Dow soared 160 (closing near the highs), advancers slightly above decliners & NAZ was up only a fraction. The MLP index gave back another 4+ to the 473 & the REIT index was off chump change to the 355s. Junk bond funds fluctuated & Treasuries declined. Oil went up pennies in the 51s (much more on oil below) & gold lost a mere 3 (while stocks rallied) to 1282.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.22869202212788642)
The US economy picked up steam with only modest inflation from Sep thru early Oct, as some companies expected a tight labor market would exacerbate hurricane rebuilding efforts, a Federal Reserve survey showed. The central bank's Beige Book economic report, based on anecdotal information collected by the 12 regional Fed banks thru Oct 6, said economic activity increased even amid “major disruptions” across the South from hurricanes Harvey & Irma. Still, price pressures were described as “modest.” “Labor markets were widely described as tight” & worker shortages in certain sectors “were also restraining business growth,” the report showed. “Despite widespread labor tightness, the majority of districts reported only modest to moderate wage pressures.” Wage pressures were starting to build in some industries, including transportation & construction. Such strong demand for workers was beginning to push some employers to add incentives to entice new hires & keep existing staff. “Growing use of sign-on bonuses, overtime, and other non-wage efforts to attract and retain workers were also reported,” the Fed said. The report offered a possible explanation why such perks weren't resulting in higher overall inflation: Companies were reluctant to pass on higher costs to their customers. “Several districts noted increased manufacturing input costs, but in most cases these weren’t passed through to selling prices,” according to the report. The report characterized employment growth as “modest on balance,” retail spending as rising “slowly” & loan demand as “generally stable to modestly higher.”
Fed Sees Economy Advancing Amid ‘Widespread Labor Tightness’
Treasury Sec Steve Mnuchin said that the Rep tax plan will include breaks for the wealthy, a rhetorical reversal that contradicts Pres Trump's promises that the rich won't enjoy a net tax cut. The top 20% pay 95% of the taxes & the top 10% pay 81% of the taxes,” Mnuchin said. “So when you’re cutting taxes across the board, it’s very hard not to give tax cuts to the wealthy with tax cuts to the middle class. The math, given how much you are collecting, is just hard to do.” His views on how wealthy Americans would fare under tax legislation have evolved over the past year. Last Nov, he said that Trump wanted “no absolute tax cut for the upper class,” which prompted Dems to label that promise the “Mnuchin Rule.” In the ensuing months, Mnuchin softened that promise in public remarks, in Jun, he said that he had “walked it back.” Trump, however, said as recently as Sep 14 that his tax plan is “not to benefit the wealthy. This is to benefit the middle class.” Mnuchin's acknowledgement that the wealthy would benefit from the tax plan is a gift to Dems, who have blasted the emerging proposal as a giveaway for the rich, a message that Trump & Reps have struggled all year to counter. The GOP framework calls for trillions of dollars in tax cuts, 80% of which would flow to the top 1%, according to a preliminary analysis by the nonpartisan Tax Policy Center. Rep leaders have dismissed that study by noting that it relied on details from an earlier GOP plan. They say their latest framework is incomplete & that they have yet to fill in details that would benefit the middle class, such as how much to raise the child tax credit. Mnuchin also defended the framework's call for repeal of the estate tax, which applies to estates worth at least $5.49M per person. “Why should people have to pay taxes again when they die?” he said. The Treasury chief gave an “absolute guarantee” that Trump would sign a tax bill by the end of 2017.
Mnuchin Says It’s ‘Very Hard Not to Give Tax Cuts to the Wealthy’
OPEC is leaning towards extending a deal with Russia & other non-members to cut oil supply for a further 9 months, 4 OPEC sources said, although stronger-than-expected demand growth may allow the group to delay a decision until early next year. OPEC, plus Russowia & 9 other producers are cutting oil output by about 1.8M barrels per day until Mar 2018, in an attempt to eradicate a supply glut that has weighed on prices. After slow initial progress, OPEC is more confident the cut is working. Oil prices are near a 2-year high, supported by falling stocks, strong global demand, a slowdown in US shale output & high overall adherence to supply pledges. 3 OPEC sources said keeping the curbs in place until the end of 2018 was a likely outcome, while a 4th said an extension of 6 to 9 months would be needed to remove all excess oil in storage. “If demand growth is performing very well, then the decision might be postponed till early next year,” one source said. “But there is still a big chance for it to be taken in November.” Discussions among producers are continuing in the run-up to the next OPEC meeting to set oil policy on Nov 30. Before then, OPEC's board of governors, who do not decide policy, will meet in Vienna on Oct 23-24 & are likely informally to discuss options & scenarios. If a decision is not announced in Nov, OPEC & its allies could meet in early 2018. Usually, OPEC holds each year's first policy-setting meeting in May or Jun. OPEC wants to reduce the level of oil stocks in developed economies to the 5-year average & the latest figures show this is in progress but not yet complete. In Aug, OPEC said such stocks stood at 2.996B barrels, 171M barrels above the 5-year average, reducing the excess from 340M barrels in Jan. Deepening the cut, which OPEC decided against when it last met in May, is not considered likely this time since some producers would struggle to reduce output further. Russian Pres Putin said on Oct 4 the deal could be extended to the end of 2018, although OPEC ministers have not given specific commitments on doing so. A strengthening of the oil market has reduced the urgency of further measures. With Brent crude trading at $58 a barrel, it is within sight of the $60 mark that Saudi Arabia considers a good level. OPEC & other forecasters have been raising their projections for growth in global oil demand. The latest monthly OPEC report pointed to a supply deficit on the world market next year if OPEC keeps output at the Sep level. Kuwait's oil minister said on Sun the market was moving in the right direction & it was too early to decide on extending the supply cut. But OPEC sources say prolonging the agreement, with 9 months as the timeframe, is likely. “My belief is that the ministers will renew until stocks go back to normal,” another source said.
Following negotiations that lasted for more than a month, Sen. Lamar Alexander & Sen. Patty Murray have reached a deal to stabilize the insurance markets, just 2 weeks before the ObamaCare open enrollment period is set to begin. The short-term deal was based on bipartisan hearings before the Senate Health, Education, Labor & Pensions Committee, & engaged nearly 60 senators, according to Sen. Alexander. While Trump initially indicated support for a deal yesterday, today the pres said he would not get behind any plan that proposes a bailout to insurance companies. Other members of the GOP are criticizing the deal because they are still pushing for a full repeal & replace measure.
Steve Mnuchin said that tax reform is key to extending the stock market rally. That legislation to is scheduled to follow ObamaCare reform which is very iffy. Never a dull moment in DC with Trump making his presence known. Today traders threw caution to the wind & are not worrying about problems Meanwhile, gold, the main contrary investment to stocks, had only limited selling. Additionally, market breadth was far from impressive & NAZ (representing tech stocks) lagged far behind while IBM stock had its biggest gain in years. The rally may be shakier than the bulls make it out to be.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US economy picked up steam with only modest inflation from Sep thru early Oct, as some companies expected a tight labor market would exacerbate hurricane rebuilding efforts, a Federal Reserve survey showed. The central bank's Beige Book economic report, based on anecdotal information collected by the 12 regional Fed banks thru Oct 6, said economic activity increased even amid “major disruptions” across the South from hurricanes Harvey & Irma. Still, price pressures were described as “modest.” “Labor markets were widely described as tight” & worker shortages in certain sectors “were also restraining business growth,” the report showed. “Despite widespread labor tightness, the majority of districts reported only modest to moderate wage pressures.” Wage pressures were starting to build in some industries, including transportation & construction. Such strong demand for workers was beginning to push some employers to add incentives to entice new hires & keep existing staff. “Growing use of sign-on bonuses, overtime, and other non-wage efforts to attract and retain workers were also reported,” the Fed said. The report offered a possible explanation why such perks weren't resulting in higher overall inflation: Companies were reluctant to pass on higher costs to their customers. “Several districts noted increased manufacturing input costs, but in most cases these weren’t passed through to selling prices,” according to the report. The report characterized employment growth as “modest on balance,” retail spending as rising “slowly” & loan demand as “generally stable to modestly higher.”
Fed Sees Economy Advancing Amid ‘Widespread Labor Tightness’
Treasury Sec Steve Mnuchin said that the Rep tax plan will include breaks for the wealthy, a rhetorical reversal that contradicts Pres Trump's promises that the rich won't enjoy a net tax cut. The top 20% pay 95% of the taxes & the top 10% pay 81% of the taxes,” Mnuchin said. “So when you’re cutting taxes across the board, it’s very hard not to give tax cuts to the wealthy with tax cuts to the middle class. The math, given how much you are collecting, is just hard to do.” His views on how wealthy Americans would fare under tax legislation have evolved over the past year. Last Nov, he said that Trump wanted “no absolute tax cut for the upper class,” which prompted Dems to label that promise the “Mnuchin Rule.” In the ensuing months, Mnuchin softened that promise in public remarks, in Jun, he said that he had “walked it back.” Trump, however, said as recently as Sep 14 that his tax plan is “not to benefit the wealthy. This is to benefit the middle class.” Mnuchin's acknowledgement that the wealthy would benefit from the tax plan is a gift to Dems, who have blasted the emerging proposal as a giveaway for the rich, a message that Trump & Reps have struggled all year to counter. The GOP framework calls for trillions of dollars in tax cuts, 80% of which would flow to the top 1%, according to a preliminary analysis by the nonpartisan Tax Policy Center. Rep leaders have dismissed that study by noting that it relied on details from an earlier GOP plan. They say their latest framework is incomplete & that they have yet to fill in details that would benefit the middle class, such as how much to raise the child tax credit. Mnuchin also defended the framework's call for repeal of the estate tax, which applies to estates worth at least $5.49M per person. “Why should people have to pay taxes again when they die?” he said. The Treasury chief gave an “absolute guarantee” that Trump would sign a tax bill by the end of 2017.
Mnuchin Says It’s ‘Very Hard Not to Give Tax Cuts to the Wealthy’
OPEC is leaning towards extending a deal with Russia & other non-members to cut oil supply for a further 9 months, 4 OPEC sources said, although stronger-than-expected demand growth may allow the group to delay a decision until early next year. OPEC, plus Russowia & 9 other producers are cutting oil output by about 1.8M barrels per day until Mar 2018, in an attempt to eradicate a supply glut that has weighed on prices. After slow initial progress, OPEC is more confident the cut is working. Oil prices are near a 2-year high, supported by falling stocks, strong global demand, a slowdown in US shale output & high overall adherence to supply pledges. 3 OPEC sources said keeping the curbs in place until the end of 2018 was a likely outcome, while a 4th said an extension of 6 to 9 months would be needed to remove all excess oil in storage. “If demand growth is performing very well, then the decision might be postponed till early next year,” one source said. “But there is still a big chance for it to be taken in November.” Discussions among producers are continuing in the run-up to the next OPEC meeting to set oil policy on Nov 30. Before then, OPEC's board of governors, who do not decide policy, will meet in Vienna on Oct 23-24 & are likely informally to discuss options & scenarios. If a decision is not announced in Nov, OPEC & its allies could meet in early 2018. Usually, OPEC holds each year's first policy-setting meeting in May or Jun. OPEC wants to reduce the level of oil stocks in developed economies to the 5-year average & the latest figures show this is in progress but not yet complete. In Aug, OPEC said such stocks stood at 2.996B barrels, 171M barrels above the 5-year average, reducing the excess from 340M barrels in Jan. Deepening the cut, which OPEC decided against when it last met in May, is not considered likely this time since some producers would struggle to reduce output further. Russian Pres Putin said on Oct 4 the deal could be extended to the end of 2018, although OPEC ministers have not given specific commitments on doing so. A strengthening of the oil market has reduced the urgency of further measures. With Brent crude trading at $58 a barrel, it is within sight of the $60 mark that Saudi Arabia considers a good level. OPEC & other forecasters have been raising their projections for growth in global oil demand. The latest monthly OPEC report pointed to a supply deficit on the world market next year if OPEC keeps output at the Sep level. Kuwait's oil minister said on Sun the market was moving in the right direction & it was too early to decide on extending the supply cut. But OPEC sources say prolonging the agreement, with 9 months as the timeframe, is likely. “My belief is that the ministers will renew until stocks go back to normal,” another source said.
OPEC leans towards nine-month extension of oil supply cut - sources
Following negotiations that lasted for more than a month, Sen. Lamar Alexander & Sen. Patty Murray have reached a deal to stabilize the insurance markets, just 2 weeks before the ObamaCare open enrollment period is set to begin. The short-term deal was based on bipartisan hearings before the Senate Health, Education, Labor & Pensions Committee, & engaged nearly 60 senators, according to Sen. Alexander. While Trump initially indicated support for a deal yesterday, today the pres said he would not get behind any plan that proposes a bailout to insurance companies. Other members of the GOP are criticizing the deal because they are still pushing for a full repeal & replace measure.
Trump slams new bipartisan health care deal: What's in it?
Steve Mnuchin said that tax reform is key to extending the stock market rally. That legislation to is scheduled to follow ObamaCare reform which is very iffy. Never a dull moment in DC with Trump making his presence known. Today traders threw caution to the wind & are not worrying about problems Meanwhile, gold, the main contrary investment to stocks, had only limited selling. Additionally, market breadth was far from impressive & NAZ (representing tech stocks) lagged far behind while IBM stock had its biggest gain in years. The rally may be shakier than the bulls make it out to be.
Dow Jones Industrials
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