Dow fell 34, decliners modestly ahead of advancers & NAZ declined 15. The MLP index was fractionally higher to the 272s & the REIT index rebounded 1+ to 351. Junk bond funds did little & Treasuries were of a tad. Oil dipped below 58 & gold rose 5 to 1276.
AMJ (Alerian MLP Index tracking fund)
The Rep-controlled Congress managed the bare minimum task of keeping the gov open before the holiday recess, yet made little progress on a medley of divisive fiscal & social issues it will now be forced to confront in Jan. Among these are resolving a long-running dispute over defense spending levels; raising the nation's debt ceiling, which came back into force this month & dealing with the looming deportations of undocumented immigrants, known as dreamers. All the unfinished business could impede Pres Trump's ability to rack up more legislative victories, including a large-scale infrastructure bill, before the 2018 midterm elections. “At some point, and for the good of the country, I predict we will start working with the Democrats in a Bipartisan fashion. Infrastructure would be a perfect place to start,” Trump tweeted a couple of hours ago. Leaders were able to corral rank-&-file lawmakers to vote for a bare-bones funding patchwork & the gov now has enough money to operate through Jan 19. Patience, however, is running thin among both Dems & Reps, so the votes may not be there to keep delaying final spending measures for the current fiscal year. Many lawmakers are eager to take agencies off auto-pilot & to devote more funding for the armed forces, the opioid abuse crisis, medical research & other priorities. They are divided, however, over how much to spend & how much to add to deficits. To get the stopgap bill enacted, lawmakers dropped plans to provide long-term financing for the Children's Health Insurance Program (CHIP) & the community health centers program as well as a long-term extension of electronic surveillance programs. Resolving those issues will take priority over Trump's plans for an infrastructure bill & welfare reform. Congress also left town without being able to agree on an $81B hurricane & wildfire relief package. Working out differences on that will be high on the agenda in the new year.
Congress Averts a Shutdown But Now Faces a Messy 2018 Start
US purchases of new homes unexpectedly surged in Nov to the highest level since before the last recession, indicating resilient demand, according to gov data. Single-family home sales jumped 17.5% M/M to 733K annualized pace (est. 655K), fastest since 2007, from 624K rate (revised from 685K). The monthly percentage increase biggest since 1992. Purchases in the West & South rose to the fastest rates since 2007. The median sales price increased 1.2% Y/Y to $318K. The report showed that residential construction will increase in coming months & provide fuel for the economy. In another sign builders will stay busy, the number of properties sold in which construction hadn't yet started increased almost 43% to 258K in Nov, the most since 2006. While stronger results in the South probably reflected some boost from post-hurricane recovery efforts in the region, sales surged in the western US & also increased in the Midwest & Northeast. Housing demand is benefiting from a strong job market & still- low mortgage costs. New-home sales, tabulated when contracts get signed, account for about 10% of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close & are reported by the National Association of Realtors. The supply of homes at current sales rate fell to 4.6 months from 5.4 months, 283K new houses were on market at end of Nov.
U.S. New-Home Sales Surged in November to Highest Since 2007
US consumer spending rose more than forecast in Nov & the Fed's preferred inflation gauge advanced to an 8-month high, signs of economic vitality that should keep the central bank on track to raise interest rates gradually in 2018. Purchases rose 0.6% after a 0.2% advance that was less than previously estimated, Commerce Dept figures showed. The forecast called for a 0.5% gain. Incomes rose 0.3%, slightly below projections, though the 3-month gain was the fastest since early 2017. While partly reflecting rising prices & spending related to energy, the results indicate strength in consumption, which accounts for about 70% of the economy & is likely to drive US growth again this qtr. Inflation moving closer to the Fed's target may also reinforce expectations for interest- rate hikes next year under incoming Chairman Jerome Powell & tax legislation could provide a further boost to the economy. One caveat: The report showed Americans' spending is increasingly coming at the expense of storing up funds. The saving rate fell to 2.9%, the lowest in 10 years, just before the last recession began. The Fed's preferred inflation gauge, tied to consumption, rose 0.2% in Nov from the previous month & 1.8% from a year earlier, the fastest since Mar. Excluding food & energy, core prices rose 0.1% from Oct & 1.5% from Nov 2016, matching estimates. Inflation has missed the central bank's 2% target for most of the past 5 years. While energy prices have helped drive the pickup in headline inflation, the rise in the core gauge should also hearten Fed officials, who expect inflation will slowly reach their goal as transitory downward pressures dissipate. With steady hiring, rising stock & home prices boosting households' ability to increase purchases, some analysts project the holiday season will be the best since before the recession began. Recent gov figures showed retail sales rose more than forecast in Nov amid broad-based demand.
Trading is light with many traders away, cerebrating the holiday early. The Dow is up 100 this week, even with back peddling recently, & still just 250 away from breaking the 25K level. The stock market is cheered by economic data which keeps coming in strong. Autos & housing are 2 giant sectors that are seeing strong business. Housing is suffering from a shortage of houses for sale while auto sales are holding at or near record levels.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 58.12 | -0.24 | -0.4% |
| GC=F | Gold | 1,275.50 | +4.90 | +0.4% |
The Rep-controlled Congress managed the bare minimum task of keeping the gov open before the holiday recess, yet made little progress on a medley of divisive fiscal & social issues it will now be forced to confront in Jan. Among these are resolving a long-running dispute over defense spending levels; raising the nation's debt ceiling, which came back into force this month & dealing with the looming deportations of undocumented immigrants, known as dreamers. All the unfinished business could impede Pres Trump's ability to rack up more legislative victories, including a large-scale infrastructure bill, before the 2018 midterm elections. “At some point, and for the good of the country, I predict we will start working with the Democrats in a Bipartisan fashion. Infrastructure would be a perfect place to start,” Trump tweeted a couple of hours ago. Leaders were able to corral rank-&-file lawmakers to vote for a bare-bones funding patchwork & the gov now has enough money to operate through Jan 19. Patience, however, is running thin among both Dems & Reps, so the votes may not be there to keep delaying final spending measures for the current fiscal year. Many lawmakers are eager to take agencies off auto-pilot & to devote more funding for the armed forces, the opioid abuse crisis, medical research & other priorities. They are divided, however, over how much to spend & how much to add to deficits. To get the stopgap bill enacted, lawmakers dropped plans to provide long-term financing for the Children's Health Insurance Program (CHIP) & the community health centers program as well as a long-term extension of electronic surveillance programs. Resolving those issues will take priority over Trump's plans for an infrastructure bill & welfare reform. Congress also left town without being able to agree on an $81B hurricane & wildfire relief package. Working out differences on that will be high on the agenda in the new year.
Congress Averts a Shutdown But Now Faces a Messy 2018 Start
US purchases of new homes unexpectedly surged in Nov to the highest level since before the last recession, indicating resilient demand, according to gov data. Single-family home sales jumped 17.5% M/M to 733K annualized pace (est. 655K), fastest since 2007, from 624K rate (revised from 685K). The monthly percentage increase biggest since 1992. Purchases in the West & South rose to the fastest rates since 2007. The median sales price increased 1.2% Y/Y to $318K. The report showed that residential construction will increase in coming months & provide fuel for the economy. In another sign builders will stay busy, the number of properties sold in which construction hadn't yet started increased almost 43% to 258K in Nov, the most since 2006. While stronger results in the South probably reflected some boost from post-hurricane recovery efforts in the region, sales surged in the western US & also increased in the Midwest & Northeast. Housing demand is benefiting from a strong job market & still- low mortgage costs. New-home sales, tabulated when contracts get signed, account for about 10% of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close & are reported by the National Association of Realtors. The supply of homes at current sales rate fell to 4.6 months from 5.4 months, 283K new houses were on market at end of Nov.
U.S. New-Home Sales Surged in November to Highest Since 2007
US consumer spending rose more than forecast in Nov & the Fed's preferred inflation gauge advanced to an 8-month high, signs of economic vitality that should keep the central bank on track to raise interest rates gradually in 2018. Purchases rose 0.6% after a 0.2% advance that was less than previously estimated, Commerce Dept figures showed. The forecast called for a 0.5% gain. Incomes rose 0.3%, slightly below projections, though the 3-month gain was the fastest since early 2017. While partly reflecting rising prices & spending related to energy, the results indicate strength in consumption, which accounts for about 70% of the economy & is likely to drive US growth again this qtr. Inflation moving closer to the Fed's target may also reinforce expectations for interest- rate hikes next year under incoming Chairman Jerome Powell & tax legislation could provide a further boost to the economy. One caveat: The report showed Americans' spending is increasingly coming at the expense of storing up funds. The saving rate fell to 2.9%, the lowest in 10 years, just before the last recession began. The Fed's preferred inflation gauge, tied to consumption, rose 0.2% in Nov from the previous month & 1.8% from a year earlier, the fastest since Mar. Excluding food & energy, core prices rose 0.1% from Oct & 1.5% from Nov 2016, matching estimates. Inflation has missed the central bank's 2% target for most of the past 5 years. While energy prices have helped drive the pickup in headline inflation, the rise in the core gauge should also hearten Fed officials, who expect inflation will slowly reach their goal as transitory downward pressures dissipate. With steady hiring, rising stock & home prices boosting households' ability to increase purchases, some analysts project the holiday season will be the best since before the recession began. Recent gov figures showed retail sales rose more than forecast in Nov amid broad-based demand.
Trading is light with many traders away, cerebrating the holiday early. The Dow is up 100 this week, even with back peddling recently, & still just 250 away from breaking the 25K level. The stock market is cheered by economic data which keeps coming in strong. Autos & housing are 2 giant sectors that are seeing strong business. Housing is suffering from a shortage of houses for sale while auto sales are holding at or near record levels.
Dow Jones Industrials
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