Markets waver after an increase in consumer confidence

Dow climbed 23, advancers barely ahead of decliners & NAZ went up 11.  The MLP index dropped 2+ to the 292s & the REIT index gained 2+ to the 331s.  Junk bond funds were mixed & Treasuries had modest advance.  Oil sank to the low 45s (more below) & gold was down all of 2.

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Federal Reserve Governor Jerome Powell signaled his readiness to raise interest rates, as unemployment & inflation approach the central bank’s goals.  “The case for an increase in the federal funds rate has clearly strengthened since our previous meeting earlier this month,” Powell said (referring to the Nov 1-2 session of the FMOC).  “The committee has been patient about raising rates,” he added.  “That patience has paid dividends. But moving too slowly could eventually mean that the committee would have to tighten policy abruptly to avoid overshooting our goals.”  Policy makers are widely expected to lift the benchmark borrowing rate when they gather in 2 weeks, which would mark only the 2nd increase since the economic expansion began in 2009.  Chair Janet Yellen indicated to Congress earlier this month a rate increase could happen “relatively soon” if the economy continues to show further progress.  The preferred gauge of price pressures, after removing food & energy components, rose 1.7% in the 12 months thru Sep.  Unemployment stood at 4.9% in Oct, close to estimates of its lowest sustainable level.  Powell said he expects the economy to continue to grow at about 2%, with strong job gains & a gradual rise in the pace of inflation to the central bank's 2% target.  “The main risks I see to that outlook are from abroad,” he said.  With growth & inflation low in other parts of the world, & with US interest rates so low, “we are not well positioned to respond to negative shocks,” he added.

Fed’s Powell Says Case for Rate Hike Has ‘Clearly Strengthened’

Consumer confidence rose in Nov to the highest level since Jul 2007 on increased optimism about the US labor market & economy, according to the Conference Board.  Confidence index increased to 107.1 (forecast was 101.5) from a revised 100.8.  Present conditions gauge rose to 130.3, also the highest since Jul 2007, from 123.1.  A measure of consumer expectations for the next 6 months climbed to 91.7, the strongest since Jun 2015, from 86.  The share of those who said jobs were plentiful rose to 26.9% from 25.3%.  A little more than 29%, the largest share in 3 months, said the current economy was in good shape & more respondents indicated jobs were plentiful, which bodes well for consumer spending thru the holiday-shopping season.  While a majority of respondents were surveyed prior to the presidential election, a small sample of responses after it showed no impact on sentiment.  Plans to purchase major appliances were the strongest since Jan.  “With the holiday season upon us, a more confident consumer should be welcome news for retailers,” Lynn Franco, director of economic indicators at the Conference Board, said.

• Consumer Confidence in U.S. Increases to a Nine-Year High

Cyber Monday set a new record with $3.45B spent online in the US, a 12% increase from a year ago, according to Adobe Digital Insights.  Top-selling electronics included Sony's PlayStation 4 & Apple's iPhone, while Lego A/S building sets & Mattel's Barbie dolls were among popular toys.  The holiday shopping season, Nov 1-28, has generated almost $40B in online revenue, 7.6% more than 2015.

Cyber Monday Sets U.S. Record With $3.45 Billion of Sales

Oil futures dropped, losing nearly 4% to settle at their lowest level in about 2 weeks.  Some traders remained skeptical that OPEC will finalize a deal to curb production at its meeting tomorrow.  Jan West Texas Intermediate crude fell 1.85 (3.9%) to settle at $45.23 a barrel, the lowest since Nov 14.

Oil Futures Lose Nearly 4% To Settle At a 2-week Low

Traders are trying to figure out what to do.  Enthusiasm over Trump's victory has maxed out & the rate hike is officially recognized as around the corner.  Consumer confidence & spending is coming in strong.  The OPEC meeting looks like it will be a big disappointment for Saudi Arabia, et all.  While the Dow remains over 9.1K (record levels), it's still overbought & a correction is long overdue.

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