Thursday, November 30, 2017

Higher markets ahead of Senate tax vote

Dow jumped up 140 (yet another record), advancers over decliners 2-1 & NAZ recovered 36 after yesterday's selloff.  The MLP index rebounded 3+ to the 255s & the REIT index was even in the 358s.  Junk bond funds were mixed & Treasuries slid lower.  Oil fluctuated in the 57s & gold was off 3 to 1283.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil57.44

GC=FGold   1,282.90

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Stocks gained, led by energy producers, as OPEC & Russia said they are ready to extend cuts to crude output.  The Dow climbed past 24K, while the S&P 500 was poised for its longest monthly winning streak since 2007 as the Senate tax bill headed for a marathon debate.  The biggest tech stocks rebounded from their worst selloff in more than a year.  The € strengthened along with the £ as Brexit negotiators moved closer to a divorce agreement.  Treasury yields slipped, capping the least turbulent month for 10-year notes in almost 43 decades.  Progress over tax reform this week had prompted traders to rotate out of tech stocks, the year's best performers, & switch to firms seen benefiting most from a potential reduction in the cor tax rate such as banks.  Technology companies are expected to see little boost, as the industry's average effective tax rate of 18.5% is already lower than the new level of 20% proposed by Reps.  An up-or-down vote in the Senate could happen before the end of this week.  In a sign of the cloudy outlook for the bill, Rep Senator Susan Collins said it “would be very difficult” to support the measure in its current form.  Data showed US consumer spending settled back in Oct to a still-decent pace after the biggest increase since 2009, as a post-storm surge in auto sales cooled.  Incomes remained robust & inflation showed progress toward the Fed's goal.  The Stoxx Europe 600 was little changed.  Earlier, Hong Kong &South Korean-listed shares tumbled, while Japanese stocks gained.  South Korea's won slid after its central bank said it would eep an accommodative policy stance after raising interest rates for the first time since 2011.

U.S. Stocks Rise as Crude Climbs on OPEC Outlook: Markets Wrap

US consumer spending settled back in Oct to a still-decent pace after the biggest increase since 2009, as a post-storm surge in auto sales cooled.  Incomes remained robust & inflation showed progress toward the Fed's goal.  Purchases rose 0.3%, matching the projection, after a revised 0.9% advance in Sep, Commerce Dept figures showed.  Incomes grew 0.4% for a 2nd month, marking the best back-to-back gains since early 2017.  The figures, including the biggest rise in inflation-adjusted disposable income in 5 months, indicate American consumers are likely to drive growth this qtr as a pickup in business investment also helps lift demand.  Inflation data in the report may add further support for a Fed interest-rate increase in Dec that's already widely anticipated by investors.  The central bank's preferred price gauge, excluding food & energy, rose 0.2% in Oct from the prior month.  The Sep monthly gain was revised upward to 0.2% from 0.1%, making for the fastest consecutive increases since January & Feb.  While the latest figures indicate progress toward the Fed's 2% goal, inflation remains below target on an annual basis, as it has for most of the past 5 years.  Including all items, prices rose 1.6% from a year earlier following an upwardly revised 1.7% & the core measure was up 1.4% for a 2nd month.  Central bankers have said persistently low inflation is somewhat of a mystery & taken note of sluggish wage gains amid a tightening labor market.  Even so, Fed Chair Janet Yellen reiterated Wed that she expects inflation will gradually rebound to the Fed's target as transitory factors dissipate.

U.S. Consumer Spending Cools; Inflation May Encourage Fed

Fewer people sought unemployment benefits last week, a sign of strength in the job market.  Weekly applications for unemployment aid slipped 2K to a seasonally adjusted 238K, the Labor Dept said.  That's near a 4-decade low that was reached last month.  The 4-week average, a less volatile measure, increased 2K to 242K.  The number receiving aid increased 42K to 1.96M, also near a 4-decade low. The data comes after other evidence that the economic recovery from the recession remains strong in its 8th year.  The unemployment rate has fallen to a 17-year low of 4.1% & growth reached 3.3% at an annual rate in Q3, the fastest in 3years.  Hiring has been steady, despite interruptions from Hurricanes Harvey & Irma.  Employers added 261K jobs in Oct, a healthy gain after hiring fell in Sep because of the storms.  Applications are a proxy for layoffs.  Any figure below 300K indicates that hiring is likely healthy & employers are confident enough in future demand to keep their workers.  With unemployment so low, many companies say they are struggling to find qualified workers to fill jobs.  With so few workers available, companies are even less likely to lay off employees.

Applications for US jobless aid tick down to 238,000

The drama increases.  Stocks are rising as traders await to hear more about the fate of the tax bill.  Reps are sort of coming together with the realization that that need to get a bill passed.  And time is short given the announced deadlines.  Even with higher levels of drama, investors are optimistic & bidding stocks up.  The bulls now have their eyes on going up to 25K.

Dow Jones Industrials


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