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Tuesday, November 10, 2015
Lower markets on interest rate hike concerns
Dow dropped 35, decliners a little ahead of advancers & NAZ lost 28. The MLP index was off 1+ to the 318s +& the REIT index rebounded 2+ to 315. Junk bond funds slipped lower & Treasuries finally has a tiny rally. Oil went back up to the 44s & gold was flattish.
Wage growth is poised to accelerate at small US companies this month after a slowdown in Oct. A
net 17% of managers last month said they plan to increase pay,
up 1 percentage point from Sep & matching the highest level
since 2007, according to the seasonally adjusted results of 1411
responses in a survey by the National Federation of Independent
Business. The proportion of business owners who said they had recently
raised pay fell to 21% from 23% in the previous month.
Share planning greater compensation matches highest since 2007
The group’s index of small-business optimism held at 96.1 in Sep, below the 42-year average of 98. The
survey by the NFIB, a lobbying group that says it has 325K small &
independent business owners as members. Since the start of 2013, the
percentage of smaller companies preparing to increase pay has been as
low as 6% & as high as 17%. Average hourly
earnings reported on Nov 6 by the Labor Dept advanced 2.5%
in Oct from a year earlier, the biggest gain since Jul 2009.
China’s consumer inflation waned in Oct while factory-gate deflation
extended a record streak of negative readings, signaling policy makers
may need to hit the gas again to ease deflationary pressures. The consumer-price index rose 1.3% in Oct from a year
earlier, according to the National Bureau of Statistics, missing the 1.5% estimate & down from 1.6%
in Sep. The producer-price index fell 5.9%, its 44th
straight monthly decline. The lingering deflation risks, along with weakening trade, open the door for additional stimulus as inflation remains about
half the gov target pace. The People’s Bank of China, which
has cut interest rates 6 times in the past year, is seeking to
stabilize the economy without fueling a renewed surge in debt. China’s stocks halted a 4 day rally after the data, with the Shanghai Composite Index down 0.2%.
Food
prices rose 1.9% from a year earlier, from 2.7% in
Sep. Non-food prices climbed 0.9%. Prices of consumer goods
increased 1%, while services increased 1.9%. The
inflation reading follows a tepid trade report that suggested the economy isn’t likely to get a near-term boost
from global demand.
Prices for imported goods fell for the 4th straight month in Oct,
highlighting the cheap oil, strong dollar & slow overseas growth that
are keeping inflation low. Import prices dropped 0.5% from the
prior month, according to the Labor Dept. Economists had expected a 0.1% decline. Overall import prices are down 10.5% from a year earlier. The year-over-year figure has declined for 15 consecutive months. The decline was broad-based, with prices for petroleum &
natural gas, industrial supplies like paper & metal, food, autos &
capital goods all falling. Petroleum import prices are down 48% from a year ago.
But a stronger dollar & tepid overseas demand are tamping down prices
for other goods. The index for non-fuel imports was down 3.2% over the
past year, the biggest decline in more than 6 years. The non-fuel
index hasn't recorded a monthly advance since Jul 2014. Falling import prices are one reason inflation has remained historically low. Fed Chair Janet Yellen and other officials expect the drag from cheap commodities & imports will eventually pass. US export prices fell 0.2% in Oct from the prior month & are down 6.7% year-over-year.
Stocks aren't doing much of anything. But the looming interest rate hike is spooking traders. In addition, gloomy economic news globally & a world that is out of control is not helping matters.
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