As I expected both equity and bond markets are quiet at 6 a.m. central as everyone waits for the Fed statement and press conference–we don’t need to wait on the actual rate increase as it will be 75 basis points. It is a rarity that I watch these press conferences, but today it may be worth watching. If Powell appears hawkish markets are heading down hard.
Already today the mortgage bankers have announced that mortgage applications are down 85% for refinancing’s and down 41% for new house purchases. Over the course of the last week applications were flat–of course when you are down 85% how much lower can it go? Here is the MBA press release.
Today we have the ADP employment report being released. Forecast is for 195,000 new jobs in October versus 208,000 last month. Does anyone care about the ADP numbers? Just barely—if you are grasping at straws looking for weakness in economic conditions I guess you look at their number hoping for a sign of weakness–but otherwise folks look to the ‘government’ number which will come on Friday.
Has anyone paid attention to insurance company earnings (or lack thereof)? Heavy ‘mark to market’ investments have cratered many company earnings. Hurricanes and Covid (still) have weighed heavy on some of them as well. Renaissance RE (RNR) reported last night and showed an underwriting loss of $683 million and $641 million in realized and unrealized gains/losses on investments. The press release is here. Prudential Financial (PRU) also reported yesterday and their numbers were kind of ugly–Covid in Japan hit earnings. PRU also manages a lot of money and fee income was lower because assets under management were off 20% from a year ago (no surprise here). Their press release is here. Both of these company’s have investment grade preferreds and baby bonds.
Well let’s buckle up and get ready for the ‘show’.