Investors Business Daily has moved its market rating to “rally under pressure mode” as the NASDAQ has fallen about 6% in the past week. Rising rates are the main reason for the shift. Earnings reports will begin this week and the general feeling among the gurus is that third quarter results will be up 19.2% which, if it happens, will be the biggest earnings gain since 2011. FactSet Research is noting that earnings could come in well above 20% however given the recent trend of companies and stock analysts raising guidance. At the close the Dow was down 56 points to 26,430. Trading volume was higher.
Lumber prices continue to fall. After hitting a record high in late June, the Random Lengths framing lumber index has now experienced a record plunge falling $16 last week and hitting $389 per thousand. Last year the price level was $440 per thousand. There is no single factor behind the selloff and industry reports show several things are happening to cause the pullback. One item is that retailers are tempering their sales expectations heading into yearend as housing markets cool and mortgage rates hit 5%. Another reason stems from rising production of both OSB and lumber in the South. Beginning in 2015, construction of several new saw mills in the South were launched in response to Canadian tariffs and a strong US housing market and now these mills appear to be in full swing.
Scout outings can be a great place to get information. This past weekend, as the dads were huddled around the campfire, we got into a discussion about Tesla. One dad who works in the tech industry said that with car companies rushing to bring electric vehicles with autonomous features to market, the supply chain for microchips and memory chips was stressed and might be tight for a few years. Another dad said he was slated to give a talk on Newtonian relativity and its application to data collection. He then went to help some eager new scouts split wood for the fire without chopping their legs off. What a great bunch of yahoos to spend time with!