Wednesday's Scoop: Flying☀️

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Here’s what you need to know today to inform your work, spending, and investments:

1. Businesses are growing more cautious.

2. Another potentially devastating hurricane is headed toward the US.

3. Mortgage costs are on the rise again.

Unemployment Rate: 4.1%
^{Relatively low, but up from 50-year lows}

Businesses are growing more cautious, stocking their warehouses at a slower pace. According to the Commerce Department, wholesale inventories grew slower than expected in August, rising just 0.1% instead of the previously estimated 0.2%. The slower pace was partly due to a smaller increase in motor vehicle parts. This could indicate slowing business activity across major businesses in the coming months. Sales at wholesalers dipped 0.1% in August after a substantial 1.1% rise in July, leaving the time needed to clear shelves steady at 1.35 months. Retail inventory data next week could provide more insight into overall economic performance.

Global Energy Emissions: 37.4B metric tons of CO₂
^{An all-time high, up 1.1% from 2022. (IEA)}

Another potentially devastating hurricane is headed toward the US. Hurricane Milton is barreling toward Florida’s Gulf Coast as a powerful Category 5 storm, with winds up to 160 mph and a dangerous storm surge that could bring up to 15 feet of flooding. The hurricane has triggered widespread evacuations, grounded flights, and prompted emergency declarations across 51 Florida counties. Bloomberg analysts estimate the storm could cause insured losses between $60 billion and $100 billion, making it one of the most costly hurricanes in US history, comparable to Katrina in 2005.

The economic toll could extend beyond immediate damage, impacting the insurance market with higher reinsurance rates. Power outages from Hurricane Helene have already hit over 160,000 homes and businesses across Georgia, the Carolinas, and Florida. Key industries, including theme parks and ports, have halted operations while cities like Tampa brace for severe flooding and damage. With the region recovering from Hurricane Helene just weeks ago, Milton’s impact could further strain recovery efforts and add to long-term economic challenges.

30yr Mortgage Rate: 6.36%
^{That’s down from 7.7% a year ago. (MBA)}
Median Home Price: $416,700
^{That’s up from $404K a year ago. (Existing Homes, NAR)}

Mortgage costs are on the rise again. The Mortgage Bankers Association reported that the average rate for a 30-year fixed-rate mortgage increased to 6.36% last week, the highest since August. New purchase mortgage applications fell, and refinancing applications, which had been climbing in recent months, fell 9%. Rates are still well below last year, so more people are refinancing to cut their monthly payments. However, lower mortgage rates aren’t yet enough to entice new buyers, given the near-record home prices and climbing insurance costs.

The Market: ⬆️ +0.7%
S&P 500: 5,792.04
1Mo: +6% | 1Yr: +34% | 5Yr: +95%

The market climbed to a new record high on Wednesday despite the heightened tensions in the Middle East and the impending hurricane. Notes from the last Federal Reserve meeting revealed growing confidence from policymakers that inflation is under control and the economy is doing well.