The Houthis have near shut down shipping via the Suez Canal. Their location in Yemen provides a great shooting gallery for any vessel seeking entrance to the canal. That means shipping has to take the much longer route around South Africa. Given that and multiple wars in the Ukraine and the Mid East, one would expect the oil price to at least be firm. That has not been the case. In the last five days crude has dropped 4.73% losing $3.36. It trades at $67.46 Friday morning.
The price drop has taken its toll on smaller firms like Apache (APA). Since late July it has fallen from $33 to $24. Permian’s Diamondback (FANG) has dropped form $212 to $173. Gasoline futures in this period have dropped from $2.55 to $1.93. For now the trend in energy prices and shares is down.
Given the promise or threat of taxing unrealized capital gains, one might think investors would be selling. But instead they are pushing prices ever higher. The Industrials now stand at another all-time high of 42,502. The NASD 100 NDX has not bettered its July peak around 20,500. It is trading at 20,093. The usual seasonal weakness of the fall has yet to take hold. For now the trend in stock prices remains to the upside.
The Transports have not bettered their 2021 highs. From that standpoint we do not have a long term Dow Theory high. Last week we noted a shorter term confirmation may have happened.
Mortgage rates have fallen to a two-year low just above 6%. The yield curve is no longer inverted. The ten year trades at 3.77% while the two year is yielding 3.64%. That is not much difference for holding another 8 years. So far the inversion that held for over a year has yet to usher in a recession.
A strong bull market in stocks usually makes for a strong derivative market in real estate and art. Real estate, excluding downtown commercials, is doing well, art not so much. Patrick Drahi bought Sotheby’s auction house in 2019. Now burdened with over a billion dollar debt, its bonds are trading for 87 cents on the dollar.
The Wall Street Journal reports that after paying ever higher prices for art for years, the market is now reeling. Smaller galleries have closed. Higher interest rates and inflation has lowered art prices. Many items bought at or near all-time art high prices may never pay off. Sellers are balking at the 20% fee for anything selling over $6 million.
For now stocks are higher while crude oil and art prices are lower.
