Dow shot up 102, advancers over decliners better than 5-2 & NAZ gained 27. The MLP index recovered 1+ to the 286s (off recent lows shown in the chart below) & the REIT index added 1+to the 355s (nearing its record highs). Junk bond funds went up & Treasuries crawled higher. Oil was up pennies in the 43s & gold lost a very big 12.
AMJ (Alerian MLP Index tracking fund)
An unexpected decline in US orders for business equipment in May indicates cooling capital-goods investment may weigh on Q2 economic growth, Commerce Dept data showed. Orders for non-military capital goods excluding aircraft fell 0.2% (est. 0.4% gain) after 0.2% increase in prior month. Shipments of those goods, which are used to calculate GDP, fell 0.2% after 0.1% gain. Bookings for all durable goods fell 1.1% (est. 0.6% drop) following 0.9% decline; excluding transportation-equipment demand, which is volatile, orders rose 0.1% (est. 0.4% gain). The broad showdown in equipment orders & shipments raises the risk that business investment will provide less of a boost than anticipated to the economic rebound this qtr, leaving the heavy lifting to household spending. The outlook for capital-goods production is clouded by cooling automobile sales, while overseas markets, though improving, are yet to show the kind of demand acceleration that would spur exports of US-made goods. Orders for non-defense capital goods excluding aircraft dropped most since Dec; durable-goods orders fell most since Nov. Orders for motor vehicles & parts rose 1.2%; compares with industry data showing sales of cars & light trucks slowed in May for the 4th time in the past 5 months. Orders for fabricated metal products fell 0.2% after a 1% decline & machinery orders rose 0.6%. Computer & electronic-products orders decreased 0.2%. Bookings for civilian aircraft & parts dropped 11.7% while defense capital-goods orders fell 8.2%. Durable-goods inventories rose 0.2%; unfilled orders for non-defense capital goods excluding aircraft advanced 0.2%.
Slowdown in U.S. Business-Equipment Orders May Weigh on Growth
Federal Reserve policy maker John Williams made the case for further gradual increases in interest rates, saying he expects inflation to rise to the central bank's 2% target next year as unemployment edges lower. “Gradually raising interest rates to bring monetary policy back to normal helps us keep the economy growing at a rate that can be sustained for a longer time,” Williams said. The comments by the pres of the Federal Reserve Bank of San Francisco suggest that he’s lining up with Fed Chair Janet Yellen, his predecessor at the bank, in an emerging debate on how to respond to an easing in inflation during the last few months. While some Fed officials have argued for a pause in the rate-hiking campaign to wait for clearer signs that inflation is indeed headed higher, Yellen has played down the significance of recent weak price data & suggested that the Fed remains on course for higher rates. Williams seemed to agree. “Some special transitory factors have been pulling inflation down,” he said. “But with some of these factors now waning, and with the economy doing well, I expect we’ll reach our 2 percent goal some time next year.” Those special factors include a steep drop in the cost of mobile-phone services. That helped pull down the Fed’s favorite inflation gauge to 1.7% in Apr from 1.9% in Mar & 2.1% in Feb. Williams also saw a danger in the Fed allowing the unemployment rate to fall too far. “The very strong labor market actually carries with it the risk of the economy exceeding its safe speed limit and overheating, which could eventually undermine the sustainability of the expansion,” he said. At 4.3% in May, the jobless rate was already below what Williams thinks is its long-run sustainable rate of 4.75% & he sees it dropping some more. “Given the strong job growth we’ve been seeing in the United States, I expect the unemployment rate to edge down a bit further and remain a little above 4 percent through next year,” Williams said. He affirmed the Fed's intention to begin trimming its $4.5T balance sheet this year, saying the central bank would start off “nice and easy.”
Fed’s Williams Sees Interest Rates Rising as Inflation Moves Up
It seems the sky is the limit for Germany's economy. Business confidence, logging its 5th consecutive increase, jumped to the highest since 1991 this month, underpinning optimism by the Bundesbank that the upswing in Europe's largest economy is set to continue. With domestic demand supported by a buoyant labor market, risks to growth stem almost exclusively from global forces. Growth was the fastest in a year in the 3 months thru Mar, bolstered by an unexpected pickup in manufacturing, which bodes well for investment. Earlier this month, Germany's central bank raised its economic outlook thru 2019, arguing that increasing employment, consumer spending & construction would ensure an “ongoing solid underlying pace” of expansion. The Ifo institute's business climate index rose to 115.1 in Jun from 114.6 in May, the highest since data for reunified Germany are available & compares with an estimate for a dip to 114.5. A measure of current economic conditions improved to 124.1 from a revised 123.3 & a gauge of expectations rose to 106.8 from 106.5. Strength in manufacturing was also indicated by Purchasing Managers' Indices published Fri. Momentum remained close to the highest level since 2011.
Only the World Can Stop Germany as Business Climate Hits Record
The week started quietly. Attention will be on DC this week to see if those guys can move forward on a new healthcare plan. There should also be announcements from the White House on energy. The popular stocks averages remain near their record highs while NAZ is recovering from selling earlier in Jun.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 43.13 | 0.12 | 0.3% |
| GC=F | Gold | 1,244.50 | -11.90 | -1.0% |
An unexpected decline in US orders for business equipment in May indicates cooling capital-goods investment may weigh on Q2 economic growth, Commerce Dept data showed. Orders for non-military capital goods excluding aircraft fell 0.2% (est. 0.4% gain) after 0.2% increase in prior month. Shipments of those goods, which are used to calculate GDP, fell 0.2% after 0.1% gain. Bookings for all durable goods fell 1.1% (est. 0.6% drop) following 0.9% decline; excluding transportation-equipment demand, which is volatile, orders rose 0.1% (est. 0.4% gain). The broad showdown in equipment orders & shipments raises the risk that business investment will provide less of a boost than anticipated to the economic rebound this qtr, leaving the heavy lifting to household spending. The outlook for capital-goods production is clouded by cooling automobile sales, while overseas markets, though improving, are yet to show the kind of demand acceleration that would spur exports of US-made goods. Orders for non-defense capital goods excluding aircraft dropped most since Dec; durable-goods orders fell most since Nov. Orders for motor vehicles & parts rose 1.2%; compares with industry data showing sales of cars & light trucks slowed in May for the 4th time in the past 5 months. Orders for fabricated metal products fell 0.2% after a 1% decline & machinery orders rose 0.6%. Computer & electronic-products orders decreased 0.2%. Bookings for civilian aircraft & parts dropped 11.7% while defense capital-goods orders fell 8.2%. Durable-goods inventories rose 0.2%; unfilled orders for non-defense capital goods excluding aircraft advanced 0.2%.
Slowdown in U.S. Business-Equipment Orders May Weigh on Growth
Federal Reserve policy maker John Williams made the case for further gradual increases in interest rates, saying he expects inflation to rise to the central bank's 2% target next year as unemployment edges lower. “Gradually raising interest rates to bring monetary policy back to normal helps us keep the economy growing at a rate that can be sustained for a longer time,” Williams said. The comments by the pres of the Federal Reserve Bank of San Francisco suggest that he’s lining up with Fed Chair Janet Yellen, his predecessor at the bank, in an emerging debate on how to respond to an easing in inflation during the last few months. While some Fed officials have argued for a pause in the rate-hiking campaign to wait for clearer signs that inflation is indeed headed higher, Yellen has played down the significance of recent weak price data & suggested that the Fed remains on course for higher rates. Williams seemed to agree. “Some special transitory factors have been pulling inflation down,” he said. “But with some of these factors now waning, and with the economy doing well, I expect we’ll reach our 2 percent goal some time next year.” Those special factors include a steep drop in the cost of mobile-phone services. That helped pull down the Fed’s favorite inflation gauge to 1.7% in Apr from 1.9% in Mar & 2.1% in Feb. Williams also saw a danger in the Fed allowing the unemployment rate to fall too far. “The very strong labor market actually carries with it the risk of the economy exceeding its safe speed limit and overheating, which could eventually undermine the sustainability of the expansion,” he said. At 4.3% in May, the jobless rate was already below what Williams thinks is its long-run sustainable rate of 4.75% & he sees it dropping some more. “Given the strong job growth we’ve been seeing in the United States, I expect the unemployment rate to edge down a bit further and remain a little above 4 percent through next year,” Williams said. He affirmed the Fed's intention to begin trimming its $4.5T balance sheet this year, saying the central bank would start off “nice and easy.”
Fed’s Williams Sees Interest Rates Rising as Inflation Moves Up
It seems the sky is the limit for Germany's economy. Business confidence, logging its 5th consecutive increase, jumped to the highest since 1991 this month, underpinning optimism by the Bundesbank that the upswing in Europe's largest economy is set to continue. With domestic demand supported by a buoyant labor market, risks to growth stem almost exclusively from global forces. Growth was the fastest in a year in the 3 months thru Mar, bolstered by an unexpected pickup in manufacturing, which bodes well for investment. Earlier this month, Germany's central bank raised its economic outlook thru 2019, arguing that increasing employment, consumer spending & construction would ensure an “ongoing solid underlying pace” of expansion. The Ifo institute's business climate index rose to 115.1 in Jun from 114.6 in May, the highest since data for reunified Germany are available & compares with an estimate for a dip to 114.5. A measure of current economic conditions improved to 124.1 from a revised 123.3 & a gauge of expectations rose to 106.8 from 106.5. Strength in manufacturing was also indicated by Purchasing Managers' Indices published Fri. Momentum remained close to the highest level since 2011.
Only the World Can Stop Germany as Business Climate Hits Record
The week started quietly. Attention will be on DC this week to see if those guys can move forward on a new healthcare plan. There should also be announcements from the White House on energy. The popular stocks averages remain near their record highs while NAZ is recovering from selling earlier in Jun.
Dow Jones Industrials
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