Dow rose all of to another record, advancers over decliners about 3-2 & NAZ added 22. The MLP index was up 2+ to the 271s & the REIT index gained 4+ to the 357s. Junk bond funds were mixed & Treasuries went higher. Oil shot up to the 57s (more below on surging oil prices) & gold jumped 12 to 1281.
AMJ (Alerian MLP Index tracking fund)
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In a world where the underlying growth potential of the economy is hard to pin down, targeting a price level, rather than a precise, 2% inflation goal, could be effective, Federal Reserve Bank of San Francisco Pres John Williams argues in new research. Williams says officials don't know how fast the economy is capable of growing. As a result, it makes sense to set monetary policy using a method that doesn't rely heavily on estimates of potential output, which is shaped by labor force growth & hard-to-predict productivity. Price-level targeting fits the bill & could give central bankers an extra safety cushion with interest rates close to zero. “It’s a powerful way to cope with the zero lower bound, but it also has advantages even away from that,” Williams said of the strategy. Because of the uncertain output gap, “there’s this other argument for following price-level targeting all the time that is separate from the lower bound issue.” The Fed currently aims for 2% inflation, a goal that it says is symmetrical. That means policy makers are equally unhappy if they miss by undershooting or overshooting. Still, they don't try to make up lost ground by running inflation above target if they've been under the goal for a prolonged period, as is currently the US case. Price-level targeting aims for an inflation goal on average over a given time period, & Williams has suggested for a while that his colleagues consider switching to such a regime. The new paper fleshes out his argument.
Fed's Williams Lays Out Case for Considering Price Level Target
AMJ (Alerian MLP Index tracking fund)
In a world where the underlying growth potential of the economy is hard to pin down, targeting a price level, rather than a precise, 2% inflation goal, could be effective, Federal Reserve Bank of San Francisco Pres John Williams argues in new research. Williams says officials don't know how fast the economy is capable of growing. As a result, it makes sense to set monetary policy using a method that doesn't rely heavily on estimates of potential output, which is shaped by labor force growth & hard-to-predict productivity. Price-level targeting fits the bill & could give central bankers an extra safety cushion with interest rates close to zero. “It’s a powerful way to cope with the zero lower bound, but it also has advantages even away from that,” Williams said of the strategy. Because of the uncertain output gap, “there’s this other argument for following price-level targeting all the time that is separate from the lower bound issue.” The Fed currently aims for 2% inflation, a goal that it says is symmetrical. That means policy makers are equally unhappy if they miss by undershooting or overshooting. Still, they don't try to make up lost ground by running inflation above target if they've been under the goal for a prolonged period, as is currently the US case. Price-level targeting aims for an inflation goal on average over a given time period, & Williams has suggested for a while that his colleagues consider switching to such a regime. The new paper fleshes out his argument.
Fed's Williams Lays Out Case for Considering Price Level Target
Economic growth generated by GOP tax cuts won't be
enough by itself to wipe out the federal budget deficit, top House tax
writer Rep Kevin Brady said. "We know tax reform done right
can grow the economy in a big way. But that alone won't get us back to a
balanced budget," said the chairman of the House Ways & Means Committee. "You have to eliminate dozens, if not hundreds of
provisions out of the code to lower those rates and move us back to a
balanced budget." "Growth alone, I acknowledge, won't get us back there," Brady added on. The Trump administration has suggested previously the proposed tax cuts wll be paid for entirely thru economic growth & the cuts would not increase the budget deficit. Critics counter by
saying that Reps can't count on the economic growth to pay for
the tax cuts, & that the GOP package as designed would add to the
deficit & put the federal budget further out of balance. The House Ways & Means Committee is revising its tax reform plan today to help ease some Rep lawmakers' concerns about the bill, which was unveiled last week. House Speaker Paul Ryan said that he expects the broad outlines of the bill to remain
the same. Reps are aiming to pass their tax legislation by
Thanksgiving. Brady also said he's looking to close a loophole used by hedge funds by increasing to 2 years "the holding period on carried interest."
This would make the tax rule less profitable to exercise. The provision,
being utilized in the short term by hedge funds, was designed to reward
longer-term investments like real estate.
Tax cut-driven economic growth alone won't wipe out the deficit, top House tax writer Brady admits
The Fed's point-person with stock traders appealed to Congress to "do no harm" as it considers slicing back regulations put in place to protect the US economy in the wake of the financial crisis. NY Fed Pres William Dudley, who announced today he would retire earlier than expected in mid-2018, said that while there were some rules that could be adjusted the main tenets of stronger capital, liquidity & clearing standards must be protected. Pres Trump & the Rep-controlled Congress aim to loosen requirements on banks ( financial markets in general to free up capital flow & encourage economic growth. But Dudley & other regulators have warned not to go too far in revamping rules & laws put in place to avoid a repetition of the 2007-2009 crisis & deep recession. "As we reflect on potential changes to the U.S. regulatory regime, we should not lose sight of the horrific damage caused by the financial crisis, including the worst recession of our lifetimes and millions of people losing their jobs and homes," said Dudley, a close ally of outgoing Fed Chair Janet Yellen. "We had a woefully inadequate regulatory regime in place, and while it is much better now, there is still work to do," he added. "We should finish the job as quickly as possible, and we should do no harm as we adjust our regulatory regime to make it more efficient."
Fed's Dudley appeals to Congress to 'do no harm'
Oil prices rose 3%, hitting the highest since early Jul 2015, as Saudi Arabia's crown prince cemented his power over the weekend with an anti-corruption crackdown, while the US rig count fell & markets continued to tighten. Brent crude futures were trading $1.86 (3%) higher at $62.46 a barrel. West Texas Intermediate (WTI) crude rose $1.49 (2.7%) to $57.13 a barrel. Both benchmarks are at their highest since early Jul 2015. Saudi Crown Prince Mohammed bin Salman tightened his grip with the arrest of royals, ministers & investors, including billionaire Alwaleed bin Talal & the powerful head of the National Guard, Prince Miteb bin Abdullah. The arrests, which an official said were just "phase one" of the crackdown, are the latest in a series of dramatic steps by Crown Prince Mohammed bin Salman to amass more power for himself at home. The attorney general said detainees had been questioned & "a great deal of evidence" had been gathered. Analysts for now do not see Saudi Arabia, the world's largest oil exporter, changing its policy of boosting crude prices. Prince Mohammed's reforms include a plan to list shares of parts of state-owned oil company Saudi Aramco next year & a higher oil price is seen as beneficial for its market capitalization. Saudi Energy Minister Khalid al-Falih said that while there is "satisfaction" with a production-cutting deal between OPEC & other producers led by Russia, the "job is not done yet." OPEC is expected to extend a cut of around 1.8M barrels per day into the whole of 2018. Nigeria's oil minister said that Nigeria supports an extension of a deal between OPEC, Russia & other non-members to cut oil supply until the end of 2018 "as long as the right terms are on the table" regarding its own participation. Nigeria itself, however, is exempt from the deal. Also boosting oil prices, US energy companies cut 8 oil rigs last week, to 729, in the biggest reduction since May 2016. While supplies are tightening, demand remains strong. Speculators have increased to a record high their bets on gains in the price of Brent.
Oil surges 3%, at highest since mid-2015 on Saudi purge
Stocks had another good day even though there is plenty of uncertainty around the globe. That starts with Saudi Arabia & its crackdown on corruption, whatever. More importantly, Congress has to come up with a new tax system & time is short if it intends on meeting its ambitious deadlines by year-end. The market bulls are felling good. But demand for gold is also on the rise & both are not supposed to go up at the same time.
Dow Jones Industrials
Tax cut-driven economic growth alone won't wipe out the deficit, top House tax writer Brady admits
The Fed's point-person with stock traders appealed to Congress to "do no harm" as it considers slicing back regulations put in place to protect the US economy in the wake of the financial crisis. NY Fed Pres William Dudley, who announced today he would retire earlier than expected in mid-2018, said that while there were some rules that could be adjusted the main tenets of stronger capital, liquidity & clearing standards must be protected. Pres Trump & the Rep-controlled Congress aim to loosen requirements on banks ( financial markets in general to free up capital flow & encourage economic growth. But Dudley & other regulators have warned not to go too far in revamping rules & laws put in place to avoid a repetition of the 2007-2009 crisis & deep recession. "As we reflect on potential changes to the U.S. regulatory regime, we should not lose sight of the horrific damage caused by the financial crisis, including the worst recession of our lifetimes and millions of people losing their jobs and homes," said Dudley, a close ally of outgoing Fed Chair Janet Yellen. "We had a woefully inadequate regulatory regime in place, and while it is much better now, there is still work to do," he added. "We should finish the job as quickly as possible, and we should do no harm as we adjust our regulatory regime to make it more efficient."
Fed's Dudley appeals to Congress to 'do no harm'
Oil prices rose 3%, hitting the highest since early Jul 2015, as Saudi Arabia's crown prince cemented his power over the weekend with an anti-corruption crackdown, while the US rig count fell & markets continued to tighten. Brent crude futures were trading $1.86 (3%) higher at $62.46 a barrel. West Texas Intermediate (WTI) crude rose $1.49 (2.7%) to $57.13 a barrel. Both benchmarks are at their highest since early Jul 2015. Saudi Crown Prince Mohammed bin Salman tightened his grip with the arrest of royals, ministers & investors, including billionaire Alwaleed bin Talal & the powerful head of the National Guard, Prince Miteb bin Abdullah. The arrests, which an official said were just "phase one" of the crackdown, are the latest in a series of dramatic steps by Crown Prince Mohammed bin Salman to amass more power for himself at home. The attorney general said detainees had been questioned & "a great deal of evidence" had been gathered. Analysts for now do not see Saudi Arabia, the world's largest oil exporter, changing its policy of boosting crude prices. Prince Mohammed's reforms include a plan to list shares of parts of state-owned oil company Saudi Aramco next year & a higher oil price is seen as beneficial for its market capitalization. Saudi Energy Minister Khalid al-Falih said that while there is "satisfaction" with a production-cutting deal between OPEC & other producers led by Russia, the "job is not done yet." OPEC is expected to extend a cut of around 1.8M barrels per day into the whole of 2018. Nigeria's oil minister said that Nigeria supports an extension of a deal between OPEC, Russia & other non-members to cut oil supply until the end of 2018 "as long as the right terms are on the table" regarding its own participation. Nigeria itself, however, is exempt from the deal. Also boosting oil prices, US energy companies cut 8 oil rigs last week, to 729, in the biggest reduction since May 2016. While supplies are tightening, demand remains strong. Speculators have increased to a record high their bets on gains in the price of Brent.
Oil surges 3%, at highest since mid-2015 on Saudi purge
Stocks had another good day even though there is plenty of uncertainty around the globe. That starts with Saudi Arabia & its crackdown on corruption, whatever. More importantly, Congress has to come up with a new tax system & time is short if it intends on meeting its ambitious deadlines by year-end. The market bulls are felling good. But demand for gold is also on the rise & both are not supposed to go up at the same time.
Dow Jones Industrials
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