Dow dropped 53, decliners over advancers more than 2-1 & NAZ lost 3. The MLP index fell 2+ to the 303s & the REIT index was fractionally lower to the 345s. Junk bond funds slid back & Treasuries had a minor advance. Oil fell in the 49s & gold was sold.
AMJ (Alerian MLP Index tracking fund)
CL=F
GC=F
The consumer is on track for a second-quarter comeback after a weak stretch at the start of the year, as Americans kept up spending in line with income gains in Apr, Commerce Dept figures show. Purchases increased 0.4% m/m (matching the est.), the most since Dec, after 0.3% rise in Mar. Incomes rose 0.4% m/m (matching est.) after 0.2% gain. Price gauge tied to consumption rose 0.2% m/m (matching est.), rose 1.7% y/y (matching est.). Excluding food & energy, prices rose 0.2% m/m (est. 0.1% rise), rose 1.5% y/y (matching est.). The pickup in nominal consumer purchases shows Americans appear more eager to spend in Q2 following the weakest gains since 2009 in the Jan-Mar period. Household balance sheets that have been strengthening with a tightening labor market & rising wages should help buoy spending as the broader economy gains momentum. Wages & salaries rose 0.7% from the previous month, matching the fastest gain in a year. While Fed policy makers should take some comfort that the results were in line with forecasts & core prices exceeded estimates, their preferred inflation gauge did slow down on a year-over-year basis, slipping slightly further away from the 2% annual target. The central bank is expected to raise interest rates at the Jun meeting, though a sustained slowdown in inflation could delay another hike this year. Spending on goods rose 0.7% after adjusting for inflation, up from 0.3% gain in Mar. Disposable income rose 0.2% after adjusting for inflation.
U.S. Consumer Spending Signals Second-Quarter Rebound On Track
A larger-than-forecast increase in home prices in 20 US cities in Mar underscores both steady demand & lean inventory, figures from S&P CoreLogic Case-Shiller showed. 20-city property values index rose 5.9% from Mar 2016 (forecast 5.7%), matching Feb as biggest since Jul 2014. National price gauge climbed 5.8% in the 12 months thru Mar. Seasonally adjusted 20-city index rose 0.9% from a month earlier (matching forecast). Mortgage rates at a 6-month low, along with a strong job market & healthier finances, are giving prospective buyers more wherewithal to make purchases. In addition to rising demand, persistent inventory shortages in the previously owned property market are also contributing to price gains. At the same time, wage growth has been slower to pick up than property values, representing a potential headwind to even faster price gains. “While there is some regional variation, prices are rising across the U.S.,” David Blitzer, chairman of the S&P index committee, said. The gain reflected “unusually low inventory of homes for sale.” He added “there is no way to tell when rising prices and mortgage rates will force a slowdown in housing.”
German inflation slowed in May, underpinning recent comments from ECB officials that the 19-nation bloc still needs extraordinary monetary stimulus. The rate dropped to 1.4% in May from 2% in Apr, sharper than the decline to 1.5% predicted. Inflation in the euro area, due tomorrow, is forecast to have cooled to 1.5%, though the German data means there's now a risk of a weaker reading. While inflation rates have risen sharply across the continent since late last year, policy makers have cautioned that increases are driven largely by energy costs & not yet self-sustained. Still, with the economy growing solidly, speculation has mounted among investors about how the ECB's stimulus efforts will eventually be unwound. Euro-area consumer-price growth probably decelerated to 1.5% this month from 1.9% predicted for Apr. Spain's inflation rate fell more than forecast in May, dropping to 2% from 2.6%. The ECB’s Governing Council will gather next week for one of its regular meetings. ECB Pres Mario Draghi has tried to downplay expectations of a major shift & used an appearance in European Parliament yesterday to argue that accommodative policy, negative interest rates and a €2.3T ($2.6T) asset-purchase program, must be maintained. “Domestic cost pressures, notably from wages, are still insufficient to support a durable and self-sustaining convergence of inflation toward our medium-term objective,” he said.
There is a little bit of profit taking after Trump is back in dysfunctional DC. Gossip about this & that is unsettling to some traders. Also, there is awareness that there is not much time left to pass legislation before Congress goes on its next break. Getting little attention, but very important, the debt ceiling must be raised to avoid a gov shutdown. That will involve one more bitter fight. Of course, healthcare & tax reform remain priorities. Bigger picture, stock averages are very near record highs with Dow hanging in above 21K.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
CL=F
| Crude Oil | 49.27 | -0.53 | -1.1% |
GC=F
| Gold | 1,266.60 | -4.80 | -0.4% |
The consumer is on track for a second-quarter comeback after a weak stretch at the start of the year, as Americans kept up spending in line with income gains in Apr, Commerce Dept figures show. Purchases increased 0.4% m/m (matching the est.), the most since Dec, after 0.3% rise in Mar. Incomes rose 0.4% m/m (matching est.) after 0.2% gain. Price gauge tied to consumption rose 0.2% m/m (matching est.), rose 1.7% y/y (matching est.). Excluding food & energy, prices rose 0.2% m/m (est. 0.1% rise), rose 1.5% y/y (matching est.). The pickup in nominal consumer purchases shows Americans appear more eager to spend in Q2 following the weakest gains since 2009 in the Jan-Mar period. Household balance sheets that have been strengthening with a tightening labor market & rising wages should help buoy spending as the broader economy gains momentum. Wages & salaries rose 0.7% from the previous month, matching the fastest gain in a year. While Fed policy makers should take some comfort that the results were in line with forecasts & core prices exceeded estimates, their preferred inflation gauge did slow down on a year-over-year basis, slipping slightly further away from the 2% annual target. The central bank is expected to raise interest rates at the Jun meeting, though a sustained slowdown in inflation could delay another hike this year. Spending on goods rose 0.7% after adjusting for inflation, up from 0.3% gain in Mar. Disposable income rose 0.2% after adjusting for inflation.
U.S. Consumer Spending Signals Second-Quarter Rebound On Track
A larger-than-forecast increase in home prices in 20 US cities in Mar underscores both steady demand & lean inventory, figures from S&P CoreLogic Case-Shiller showed. 20-city property values index rose 5.9% from Mar 2016 (forecast 5.7%), matching Feb as biggest since Jul 2014. National price gauge climbed 5.8% in the 12 months thru Mar. Seasonally adjusted 20-city index rose 0.9% from a month earlier (matching forecast). Mortgage rates at a 6-month low, along with a strong job market & healthier finances, are giving prospective buyers more wherewithal to make purchases. In addition to rising demand, persistent inventory shortages in the previously owned property market are also contributing to price gains. At the same time, wage growth has been slower to pick up than property values, representing a potential headwind to even faster price gains. “While there is some regional variation, prices are rising across the U.S.,” David Blitzer, chairman of the S&P index committee, said. The gain reflected “unusually low inventory of homes for sale.” He added “there is no way to tell when rising prices and mortgage rates will force a slowdown in housing.”
German inflation slowed in May, underpinning recent comments from ECB officials that the 19-nation bloc still needs extraordinary monetary stimulus. The rate dropped to 1.4% in May from 2% in Apr, sharper than the decline to 1.5% predicted. Inflation in the euro area, due tomorrow, is forecast to have cooled to 1.5%, though the German data means there's now a risk of a weaker reading. While inflation rates have risen sharply across the continent since late last year, policy makers have cautioned that increases are driven largely by energy costs & not yet self-sustained. Still, with the economy growing solidly, speculation has mounted among investors about how the ECB's stimulus efforts will eventually be unwound. Euro-area consumer-price growth probably decelerated to 1.5% this month from 1.9% predicted for Apr. Spain's inflation rate fell more than forecast in May, dropping to 2% from 2.6%. The ECB’s Governing Council will gather next week for one of its regular meetings. ECB Pres Mario Draghi has tried to downplay expectations of a major shift & used an appearance in European Parliament yesterday to argue that accommodative policy, negative interest rates and a €2.3T ($2.6T) asset-purchase program, must be maintained. “Domestic cost pressures, notably from wages, are still insufficient to support a durable and self-sustaining convergence of inflation toward our medium-term objective,” he said.
German Inflation Slows More Than Forecast as ECB Meeting Nears
There is a little bit of profit taking after Trump is back in dysfunctional DC. Gossip about this & that is unsettling to some traders. Also, there is awareness that there is not much time left to pass legislation before Congress goes on its next break. Getting little attention, but very important, the debt ceiling must be raised to avoid a gov shutdown. That will involve one more bitter fight. Of course, healthcare & tax reform remain priorities. Bigger picture, stock averages are very near record highs with Dow hanging in above 21K.
Dow Jones Industrials
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