Dow went up 13,decliners over advancers 5-4 & NAZ dropped 37 The MLP index lost 1+ to the 279s & the REIT index crawled up pennies in the 357s. Junk bond funds drifted lower & Treasuries were flat. Oil fell to the 47s (more below) & gold inched higher to 1252.
AMJ (Alerian MLP Index tracking fund)
Federal Reserve Bank of NY Pres William Dudley said back-to-back hurricanes in Q3 could temporarily influence the timing of the next interest-rate increase, although above-trend growth does warrant continued gradual rate hikes. With Texas just starting to recover from Hurricane Harvey & southern Florida bracing for Irma, Dudley said that “it’s possible they could have effect on the timing of short-term rate increases. But I think that’s probably further out anyway.” The Fed is expected to announce the start of a gradual process to shrink its $4.5T balance sheet at its Sep 19-20 meeting while keeping rates on hold amid a spate of disappointingly weak readings on inflation. Central bankers hiked in Mar & Jun, and in Jun forecast they would raise a 3rd time this year to a range of 1.25-1.5%. Dudley said that he didn't think the storms would affect the balance-sheet move, which he expects to happen “relatively soon,” & that a decision on when to raise rates again was a question for later in the year. “It’s too soon to judge exactly the timing of when the next rate hike might occur, but I think the path is still clear that short-term rates are going to move gradually higher over time,” he added. While he was marking down his Q3 growth forecast “a touch” & the storms would affect incoming economic data over the next few months, he was otherwise upbeat on the economy. “I’m pretty optimistic the expansion’s going to continue. I’m pretty confident it’s going to continue at an above-trend pace, and that’s why I think that as time passes, the Federal Reserve will continue to gradually remove monetary policy accommodation.”
Dudley Says Hurricanes May Have Temporary Effect on Hike Timing
Conservative House Reps hissed & groaned at Treasury Sec Steve Mnuchin as he implored them to vote for a hurricane relief bill that includes a short-term extension of the federal debt limit. Some were infuriated by the sales pitch for the deal, especially when Mnuchin told them to “vote for the debt ceiling for me.” After the meeting, Representative Ted Yoho of Florida responded to Mnuchin’s comments by saying: “He’s not one of my constituents!” Representative Dave Brat of Virginia said: "The comments from the Treasury secretary today were not helpful. I found them to be intellectually insulting." The House later in the morning passed he deal brokered by Dems & Pres Trump to suspend the debt limit, keep the gov open thru Dec 8 & provide $15¼B aid to flood victims in Texas & other parts of the Gulf coast. The measure, already passed by the Senate, now goes to Trump for his signature. Reps also laughed at White House budget director Mick Mulvaney during his presentation. Several said it was ironic that Mulvaney, who as a member of the conservative House Freedom Caucus led several fights over the debt limit & pushed to shut down the gov, pleaded with Reps to pass the kind of measure he used to crusade against. Rep Darrell Issa of California joked in the meeting that more Freedom Caucus members should be hired by the Office of Management & Budget so that their views would change too. Mark Walker of North Carolina said “it got a little warm in there for Mulvaney.” Reps complained that Mnuchin only took a few questions & didn't provide satisfactory responses. Mnuchin's presentation probably cost the administration votes, Walker said. “One question that I personally asked is: What does the debt ceiling look like in December, and the Treasury secretary could not answer that and many of us found that very troubling,” Walker said. After the meeting, Mnuchin left the building quickly, answering one question from a reporter as he departed, saying that he asked the House GOP to raise the debt ceiling. At least one Rep defended Mnuchin. “I like his style,” said Thomas Massie of Kentucky. “He didn’t put on any airs. There was no hidden agenda. He was what he was.”
House GOP Rips Mnuchin for His ‘Vote for the Debt Ceiling for Me’ Sales Pitch
Hurricane Harvey will distort measures of the US economy in weeks & months ahead. Everything from jobless claims, which already surged yesterday, to GDP & inflation, will be knocked off course by the storm. The storm will make it difficult for economists to gauge the trajectory of the economy, with brief spikes across a wide range of reports. It will be hard to discern whether bad reports result from storm damage & then whether good reports owe to the effects of rebuilding. It could be well into 2018 before the storm's effects have fully washed out of the economic data. Forecasters estimate the storm will affect the most important economic reports at the national level in the months ahead. They expect the storm to reduce the pace of job gains by about 27K jobs a month in Q3, followed by little change in Q4 & then a boost of 13K in Q1-2018, as many people find work in the rebuilding process. The growth rate of GDP will fall by about 0.3 percentage points in Q3, followed by no effect on Q4, & an 0.2 percentage point boost in Q1-2018. Estimates of the storm's national economic impact remain preliminary, & Hurricane Irma, which is currently headed for Florida, could exacerbate the effects. Beginning this week, a growing number of economic indicators will show Harvey's impact, from jobless claims, to inflation, to retail sales, to housing starts & beyond. In the longer run, the storm is expected to have no lasting impact, with forecasts for GDP, unemployment, inflation & other major economic indicators unchanged for 2018 overall.
Oil prices slid, with US crude down more than 3% on worries that commerce & energy demand in Florida & the Southeast would be hit hard as Hurricane Irma drove toward the region. Irma, the 2nd major hurricane to approach the US in 2 weeks, has already killed 14 & destroyed islands in the Caribbean. Its predecessor, Harvey, shut a ¼ of US refineries & 8% of US oil production, with crude prices slumping as widespread refinery outages sharply reduced demand for crude. It will take weeks for the US petroleum industry to return to full capacity. In the case of Irma, analysts are more worried that devastation wrought by the storm could sharply reduce demand for energy. US light crude oil was down $1.53 (3.12%) at $47.56 a barrel but had a slight weekly gains. US oil output fell almost 8% because of Harvey, from 9.5M barrels per day (bpd) to 8.8M bpd, according to the Energy Information Administration (EIA). But Irma is headed away from the heart of US oil production.
Hurricane Irma threatens to knock out power to more than 4M homes & businesses served by Florida Power & Light (FPL), affecting around 9M people based on the current storm track, the utility's CEO said. "Everyone in Florida will be impacted in some way by this storm," Eric Silagy said, urging FPL customers to be prepared for a multiweek restoration process. FPL is the biggest power company in Florida serving almost ½ of the state's 20.6M residents. Outage s across the state will likely top 4M customers since other utilities will also suffer outages but have not yet estimated how many. Irma poses a significantly bigger menace to power supplies in Florida than Hurricane Harvey did in Texas because Irma is packing 150 mile-per-hour winds that could down electric lines and close nuclear & other power plants. "This storm is unprecedented as far as strength and size. We are preparing for the worst and will likely have to rebuild parts of our service territory," Silagy said, noting the kinds of winds expected could snap concrete poles. Irma's winds have rivaled the strongest for any hurricane in history in the Atlantic, whereas Harvey's damage came from record rainfall. Even as Houston flooded, the power stayed on for most, allowing citizens to use TV & radio to stay apprised of danger, or social media to call for help.
All eyes are on Irma & the outlook is grim. Florida is getting prepared, but the damage has the potential to be enormous. Making matters worse, another storm is right behind it. Gold, a bet against stocks, remains in demand. Further north, DC remains as dysfunctional as it has been for years, not encouraging for the prospects of passing tax reform legislation (among other items). Best wishes for residents in Florida.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 47.50 | -1.59 | -3.2% |
| ZG=F | Gold 100 oz. Dec 17 | 1,351.20 | +0.90 | +0.1% |
Federal Reserve Bank of NY Pres William Dudley said back-to-back hurricanes in Q3 could temporarily influence the timing of the next interest-rate increase, although above-trend growth does warrant continued gradual rate hikes. With Texas just starting to recover from Hurricane Harvey & southern Florida bracing for Irma, Dudley said that “it’s possible they could have effect on the timing of short-term rate increases. But I think that’s probably further out anyway.” The Fed is expected to announce the start of a gradual process to shrink its $4.5T balance sheet at its Sep 19-20 meeting while keeping rates on hold amid a spate of disappointingly weak readings on inflation. Central bankers hiked in Mar & Jun, and in Jun forecast they would raise a 3rd time this year to a range of 1.25-1.5%. Dudley said that he didn't think the storms would affect the balance-sheet move, which he expects to happen “relatively soon,” & that a decision on when to raise rates again was a question for later in the year. “It’s too soon to judge exactly the timing of when the next rate hike might occur, but I think the path is still clear that short-term rates are going to move gradually higher over time,” he added. While he was marking down his Q3 growth forecast “a touch” & the storms would affect incoming economic data over the next few months, he was otherwise upbeat on the economy. “I’m pretty optimistic the expansion’s going to continue. I’m pretty confident it’s going to continue at an above-trend pace, and that’s why I think that as time passes, the Federal Reserve will continue to gradually remove monetary policy accommodation.”
Dudley Says Hurricanes May Have Temporary Effect on Hike Timing
Conservative House Reps hissed & groaned at Treasury Sec Steve Mnuchin as he implored them to vote for a hurricane relief bill that includes a short-term extension of the federal debt limit. Some were infuriated by the sales pitch for the deal, especially when Mnuchin told them to “vote for the debt ceiling for me.” After the meeting, Representative Ted Yoho of Florida responded to Mnuchin’s comments by saying: “He’s not one of my constituents!” Representative Dave Brat of Virginia said: "The comments from the Treasury secretary today were not helpful. I found them to be intellectually insulting." The House later in the morning passed he deal brokered by Dems & Pres Trump to suspend the debt limit, keep the gov open thru Dec 8 & provide $15¼B aid to flood victims in Texas & other parts of the Gulf coast. The measure, already passed by the Senate, now goes to Trump for his signature. Reps also laughed at White House budget director Mick Mulvaney during his presentation. Several said it was ironic that Mulvaney, who as a member of the conservative House Freedom Caucus led several fights over the debt limit & pushed to shut down the gov, pleaded with Reps to pass the kind of measure he used to crusade against. Rep Darrell Issa of California joked in the meeting that more Freedom Caucus members should be hired by the Office of Management & Budget so that their views would change too. Mark Walker of North Carolina said “it got a little warm in there for Mulvaney.” Reps complained that Mnuchin only took a few questions & didn't provide satisfactory responses. Mnuchin's presentation probably cost the administration votes, Walker said. “One question that I personally asked is: What does the debt ceiling look like in December, and the Treasury secretary could not answer that and many of us found that very troubling,” Walker said. After the meeting, Mnuchin left the building quickly, answering one question from a reporter as he departed, saying that he asked the House GOP to raise the debt ceiling. At least one Rep defended Mnuchin. “I like his style,” said Thomas Massie of Kentucky. “He didn’t put on any airs. There was no hidden agenda. He was what he was.”
House GOP Rips Mnuchin for His ‘Vote for the Debt Ceiling for Me’ Sales Pitch
Hurricane Harvey will distort measures of the US economy in weeks & months ahead. Everything from jobless claims, which already surged yesterday, to GDP & inflation, will be knocked off course by the storm. The storm will make it difficult for economists to gauge the trajectory of the economy, with brief spikes across a wide range of reports. It will be hard to discern whether bad reports result from storm damage & then whether good reports owe to the effects of rebuilding. It could be well into 2018 before the storm's effects have fully washed out of the economic data. Forecasters estimate the storm will affect the most important economic reports at the national level in the months ahead. They expect the storm to reduce the pace of job gains by about 27K jobs a month in Q3, followed by little change in Q4 & then a boost of 13K in Q1-2018, as many people find work in the rebuilding process. The growth rate of GDP will fall by about 0.3 percentage points in Q3, followed by no effect on Q4, & an 0.2 percentage point boost in Q1-2018. Estimates of the storm's national economic impact remain preliminary, & Hurricane Irma, which is currently headed for Florida, could exacerbate the effects. Beginning this week, a growing number of economic indicators will show Harvey's impact, from jobless claims, to inflation, to retail sales, to housing starts & beyond. In the longer run, the storm is expected to have no lasting impact, with forecasts for GDP, unemployment, inflation & other major economic indicators unchanged for 2018 overall.
How Hurricane Harvey will ripple through the U.S. economy
Oil prices slid, with US crude down more than 3% on worries that commerce & energy demand in Florida & the Southeast would be hit hard as Hurricane Irma drove toward the region. Irma, the 2nd major hurricane to approach the US in 2 weeks, has already killed 14 & destroyed islands in the Caribbean. Its predecessor, Harvey, shut a ¼ of US refineries & 8% of US oil production, with crude prices slumping as widespread refinery outages sharply reduced demand for crude. It will take weeks for the US petroleum industry to return to full capacity. In the case of Irma, analysts are more worried that devastation wrought by the storm could sharply reduce demand for energy. US light crude oil was down $1.53 (3.12%) at $47.56 a barrel but had a slight weekly gains. US oil output fell almost 8% because of Harvey, from 9.5M barrels per day (bpd) to 8.8M bpd, according to the Energy Information Administration (EIA). But Irma is headed away from the heart of US oil production.
Oil slides as Irma heads for Florida, threatening demand
Hurricane Irma threatens to knock out power to more than 4M homes & businesses served by Florida Power & Light (FPL), affecting around 9M people based on the current storm track, the utility's CEO said. "Everyone in Florida will be impacted in some way by this storm," Eric Silagy said, urging FPL customers to be prepared for a multiweek restoration process. FPL is the biggest power company in Florida serving almost ½ of the state's 20.6M residents. Outage s across the state will likely top 4M customers since other utilities will also suffer outages but have not yet estimated how many. Irma poses a significantly bigger menace to power supplies in Florida than Hurricane Harvey did in Texas because Irma is packing 150 mile-per-hour winds that could down electric lines and close nuclear & other power plants. "This storm is unprecedented as far as strength and size. We are preparing for the worst and will likely have to rebuild parts of our service territory," Silagy said, noting the kinds of winds expected could snap concrete poles. Irma's winds have rivaled the strongest for any hurricane in history in the Atlantic, whereas Harvey's damage came from record rainfall. Even as Houston flooded, the power stayed on for most, allowing citizens to use TV & radio to stay apprised of danger, or social media to call for help.
Hurricane Irma may cut power to 9M people in Florida: utility
All eyes are on Irma & the outlook is grim. Florida is getting prepared, but the damage has the potential to be enormous. Making matters worse, another storm is right behind it. Gold, a bet against stocks, remains in demand. Further north, DC remains as dysfunctional as it has been for years, not encouraging for the prospects of passing tax reform legislation (among other items). Best wishes for residents in Florida.
Dow Jones Industrials
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