A Tempered Oil Boom? OPEC has slashed their production efforts causing a boom in the Texas oil fields that appears to be different than booms of the past. Is the sector learning moderation? Despite incredible profit levels, we are drilling at 60% of what we were last time the boom came. “Investors are actually demanding more discipline from these shale producers.” This means pump prices will continue to increase. While this could mean that producers could use profits to invest in cleaner energies but thus far the bulk of cash from oil and gas companies is going toward dividends and buybacks for investors.
Mortgage Rates improved this week as multiple economic reports point to weakness in the economy. Rates are up 1.5% from this time last year.
Jobs – the number of people filing for unemployment benefits for the first time increased by over 10% to 261,000. The number of folks continuing to receive unemployment benefits remains high at over 1.75M.
Trucking – the Evercore ISI Trucking Survey has historically been a good indicator of recession. When the index drops below 48 it is correlated with recessionary periods. The most recent reading is at 36.
Used Cars – the Manheim Used Vehicle Index declined 2.7% in April and is down 7.6 year over year. In the last CPI report used cars were up 4.4% contributing strongly to inflation. The recent decline should trickle over to inflation reports soon.
Home Values rose by 2% nationwide – marking the 135th consecutive month of annual growth. Gains have slowed to single digits from the all-time high of 20% in the Spring of 2022. Core Logic is anticipating a steady 4.6% gain over the next 12 months.
European GDP – Eurostat reported the euro zone has entered into a recession in the first quarter of this year and economists are not optimistic about the remainder of 2023.
Mortgage Applications to purchase homes declined 2% last week and are down 27% year over year. Refinances decreased 1% and are down 42% year over year.