Dow rose 19, but decliners barely ahead of advancers & NAZ added all of 2. The MLP index inched up pennies in the 284s & the REIT index gained 1+ to the 351s. Junk bond funds were sold & Treasuries edged lower. Oil finished the day under 50 at a 2 week low, & gold went up 3 to 1277.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.624354007333357)
Fed Vice Chair Stanley Fischer, who leaves office this month, continues to expect a tightening US labor market will lift wages & prices even though the process could take longer than anticipated. “I still believe we will have higher inflation,” Fischer said. “The basic mechanism here is unemployment is declining all the time, wages will start going up at some stage.” Fischer will leave a central bank that’s wrestling with a mystery over why price pressures have remained weak despite the lowest levels of unemployment in 16 years. “The experience many of us have, including myself, is you have to wait a long time -- usually longer than you expected to wait -- for something to happen,” said Fischer. “But then, if it’s a very basic force, namely increasing employment, increasing wages, it’ll show up.” Inflation measured by the Fed's preferred price gauge was 1.4% in the 12 months thru Aug & has been below its 2% target for most of the past 5 years. The jobless rate stood at 4.4% in Aug. The Fed slashed interest rates to zero during the financial crisis & has only hiked 4 times since beginning its tightening cycle in Dec 2015, including in Mar & Jun, with another move forecast before the end of this year. Fischer said low rates had been less successful than the central bank had expected, though they had done a very good job of encouraging employment. “The miracle of this recovery is the crisis did not generate long-term, massive unemployment. We’re basically back to something close to full employment,” he added.
Fed's Fischer Sees Low Unemployment Lifting Wages, Inflation
Pres Vladimir Putin said Russia is open to extending a deal with OPEC to curb oil supplies to the end of 2018, though he'll wait to make a decision until nearer the expiry of the existing pact in Mar. The comments are the strongest signal yet that the Kremlin is willing to redouble efforts to lift global energy prices, coming as Putin prepares to welcome King Salman Bin Abdulaziz of Saudi Arabia to Russia for the first time this week. OPEC Secretary-General Mohammad Barkindo called them a “very strong endorsement” of the deal. “Based on the realities in Mar 2018, we will make our decision, but I do not rule out that we may extend” the agreement, Putin said. “If we speak about a possible extension, then of course, it should be at least until the end of 2018.” Russia, which relies on energy for more than a 1/3 of its budget revenue, reached a historic accord last year with OPEC to cut production, hoping to eliminate a global oversupply. While the nation's economic growth accelerated to the fastest pace in almost 5 years in Q2 amid recovery in crude prices, the supply glut has taken longer than expected to clear. Growing US shale output means the market could return to surplus again next year if the producers were to reverse their curbs.
Putin Says Oil Pact With OPEC May Be Extended to End of 2018
Oil prices fell, pulled down by caution that rising US crude output could scupper a rally that lasted for most of Q3. West Texas Intermediate crude futures were at $50.40 per barrel, down 2¢ from their last close, falling below $50 earlier in the session. The drop came amid worries that a Q3 rally that lifted Brent to mid-2015 highs by late Sep had been overdone. A resumption in output at Libya's Sharara oilfield added to the concerns. The Sharara oilfield restarted today. It had been producing more than 230K barrels per day (bpd) before armed brigades closed it on Sun. Still, market observers said a rebalancing is well underway, meaning demand is no longer undershooting available supply. The rebalancing is a result of strong consumption & also efforts led by OPEC to cut output by 1.8M bpd in 2017 & the first qtr of next year. OPEC Secretary-General Mohammad Barkindo said he was confident that his organization could restore sustainable stability to markets, while Russian Pres Putin said he did not exclude an extension of the cuts until the end of 2018. But rising oil production in the US, which is not involved in the deal, has prevented prices from climbing further. US output hit 9.55M bpd in late Sep, its highest level since Jul 2017, & drillers added 6 oil rigs in the latest week. Data yesterday from the American Petroleum Institute showed gasoline stocks rising last week by a larger-than-expected 4.9M barrels, with crude stocks dropping by 4.1M barrels.
Oil weak as OPEC aims to offset rising US output
The bulls did have enough strength to take the stock market ahead in a meaningful way. Market breadth was weak, not a good sign. But more data will be coming along with earnings season which is expected to be favorable. The Dow had its 6th straight day of advances (eking out another record today) & has 23K in its sight. However gold, a negative bet on the stock market, inched higher today.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Fed Vice Chair Stanley Fischer, who leaves office this month, continues to expect a tightening US labor market will lift wages & prices even though the process could take longer than anticipated. “I still believe we will have higher inflation,” Fischer said. “The basic mechanism here is unemployment is declining all the time, wages will start going up at some stage.” Fischer will leave a central bank that’s wrestling with a mystery over why price pressures have remained weak despite the lowest levels of unemployment in 16 years. “The experience many of us have, including myself, is you have to wait a long time -- usually longer than you expected to wait -- for something to happen,” said Fischer. “But then, if it’s a very basic force, namely increasing employment, increasing wages, it’ll show up.” Inflation measured by the Fed's preferred price gauge was 1.4% in the 12 months thru Aug & has been below its 2% target for most of the past 5 years. The jobless rate stood at 4.4% in Aug. The Fed slashed interest rates to zero during the financial crisis & has only hiked 4 times since beginning its tightening cycle in Dec 2015, including in Mar & Jun, with another move forecast before the end of this year. Fischer said low rates had been less successful than the central bank had expected, though they had done a very good job of encouraging employment. “The miracle of this recovery is the crisis did not generate long-term, massive unemployment. We’re basically back to something close to full employment,” he added.
Fed's Fischer Sees Low Unemployment Lifting Wages, Inflation
Pres Vladimir Putin said Russia is open to extending a deal with OPEC to curb oil supplies to the end of 2018, though he'll wait to make a decision until nearer the expiry of the existing pact in Mar. The comments are the strongest signal yet that the Kremlin is willing to redouble efforts to lift global energy prices, coming as Putin prepares to welcome King Salman Bin Abdulaziz of Saudi Arabia to Russia for the first time this week. OPEC Secretary-General Mohammad Barkindo called them a “very strong endorsement” of the deal. “Based on the realities in Mar 2018, we will make our decision, but I do not rule out that we may extend” the agreement, Putin said. “If we speak about a possible extension, then of course, it should be at least until the end of 2018.” Russia, which relies on energy for more than a 1/3 of its budget revenue, reached a historic accord last year with OPEC to cut production, hoping to eliminate a global oversupply. While the nation's economic growth accelerated to the fastest pace in almost 5 years in Q2 amid recovery in crude prices, the supply glut has taken longer than expected to clear. Growing US shale output means the market could return to surplus again next year if the producers were to reverse their curbs.
Putin Says Oil Pact With OPEC May Be Extended to End of 2018
As Pres Trump & Rep congressional leaders
tout their tax reform plan, Sen Mike Lee, a leading
conservative, plans to fight for one of the more controversial pockets
of the plan—eliminating the state & local tax deductions & keeping
the US deficit in check. “I do support it [eliminating state and local loophole],
otherwise we are just rewarding those states that have higher tax
burdens,” Lee said. Lee, a key GOP ally for the Trump administration, is taking the
opposite side of some of his Rep colleagues who said last week that the tax reform plan must keep the
state & local tax deduction. New York, along with New Jersey & California, are considered
high-tax states that give taxpayers a break with the deduction. About 1/3 of the value of the tax break, which in total is estimated to
be $1.3T in savings, is used by filers in these states according
to a study by the nonpartisan Center for a Responsible Federal Budget. After the immediate outcry, the White House appeared to scale
back the promise of dropping the deduction as a way to pay for its tax
reform plan. National Economic Council director Gary Cohn said the issue
"is not a red line" in the upcoming talks with Congress on tax reform. When asked if he would support a bill that didn't eliminate the
loophole, Lee said, “You know, I’m trying to be careful not to draw any
lines in the sand and to not say ‘if it does have this I will vote for
it and if it isn’t in there I won’t support it’” Additionally, Lee is also worried that the Rep plan could add to the deficit & stunt US economic growth. “I think everybody is concerned about [adding to the deficit].
Everybody doesn’t want to put the federal government in a worse
position. Everyone is worried about that. That’s one of the central
questions behind this. How does this impact economic growth? How does it
impact revenue? To what extent do those impacts have on the offset of
economic growth?,” Lee said. Lee is not alone in his concerns about the potential balloon
impact on the deficit. Last week, Sen Bob Corker said that he would not support the final
tax bill if it adds to the deficit. “But if it looks like to me, Chuck, we're adding one penny to the
deficit, I am not going to be for it, OK?... I'm sorry. It is the
greatest threat to our nation. The greatest threat to our nation." The impact to the deficit may be the wild card for tax reform. The nonpartisan Tax Policy Center released its analysis on the 9 page
Republican tax plan & found that the tax framework would add $2.4T to the deficit & the federal debt would rise by $7.2T
over a decade.
Tax reform debate dividing GOP's key players
Oil prices fell, pulled down by caution that rising US crude output could scupper a rally that lasted for most of Q3. West Texas Intermediate crude futures were at $50.40 per barrel, down 2¢ from their last close, falling below $50 earlier in the session. The drop came amid worries that a Q3 rally that lifted Brent to mid-2015 highs by late Sep had been overdone. A resumption in output at Libya's Sharara oilfield added to the concerns. The Sharara oilfield restarted today. It had been producing more than 230K barrels per day (bpd) before armed brigades closed it on Sun. Still, market observers said a rebalancing is well underway, meaning demand is no longer undershooting available supply. The rebalancing is a result of strong consumption & also efforts led by OPEC to cut output by 1.8M bpd in 2017 & the first qtr of next year. OPEC Secretary-General Mohammad Barkindo said he was confident that his organization could restore sustainable stability to markets, while Russian Pres Putin said he did not exclude an extension of the cuts until the end of 2018. But rising oil production in the US, which is not involved in the deal, has prevented prices from climbing further. US output hit 9.55M bpd in late Sep, its highest level since Jul 2017, & drillers added 6 oil rigs in the latest week. Data yesterday from the American Petroleum Institute showed gasoline stocks rising last week by a larger-than-expected 4.9M barrels, with crude stocks dropping by 4.1M barrels.
Oil weak as OPEC aims to offset rising US output
The bulls did have enough strength to take the stock market ahead in a meaningful way. Market breadth was weak, not a good sign. But more data will be coming along with earnings season which is expected to be favorable. The Dow had its 6th straight day of advances (eking out another record today) & has 23K in its sight. However gold, a negative bet on the stock market, inched higher today.
Dow Jones Industrials
No comments:
Post a Comment