Angeles, one of the busiest ports in the country, will begin operating 24 hours a day and 7 days a week to ease cargo bottlenecks that have led to shortages and higher consumer costs. While the neighboring Port of Long Beach, Calif., also started doing a 24/7 schedule last month, major ports in Europe and Asia have operated around the clock for years. The increase in capacity will require cooperation from major companies like Walmart, FedEx, and UPS.

Fed officials signaled last month that they should start reducing emergency pandemic support for the economy in mid-November or mid-December, according to the latest FOMC minutes. The program could then end by mid-2022, though several participants said they'd prefer quicker pace of reducing purchases. Keep in mind that the central bank is currently purchasing at least $80B per month of Treasury securities and at least $40B per month of MBS.

Bank of America posted third-quarter results on Thursday that exceeded analysts’ expectations as it benefited from better-than-expected loan losses and record advisory and asset management fees.  Profit surged 58% to $7.7 billion, as revenue climbed 12% to $22.87 billion.

A record number of U.S. workers quit in August, potentially signaling more trouble ahead for businesses already struggling to fill some 10 million open jobs.  The government reported U.S. job openings fell in August from an all-time high, but even more noteworthy was a record number of people leaving their jobs.  The so-called quit rate climbed to 2.9% overall and 3.3% for private-sector employees. Both are the highest figures on record since the government began to keep track in 2000.  Altogether, a record 4.27 million people quit their jobs in August.  By contrast, just half as many had quit during the early stages of the pandemic.

According to the Labor Department consumer prices increased slightly more than expected in September as food and energy price increases offset declines in used cars.  The consumer price index for all items rose 0.4% for the month. On a year-over-year basis, prices increased 5.4% vs. the estimate for 5.3% and the highest since January 1991.

The parent company of Portland-based Umpqua Bank is selling to Columbia Bank in a $5.1 billion deal that will keep the Umpqua brand and split the business’ headquarters between Tacoma and the Portland area.  Both stocks were lower on the news.

Henry Kravis and George Roberts are stepping down as co-CEOs of KKR, the private equity firm they founded nearly half a century ago. The cousins are pioneers of the buyout industry, taking it from a niche market in the 1970s into one of the biggest pieces of Wall Street. The $25B purchase of Nabisco in 1989 held the record for the largest-ever LBO until 2007, when KKR topped its own record buying Texas utility TXU Corp. for $31.8B. At the time, the Nabisco acquisition was so revolutionary that it became the subject of the bestselling book Barbarians at the Gate.

The IMF’s executive board has opted to retain Kristalina Georgieva as managing director, saying they have “full confidence” in her ability, despite allegations she pressured World Bank staff when she was its chief executive to manipulate data to China’s benefit.

The extended climb in oil prices is leaving some other industrial commodities behind, a divergence that reflects bets that energy supply shortages will offset any slowdown in the global economy.  Oil is now on track to outpace copper this year by the largest amount since 2002 and is topping an index of raw materials by the biggest margin in more than a decade, according to Dow Jones Market Data. Like oil, natural gas is also far outpacing other commodities.

Investors will be keeping a close eye on rising costs as the Q3 earnings season kicks off this week. Price pressures could pose a problem for corporate profits in the current quarter and beyond, with the S&P 500 already down 3.2% from its September record. Supply chain bottlenecks, labor problems and outsized demand are all leading to shortages, while a jump in raw material costs is pressuring companies' bottom lines.  Analysts expect that earnings from S&P 500 companies grew 29.6% in the third quarter from a year earlier.  

Companies have announced record levels of share buybacks as confidence recovers after a lull at the height of the coronavirus pandemic.  Businesses have authorized more than $870bn of repurchases so far this year, Goldman Sachs data show, almost three times more than in the same period in 2020 and $50bn ahead of the record set in the first nine months of 2018.  The rebound suggests that corporate America is now flush with cash and looking for ways to use it, after cutting payouts last year to hoard funds and protect against the risk of a more severe downturn.

More than 130 countries have signed up to a groundbreaking global deal on corporate tax reform aimed at eliminating tax havens while bringing in $150bn more a year from multinationals.  The agreement — the biggest corporate tax reform for more than a century orchestrated by the OECD — includes a 15 per cent global minimum effective corporate tax rate, plus new rules to force the world’s multinationals to declare profits and pay more in the countries where they do business.
 

U.S. services industry activity nudged up in September, but growth is being restrained by a persistent shortage of inputs and the resulting high prices as the pandemic drags on. The Institute for Supply Management said their non-manufacturing activity index edged up to a reading of 62 last month from 61 in August. A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity.

The U.S. trade deficit raced to a record high in August, boosted by imports as businesses rebuild inventories, the latest sign that economic growth slowed in the third quarter.  The trade deficit surged 4.2% to $73.3 billion last month, the highest since the government started tracking the data.  Trade has subtracted from US GDP growth for 4 straight quarters.  The report followed on the heels of government data last Friday showing high inflation sharply cutting into consumer spending in July.

Shares of PepsiCo are more than 1% higher after the food and beverage giant reported better-than-expected third-quarter earnings despite higher supply chain costs. The company also raised their full-year forecast.

The major stock averages took steep losses to start the week as investors continued their rotation out of technology stocks amid rising yields. Large technology shares like Facebook, Apple, Nvidia, and Amazon were lower as investors eyed bond yields. A surge in rates to end September knocked highly valued tech stocks.

Shares of the drug maker Merck gained 2.1%, following through on an 8% surge on Friday after the drug maker said their oral antiviral treatment developed with Ridgeback Biotherapeutics for Covid-19 reduced the risk of hospitalization or death by 50% for patients with mild or moderate cases.

It was only a matter of time, but mortgage rates may finally be heading the way many housing experts have expected them to travel by this point in 2021: sharply upward.  Rates on America’s most popular types of home loans surged last week. The average interest rate on 30-year fixed-rate mortgages jumped last week from 2.88% to 3.01%, according to the mortgage giant Freddie Mac.  It was the largest weekly increase since mid-February.

The cost of goods and services rose sharply again in August and left the rate of U.S. inflation at a 30-year high, with all signs pointing to price pressures snaking into next year.  The personal consumption expenditure price index climbed 0.4% in August. It was the sixth straight big increase.  The rate of inflation in the 12 months ended in August edged up to 4.3% from 4.2% — the highest rate since 1991, when George H.W. Bush was president.

The Institute for Supply Management’s U.S. manufacturing index rose to 61.1% in September from 59.9% in the prior month.  The reading was the highest since May.  Any reading above 50% indicates improving conditions.  The ISM index had hit a high of 64.7% in March before rebounding over the last two months from a 59.5 reading in July.  Demand is still strong but manufacturers are struggling with supply shortages. Survey participants talked about an “unprecedented number of hurdles to meet” rising demand.

The CEO of Marvell technologies one of the largest semiconductor makers in the world says that the semiconductor chip shortage that is hamstringing the production of products ranging from cars and computers to appliances and toothbrushes will extend into 2022 and potentially beyond that.

During a three-hour Senate hearing yesterday, Facebook came under fire from lawmakers who were upset about the revelations brought to light by The Wall Street Journal's "Facebook Files." Internal documents showed that Instagram makes body image issues worse for a substantial minority of teen girls and was blamed for increases in anxiety and depression. With the company on the defensive (and minimizing its own research), it looks to be signaling new enthusiasm among Senators for regulatory proposals that had stagnated a bit.

It was set to be the second biggest tech deal of the year, but Zoom Video Communications and Five9 are calling off their $14.7B merger. Zoom had hoped the all-stock transaction would build on the explosive growth it experienced during the pandemic. Last week, Zoom also disclosed that a DOJ-led panel has been investigating the agreement over national security risks given Zoom's ties to China.

Investment banks are raking in record sums, with fees surging past $100bn in the first nine months of the year thanks to a rush of dealmaking.  Wall Street’s top banks and leading boutique advisers have benefited from the boom in mergers and acquisitions as well as hot equity capital markets. Fees for both are at the highest level since records began two decades ago and have hit $60.6bn in the year to date, according to Refinitiv.