Your Wednesday Blip 9/16/20

Your Wednesday Blip 9/16/20

Markets were mixed in trading action that was choppier than a logger sports event. The Dow closed up 36 points at 28,032 on higher volume while the NASDAQ was lower on lighter trade. The rally continues to trade under pressure.
At the conclusion of its meeting today the Federal Reserve said it will keep interest rates lower than dirt until 2023. The meeting also brought an upgrade to the June GDP growth estimate for 2020 from negative 6.5% to negative 3.7%. The Fed had also projected an annual unemployment rate of 9.3% but revised that lower to 7.6%. For 2021 the Fed is projecting a GDP growth rate of 4% and unemployment improving to 6.5% or lower.
FedEx posted strong earnings that beat estimates by a mile. Revenue came in 13% higher while net income jumped 60%. The big surprise in the report was the company’s operating margin which rose from 6.1% to 8.5% and bested guru estimates. The margin improvement had to do with strong package volumes and cost management initiatives. CFO Alan “Steffi” Graf noted that business demand improved in the quarter and both US and international delivery trends look good. The company was unwilling to give forward guidance due to continued uncertainties. FedEx did however indicate it expects to increase capex spending by $200 million to support increased volume levels.
Housing continues to be a bright spot as the NAHB Housing Market Index hit 83 up from 78 and beating estimates. The latest reading is the highest on record. Economist Robert “Bob” Deitz noted that lumber prices are up 170% since mid-April and at current prices add $16k to the price of a typical new single family home. Bob also said the “urban shift” is real and is keeping builders busier than a one legged man in a fanny kicking contest.

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