Dow went up 11, advancers ahead of decliners 4-3 & NAZ added 3. The MLP index was up pennies in the 285 & the REIT index rose 1+ to 355. Junk bond funds were a tad lower & Treasuries clawed their way higher. Oil did little & gold lost 2.
AMJ (Alerian MLP Index tracking fund)
Federal Reserve Bank of Chicago Pres Charles Evans said there was room for an "honest discussion" later in 2017 on whether it was the right time to raise interest rates, suggesting another hike by year-end wasn't a done deal. He also said the Fed shouldn't necessarily be worried if annual inflation exceeded the central bank's 2% target, because it has been running below that level for so long. "We should not fear 2.5% inflation," Evans said. The Fed's preferred annual inflation gauge, the personal-consumption expenditures index, read 1.4% in Aug. The Fed has raised rates by qtr percentage point increments 4 times since late 2015, most recently in Jun to 1-1.25%, after keeping them near zero for 7 years. It held rates steady in Sep, but announced a plan to gradually shrink its massive holdings of bonds. Evans also said that the fundamentals of the US economy were strong, with wages starting to pick up & added that the ultra-low jobless rate could fall further. "Global growth has really solidified," which has helped the U.S. economy, he added. "I suspect the wage story is improving." The US shed 33K jobs in Sep, the first loss in 7 years. However, the figure was largely dismissed by economists & financial markets because the jobs picture was distorted by Hurricane Harvey & Irma, which hit in early Sep. Other aspects of the report suggested underlying strength in the economy. The jobless rate was 4.2% in Sep, the lowest since 2001 & average hourly wages increased 2.9% from their year-earlier level. Evans said his estimate for the natural rate of unemployment for the US economy was around 4.5%, but added that the jobless rate could fall further from its current level.
Each year, taxpayers subsidize America's homeowners by roughly $70B, with the benefits flowing disproportionately to coastal areas with high incomes & pricey homes, from NY & DC to Los Angeles & San Francisco. The subsidy for homeowners comes in the form of a deduction from their taxes for the interest they pay on their mortgages. An affluent New Yorker, for example, would have saved an average of $3694 in 2015 & in metro Los Angeles, the deduction was worth an average of $4568, in San Francisco still more: $5500. Under Pres Trump's tax proposal, some Americans would likely be steered away from this tax break because Trump's plan would double the standard deduction, which taxpayers can take if they don't itemize deductions. The doubled standard deduction could exceed the savings many receive now from itemizing their expenses for housing, state & local taxes & related costs. The Trump plan would also eliminate many existing itemized deductions, including those for state & local taxes, so that some people who now itemize might end up paying more. The new proposal would essentially marginalize the use of the mortgage interest deduction, which is the government's primary form of direct housing assistance: It distributes 3 times more money this way than it does in the form of vouchers for impoverished renters. Trump officials say their tax plan is designed to benefit the middle class. Yet it's not clear from the scant details of the framework released so far how many families would enjoy lower tax bills and how many would face higher bills. Even though the Trump measure would preserve the mortgage interest deduction, it's confronting resistance from the real estate industry because it would likely reduce the number of people seeking the deduction. Estimates by the real estate firm Zillow suggest that someone buying a home worth at least $305K would still qualify for the deduction. But under Trump's plan, only homes worth $800K or more would receive the deduction which has led the industry to push back against the plan. The National Association of Homebuilders says it might be open to eliminating the mortgage interest deduction so long as homeownership was protected elsewhere in the tax code thru the use of a possibly more generous tax credit. A credit, which is subtracted from the amount of tax someone owes, is more generous than a deduction, which reduces the amount of income to be taxed. The advantage of moving to a credit is that more homeowners would be eligible to claim it than the 34M who receive the mortgage interest deduction, said the homebuilder association. But there are no signs that the idea of a credit has gained traction within Congress or the White House. Trump proclaimed in June that his tax plan would accelerate economic growth to ensure that "hard-working Americans enjoy a fair chance at becoming homeowners."
Oil production by the OPEC cartel increased again Sep to a level that's beyond the limit the group had agreed on in order to push up prices. The organization said its daily output rose 88K barrels during the month to 32.75M barrels overall. Since Nov, the cartel has been trying to keep production within 32.5M barrels. The increase was mainly due to a ramp-up in production in Libya, Nigeria & Iraq, whose output had been stymied by conflicts in earlier months. Venezuela's production fell sharply amid its financial crisis. In its monthly report, OPEC also increased its forecasts for global oil demand this year & next year, mainly due to stronger growth in major economies like the US, Europe & China.
Traders would like to take stocks higher, but have decided to wait for the Fed minutes & early indications on earnings. This remains a very bullish stock market that is dependent on tax reform..
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 50.90 | -0.02 | -0.0% |
| GC=F | Gold | 1,291.90 | -1.90 | -0.2% |
Federal Reserve Bank of Chicago Pres Charles Evans said there was room for an "honest discussion" later in 2017 on whether it was the right time to raise interest rates, suggesting another hike by year-end wasn't a done deal. He also said the Fed shouldn't necessarily be worried if annual inflation exceeded the central bank's 2% target, because it has been running below that level for so long. "We should not fear 2.5% inflation," Evans said. The Fed's preferred annual inflation gauge, the personal-consumption expenditures index, read 1.4% in Aug. The Fed has raised rates by qtr percentage point increments 4 times since late 2015, most recently in Jun to 1-1.25%, after keeping them near zero for 7 years. It held rates steady in Sep, but announced a plan to gradually shrink its massive holdings of bonds. Evans also said that the fundamentals of the US economy were strong, with wages starting to pick up & added that the ultra-low jobless rate could fall further. "Global growth has really solidified," which has helped the U.S. economy, he added. "I suspect the wage story is improving." The US shed 33K jobs in Sep, the first loss in 7 years. However, the figure was largely dismissed by economists & financial markets because the jobs picture was distorted by Hurricane Harvey & Irma, which hit in early Sep. Other aspects of the report suggested underlying strength in the economy. The jobless rate was 4.2% in Sep, the lowest since 2001 & average hourly wages increased 2.9% from their year-earlier level. Evans said his estimate for the natural rate of unemployment for the US economy was around 4.5%, but added that the jobless rate could fall further from its current level.
Fed's Evans hints new rate hike this year isn't a given
Each year, taxpayers subsidize America's homeowners by roughly $70B, with the benefits flowing disproportionately to coastal areas with high incomes & pricey homes, from NY & DC to Los Angeles & San Francisco. The subsidy for homeowners comes in the form of a deduction from their taxes for the interest they pay on their mortgages. An affluent New Yorker, for example, would have saved an average of $3694 in 2015 & in metro Los Angeles, the deduction was worth an average of $4568, in San Francisco still more: $5500. Under Pres Trump's tax proposal, some Americans would likely be steered away from this tax break because Trump's plan would double the standard deduction, which taxpayers can take if they don't itemize deductions. The doubled standard deduction could exceed the savings many receive now from itemizing their expenses for housing, state & local taxes & related costs. The Trump plan would also eliminate many existing itemized deductions, including those for state & local taxes, so that some people who now itemize might end up paying more. The new proposal would essentially marginalize the use of the mortgage interest deduction, which is the government's primary form of direct housing assistance: It distributes 3 times more money this way than it does in the form of vouchers for impoverished renters. Trump officials say their tax plan is designed to benefit the middle class. Yet it's not clear from the scant details of the framework released so far how many families would enjoy lower tax bills and how many would face higher bills. Even though the Trump measure would preserve the mortgage interest deduction, it's confronting resistance from the real estate industry because it would likely reduce the number of people seeking the deduction. Estimates by the real estate firm Zillow suggest that someone buying a home worth at least $305K would still qualify for the deduction. But under Trump's plan, only homes worth $800K or more would receive the deduction which has led the industry to push back against the plan. The National Association of Homebuilders says it might be open to eliminating the mortgage interest deduction so long as homeownership was protected elsewhere in the tax code thru the use of a possibly more generous tax credit. A credit, which is subtracted from the amount of tax someone owes, is more generous than a deduction, which reduces the amount of income to be taxed. The advantage of moving to a credit is that more homeowners would be eligible to claim it than the 34M who receive the mortgage interest deduction, said the homebuilder association. But there are no signs that the idea of a credit has gained traction within Congress or the White House. Trump proclaimed in June that his tax plan would accelerate economic growth to ensure that "hard-working Americans enjoy a fair chance at becoming homeowners."
How Trump tax plan would alter mortgage interest deduction
Oil production by the OPEC cartel increased again Sep to a level that's beyond the limit the group had agreed on in order to push up prices. The organization said its daily output rose 88K barrels during the month to 32.75M barrels overall. Since Nov, the cartel has been trying to keep production within 32.5M barrels. The increase was mainly due to a ramp-up in production in Libya, Nigeria & Iraq, whose output had been stymied by conflicts in earlier months. Venezuela's production fell sharply amid its financial crisis. In its monthly report, OPEC also increased its forecasts for global oil demand this year & next year, mainly due to stronger growth in major economies like the US, Europe & China.
OPEC oil production grows again beyond its limit
Traders would like to take stocks higher, but have decided to wait for the Fed minutes & early indications on earnings. This remains a very bullish stock market that is dependent on tax reform..
Dow Jones Industrials
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