Tuesday's Markets Update (September 19, 2023)

20 Sep 2023 by rate3

On Tuesday, Housing starts dropped sharply while the Nasdaq went sideways as investors awaited the Fed's rate decision. Amazon fell but Apple gained after positive iPhone outlooks. Bitcoin stalled on rate uncertainty. Other news: Coinbase found that one in five adults in the United States is holding crypto.

Details

Building permits in the US increased by 6.9% in August 2023, the highest in 10 months. This beat market expectations and was driven by a surge in multi-family permits. Permits grew in all regions of the country.

At the same time, Housing starts in August fell 11.3% from July to a seasonally adjusted annual rate of 1.28 million units. This is the lowest level since August 2020. The decline was driven by a 26.3% drop in multifamily starts, while single-family starts fell 4.3%. Despite the monthly decline, single-family starts are still 2.4% higher than a year ago.

Comment

In August, building permits in the United States experienced an increase, while housing starts declined. Why?

The rise in building permits suggests that new construction remained supported by a dearth of homes on the market. However, the decline in housing starts could be attributed to a resurgence in mortgage rates, which weighed on the demand for housing.

So, developers and builders might think in different time frames. Developers may be optimistic about the long-term outlook for the housing market. The housing market has been cooling in recent months, but some developers may still be optimistic about the long-term outlook. They may believe that the current slowdown is temporary and that the housing market will rebound in the future.

Here are some other reasons why building permits increased in August while housing starts declined:

There is a lag between building permits and housing starts. Building permits are issued when a developer has received approval to build a new home. Housing starts are counted when construction on a new home begins. It can take several weeks or even months for construction to begin after a building permit is issued. This is because developers need to secure financing and complete other tasks before they can start building.
Developers may be trying to get ahead of rising costs. The cost of building materials and labor has been rising steadily in recent months. Developers may be trying to get ahead of these rising costs by obtaining building permits now, even if they don't plan to start construction immediately.
Crypto

Coinbase research:

52 million cryptocurrency holders in US (1 in 5 adults) are concentrated in nine states: Arizona, California, Georgia, Illinois, New Hampshire, Nevada, Ohio, Pennsylvania and Wisconsin;
Nine in ten Americans, or 87%, believe the financial system needs to change;
51% of Americans believe America's financial system does not operate fairly for everyone
14% of Americans said they were optimistic about the future of the financial system.
Comment

52 million cryptocurrency holders in the US represent a growing community. In fact, if these holders were to form their own country, it would be the 28th most populous in the world, ahead of Spain and South Korea.

This is a significant number of people who are interested in and invested in cryptocurrency. It is also a diverse group, with crypto holders coming from all walks of life. This suggests that cryptocurrency is not just a passing fad, but a real and growing movement.

On the other hand, SEC represents a microscopic group of people, including Gary Gensler and other "policymakers" (mostly 70-80 years old). The fact that SEC is still winning against us is simply means that the whole system of state governance is inadequate to the new technological age.

Macroeconomics
OECD Economic Outlook from September:

World's GDP growth at 3% in 2023 (vs 2.7% seen in June) and 2.7% in 2024 (vs 2.9%);
US economy grow is 2.2% in 2023 and 1.3% in 2024;
Eurozone is seen rising 0.6% in 2023 and 1.1% in 2024;
China is expanding 5.1% in 2023 and 4.6% in 2024;
Inflation is projected to remain above central bank objectives in most economies.
FYI: The Organisation for Economic Co-operation and Development (OECD) is an international economic organisation with 38 member countries, founded in 1948 to stimulate economic progress and world trade.

Comment

Global economic growth is expected by OECD to slow as the Federal Reserve and other central banks raise interest rates to combat inflation. This tighter monetary policy is already having an impact, with business and consumer confidence declining and the rebound in China fading. The risks to the global economy remain skewed to the downside, with the biggest threats being uncertainty about how quickly and effectively monetary policy will bring down inflation, as well as a sharper-than-expected slowdown in China.