Dow jumped up 173 to yet another record, advancers ocver decliners 3-1 & NAZ gained 73. The MLP index rose 4+ to the 276s The REIT index added 3+ to the 362s. Junk bond funds were flat & Treasuries drifter lower. Oil inched higher in the 57s & gold added 5 to 1279.
AMJ (Alerian MLP Index tracking fund)
Stocks kicked off the penultimate week of the year on a positive note after Reps reached an agreement on the shape of US tax cuts. The $ dropped & Treasuries headed lower.
The S&P 500 opened higher as investors continue to focus on the progress of tax legislation. Mid-week votes in the House of Representatives & Senate are planned on a measure that will reduce corp & individual tax rates. Lawmakers are aiming for the bill to land on Pres Trump's desk for a signature before Christmas. The Stoxx Europe 600 Index climbed the most in 7 weeks as real estate, automakers & technology stocks led gains. European bonds were little changed & sterling advanced before UK Prime Minister Theresa May sets out her plan for a proposed Brexit transition period. The € strengthened after 2 days of declines. Earlier, equity benchmarks in Tokyo, Hong Kong & Sydney advanced after the S&P 500 & other US gauges closed at records on Fri. Oil extended gains toward $58 a barrel as US drillers targeting crude reduced the rig count for the first time in 4 weeks.
Stocks Surge on U.S. Tax Plan
Confidence among US homebuilders jumped in December to the highest level since 1999, exceeding all analyst estimates, as a growing economy boosts housing demand, according to the National Association of Home Builders/Wells Fargo. Housing market index rose to 74 from a downwardly revised 69 in Nov (est. was 70). Current sales gauge increased to 81, highest since 1999, from 77 & future sales index rose to 79, highest since 2005, from 76. Regional index for the Midwest surged 11 points to 76, highest in data back to 2004. The surprisingly strong reading shows developers expect demand to advance amid steady economic growth & a tightening job market. Mortgage rates remain close to record lows, making borrowing attractive for prospective buyers, while the homebuilders also cited easier regulation under Pres Trump as helping the housing market. Demand for properties is rising, with a gauge of homebuyer traffic rallying to a 19-year high. “Housing market conditions are improving partially because of new policies aimed at providing regulatory relief to the business community,” NAHB Chairman Granger MacDonald said. “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year,” NAHB Chief Economist Robert Dietz said.
Federal Reserve Bank of Minneapolis Pres Neel Kashkari said low inflation, continued weakness in wages & a flattening yield curve motivated his dissent last week against the central bank's decision to raise interest rates for a 3rd time in 2017. “Continuing to raise rates in the absence of increasing inflation could needlessly hold down wage growth while potentially increasing the chance of a recession,” Kashkari said. “While the yield curve has not yet inverted, the bond market is telling us that the odds of a recession are increasing.” Kashkari & Chicago Fed Pres Charles Evans voted against the rate rise at the end of the Dec FOMC meeting. Evans said he dissented over concerns that consumer inflation expectations, considered by economists a crucial determinant of future inflation, have fallen. Fed officials have been struggling to understand a soft patch in inflation this year and generally tepid wage gains, despite a booming job market that has pushed unemployment to a 16-year low of 4.1%. Most policy makers, led by Chair Janet Yellen, have stuck with the view that inflation has been checked by transitory price drops &that low unemployment will eventually push up wages. Kashkari repeated his concern over low price growth, which he voiced in past dissents, but added his worries over the narrowing gap between the yields for long- & short-term Treasuries. Instances of long-term yields rising higher than the short end have been a reliable indicator in the past of impending recession, he said. “In response to our rate hikes, the yield curve has flattened significantly, potentially signaling an increasing risk of a recession,” Kashkari added. “Together, these factors make a compelling case that the FOMC should not increase rates further until we are much more confident that inflation is returning to our target.”
Fed's Kashkari Says Flatter Yield Curve Helped Motivate Dissent
Investors are cheering the news from DC & have taken the Dow to within 200 of 25K. There is still plenty of chaos in DC, but optimism is running high that tax reform will be passed to help businesses expand. The Dow is up an outstanding 6.6K since last year's election. Now all that is needed for the House & Senate to pass this tax legislation.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Stocks kicked off the penultimate week of the year on a positive note after Reps reached an agreement on the shape of US tax cuts. The $ dropped & Treasuries headed lower.
The S&P 500 opened higher as investors continue to focus on the progress of tax legislation. Mid-week votes in the House of Representatives & Senate are planned on a measure that will reduce corp & individual tax rates. Lawmakers are aiming for the bill to land on Pres Trump's desk for a signature before Christmas. The Stoxx Europe 600 Index climbed the most in 7 weeks as real estate, automakers & technology stocks led gains. European bonds were little changed & sterling advanced before UK Prime Minister Theresa May sets out her plan for a proposed Brexit transition period. The € strengthened after 2 days of declines. Earlier, equity benchmarks in Tokyo, Hong Kong & Sydney advanced after the S&P 500 & other US gauges closed at records on Fri. Oil extended gains toward $58 a barrel as US drillers targeting crude reduced the rig count for the first time in 4 weeks.
Stocks Surge on U.S. Tax Plan
Confidence among US homebuilders jumped in December to the highest level since 1999, exceeding all analyst estimates, as a growing economy boosts housing demand, according to the National Association of Home Builders/Wells Fargo. Housing market index rose to 74 from a downwardly revised 69 in Nov (est. was 70). Current sales gauge increased to 81, highest since 1999, from 77 & future sales index rose to 79, highest since 2005, from 76. Regional index for the Midwest surged 11 points to 76, highest in data back to 2004. The surprisingly strong reading shows developers expect demand to advance amid steady economic growth & a tightening job market. Mortgage rates remain close to record lows, making borrowing attractive for prospective buyers, while the homebuilders also cited easier regulation under Pres Trump as helping the housing market. Demand for properties is rising, with a gauge of homebuyer traffic rallying to a 19-year high. “Housing market conditions are improving partially because of new policies aimed at providing regulatory relief to the business community,” NAHB Chairman Granger MacDonald said. “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year,” NAHB Chief Economist Robert Dietz said.
U.S. Homebuilder Sentiment Hits 18-Year High, Beating Forecasts
Federal Reserve Bank of Minneapolis Pres Neel Kashkari said low inflation, continued weakness in wages & a flattening yield curve motivated his dissent last week against the central bank's decision to raise interest rates for a 3rd time in 2017. “Continuing to raise rates in the absence of increasing inflation could needlessly hold down wage growth while potentially increasing the chance of a recession,” Kashkari said. “While the yield curve has not yet inverted, the bond market is telling us that the odds of a recession are increasing.” Kashkari & Chicago Fed Pres Charles Evans voted against the rate rise at the end of the Dec FOMC meeting. Evans said he dissented over concerns that consumer inflation expectations, considered by economists a crucial determinant of future inflation, have fallen. Fed officials have been struggling to understand a soft patch in inflation this year and generally tepid wage gains, despite a booming job market that has pushed unemployment to a 16-year low of 4.1%. Most policy makers, led by Chair Janet Yellen, have stuck with the view that inflation has been checked by transitory price drops &that low unemployment will eventually push up wages. Kashkari repeated his concern over low price growth, which he voiced in past dissents, but added his worries over the narrowing gap between the yields for long- & short-term Treasuries. Instances of long-term yields rising higher than the short end have been a reliable indicator in the past of impending recession, he said. “In response to our rate hikes, the yield curve has flattened significantly, potentially signaling an increasing risk of a recession,” Kashkari added. “Together, these factors make a compelling case that the FOMC should not increase rates further until we are much more confident that inflation is returning to our target.”
Fed's Kashkari Says Flatter Yield Curve Helped Motivate Dissent
Investors are cheering the news from DC & have taken the Dow to within 200 of 25K. There is still plenty of chaos in DC, but optimism is running high that tax reform will be passed to help businesses expand. The Dow is up an outstanding 6.6K since last year's election. Now all that is needed for the House & Senate to pass this tax legislation.
Dow Jones Industrials
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