Dow soared 161, advancers over decliners 3-2 & NAZ went up 18. The MLP index was flattish in the 303s after rising yesterday. Junk bond funds inched higher & Treasuries retreated. Oil climbed in the 64s after the EIA reported the 10th straight weekly decline for US crude supplies & gold jumped up 16 to 1353.
AMJ (Alerian MLP Index tracking fund)
The $ fell to a 3-year low & Treasuries slumped after Treasury Sec Steve Mnuchin endorsed a weaker greenback. Stocks rose as a strong earnings season continued to impress investors. Mnuchins's comments added pressure on a greenback that's been in decline for a year, with the effects rippling across markets as growth in European & emerging-nation economies continue to accelerate past America. The ¥ pushed past 110 per $ for the first time since Sep & South Africa's rand traded below 12 per $ for the first time since May 2015. Emerging-market stocks rallied a 9th day in the longest streak since Apr 2015. Commodities also gained, led by industrial metals. The $'s plunge also fed into American equities, with the S&P 500 headed for a 4th straight gain on the prospects for an uptick in overseas demand. Earnings continued to top estimates, boosting optimism that the tax reform will add to profits. European shares fluctuated, following gains in Asia & 10-year Treasury yields rose, with bonds under pressure.
Whether or not the White House choreographed the $'s slide to the lowest in 3 years, it may have just declared open season on the currency. The greenback is caught in the rhetorical cross hairs after Mnuchin endorsed the $'s decline as a benefit to the American economy at Davos. His comments came days after Pres Trump stepped up his protectionist push by slapping of tariffs on solar panels & washing machines. Losses for the greenback have mounted since Trump's inauguration a year ago, with the currency weakening against every Group-of-10 peer. That may have more to do with the vagaries of central-bank policy & interest rates & divisions in DC than it does with Trumponomics. Whatever the reason, the administration's acceptance of a weak $ lends fresh ammunition to bears. “Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin said in Davos. The currency’s short term value is “not a concern of ours at all,” he added. Mnuchin’s comments also appear to echo the sentiments of his boss. During his first year in office, Trump has expressed his displeasure with a lofty currency last year when he said, “I like a dollar that’s not too strong” & adding that “lots of bad things happen with a strong dollar.”
White House Declares Open Season on the Dollar at Davos
After struggling with slowing loan growth throughout much of 2017, US regional bank execs said the promise of lower taxes spurred a pick-up in commercial loan demand in Q4, as well as a rise in consumer spending on credit & debit cards. That, along with increased interest rates, prompted many of the lenders to raise their loan growth & profit outlooks for the coming year.
U.S. Regional Banks Say Tax Overhaul Jump-Started Loan Demand
Sales of previously-owned US homes fell in Dec for the first time in 4 months, as the market struggles with record-low supply and rising prices, figures from the National Association of Realtors showed. Contract closings declined 3.6% M/M to a 5.57M annual rate (est 5.7M) after 5.81M. The median sales price increased 5.8% Y/Y to $246K. Inventory of available properties fell 10.3% Y/Y to 1.48M, a record low in data going back to 1999. 2017 sales of 5.51M were up 1.1% from 2016, smallest gain in 3 years. The decline, deeper than estimated, indicates low inventory issues across the US are limiting the ability to purchase despite low mortgage rates & a solid job market. Higher prices spell lower affordability, particularly for first-time buyers: The median selling price rose 5.8% in 2017, easily outpacing wage gains. Gov data show the numbers of building permits last year was the highest in a decade, indicating a pipeline of new properties that could help alleviate the supply crunch. While NAR said there was no discernible impact in Dec, some prospective buyers may be discouraged by the tax legislation signed into law last month. “Inventory concerns remain with us,” with no immediate sign of a reversal, Paul Bishop, NAR’s VP of research, said. The Dec figures also reflect a squeeze on affordability, even as demand continues apace due to solid job growth & low mortgage rates, Bishop said. “Price growth is going to be a little slower than it might have been without the tax reform,” & sales in 2018 are forecast to be little changed at 5.52M. Single-family home sales fell 2.6% to annual rate of 4.96M.
Tax reform is bringing added strength to an already roaring US economy (shown above). Additionally, Starbucks (SBUX) will spend $250M on worker benefits after the tax cut. The outlook for profits & higher divs is excellent. That dovetails with higher pay/bonuses for workers who will spend that money. Meanwhile, gold, the traditional alternative investment for stocks, is flirting with 5 year highs & those guys in DC remained confused as they have been for months (if not years).
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 64.59 | +0.12 | +0.2% |
| GC=F | Gold | 1,354.90 | +18.20 | +1.4% |
The $ fell to a 3-year low & Treasuries slumped after Treasury Sec Steve Mnuchin endorsed a weaker greenback. Stocks rose as a strong earnings season continued to impress investors. Mnuchins's comments added pressure on a greenback that's been in decline for a year, with the effects rippling across markets as growth in European & emerging-nation economies continue to accelerate past America. The ¥ pushed past 110 per $ for the first time since Sep & South Africa's rand traded below 12 per $ for the first time since May 2015. Emerging-market stocks rallied a 9th day in the longest streak since Apr 2015. Commodities also gained, led by industrial metals. The $'s plunge also fed into American equities, with the S&P 500 headed for a 4th straight gain on the prospects for an uptick in overseas demand. Earnings continued to top estimates, boosting optimism that the tax reform will add to profits. European shares fluctuated, following gains in Asia & 10-year Treasury yields rose, with bonds under pressure.
Dollar Drops on Mnuchin, Stocks Gain on Earnings: Markets Wrap
Whether or not the White House choreographed the $'s slide to the lowest in 3 years, it may have just declared open season on the currency. The greenback is caught in the rhetorical cross hairs after Mnuchin endorsed the $'s decline as a benefit to the American economy at Davos. His comments came days after Pres Trump stepped up his protectionist push by slapping of tariffs on solar panels & washing machines. Losses for the greenback have mounted since Trump's inauguration a year ago, with the currency weakening against every Group-of-10 peer. That may have more to do with the vagaries of central-bank policy & interest rates & divisions in DC than it does with Trumponomics. Whatever the reason, the administration's acceptance of a weak $ lends fresh ammunition to bears. “Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin said in Davos. The currency’s short term value is “not a concern of ours at all,” he added. Mnuchin’s comments also appear to echo the sentiments of his boss. During his first year in office, Trump has expressed his displeasure with a lofty currency last year when he said, “I like a dollar that’s not too strong” & adding that “lots of bad things happen with a strong dollar.”
White House Declares Open Season on the Dollar at Davos
After struggling with slowing loan growth throughout much of 2017, US regional bank execs said the promise of lower taxes spurred a pick-up in commercial loan demand in Q4, as well as a rise in consumer spending on credit & debit cards. That, along with increased interest rates, prompted many of the lenders to raise their loan growth & profit outlooks for the coming year.
U.S. Regional Banks Say Tax Overhaul Jump-Started Loan Demand
Sales of previously-owned US homes fell in Dec for the first time in 4 months, as the market struggles with record-low supply and rising prices, figures from the National Association of Realtors showed. Contract closings declined 3.6% M/M to a 5.57M annual rate (est 5.7M) after 5.81M. The median sales price increased 5.8% Y/Y to $246K. Inventory of available properties fell 10.3% Y/Y to 1.48M, a record low in data going back to 1999. 2017 sales of 5.51M were up 1.1% from 2016, smallest gain in 3 years. The decline, deeper than estimated, indicates low inventory issues across the US are limiting the ability to purchase despite low mortgage rates & a solid job market. Higher prices spell lower affordability, particularly for first-time buyers: The median selling price rose 5.8% in 2017, easily outpacing wage gains. Gov data show the numbers of building permits last year was the highest in a decade, indicating a pipeline of new properties that could help alleviate the supply crunch. While NAR said there was no discernible impact in Dec, some prospective buyers may be discouraged by the tax legislation signed into law last month. “Inventory concerns remain with us,” with no immediate sign of a reversal, Paul Bishop, NAR’s VP of research, said. The Dec figures also reflect a squeeze on affordability, even as demand continues apace due to solid job growth & low mortgage rates, Bishop said. “Price growth is going to be a little slower than it might have been without the tax reform,” & sales in 2018 are forecast to be little changed at 5.52M. Single-family home sales fell 2.6% to annual rate of 4.96M.
U.S. Existing-Home Sales Decline as Supply Drops to Record Low
Tax reform is bringing added strength to an already roaring US economy (shown above). Additionally, Starbucks (SBUX) will spend $250M on worker benefits after the tax cut. The outlook for profits & higher divs is excellent. That dovetails with higher pay/bonuses for workers who will spend that money. Meanwhile, gold, the traditional alternative investment for stocks, is flirting with 5 year highs & those guys in DC remained confused as they have been for months (if not years).
Dow Jones Industrials
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