Dow went up 120, advancers over decliners about 2-1 & NAZ added 49. The MLP index rose 3+ to the 262s & the REIT index gave back 1+ to 338 following its recent advance. Junk bond funds inched higher & Treasuries declined in price, taking the yield on the 10 year Treasury to the magic 3% level. Oil went over 71 & gold lost 1 to 1319.
AMJ (Alerian MLP Index tracking fund)
Trump on China trade: ‘Be cool, it will all work out’
The Federal Reserve should continue its gradual approach to raising interest rates given that inflation has not yet reached the central bank's 2% goal in a sustained way, Cleveland Fed Pres Loretta Mester said. "In my view, the medium-run outlook supports the continued gradual removal of policy accommodation; it seems the best strategy for balancing the risks to both of our policy goals and avoiding a build-up of financial stability risks," Mester said in prepared remarks. Mester said she does not expect inflation to pick up sharply, adding that while it is close to the Fed's symmetric 2% target, it will only reach that level on a sustainable basis over the next 1-2 years. "We want to give inflation time to move back to goal ... this argues against a steep path," she added. The Fed unanimously decided to raise borrowing costs at its policy meeting in Mar & forecasts another 2 rate rises for this year, although an increasing number of policymakers see 3 as a possibility. Policymakers raised rates 3 times last year. The Fed's benchmark overnight lending rate now sits at 1.50-1.75%. The Fed's preferred measure of inflation increased to 1.9% in the 12 months thru Mar, effectively bringing price gains to the central bank's 2% target after undershooting that goal in recent years. Mester, who has a vote on monetary policy this year under a rotation system, also said the central bank could raise rates more rapidly if the US economy grew faster than expected, though she added it could go slower if inflation weakens again. Her views are consistent with the Fed's policy statement earlier this month. It emphasized that policymakers do not see their 2% inflation target as a ceiling & will not be unduly concerned with price gains above it for a time. Mester also used her speech to once again reiterate her stance that the central bank should begin to analyze whether its inflation framework is fit for the future. "Now is the time to assess whether changes to our current framework could make monetary policy more effective in achieving our goals," she said.
Comments on trade talks yesterday sounded good to traders & they continue to bid prices higher. But talk is cheap & there is a lot going on with China, Iran & Israel. The Dow is pushing on 25K after an almost straight up rise in May. The stock market is overbought short term, making cautious investors nervous.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 71.02 | +0.32 | +0.5% |
| GC=F | Gold | 1,321.10 | +0.40 | +0.0% |
Pres Trump said yesterday the US is working to level the
playing field regarding trade with China, as the 2 countries aim to
avoid a trade war by continuing discussions in DC this week. “China and the United States are working well
together on trade, but past negotiations have been so one sided in favor
of China, for so many years, that it is hard for them to make a deal
that benefits both countries. But be cool, it will all work out!” Trump
wrote on Twitter. Tensions with China remain
high, as both DC & Beijing have threatened to impose tens of B$s’ worth of sanctions on each other’s exports, which
could have a profound effect on many US industries, especially
agriculture. Representatives
from both the US & China, which boast the world's largest
economies, with nominal GDPs of nearly $19.4T & approximately
$12T, respectively, held trade talks in early May. During the
meetings, the US delegation led by Treasury Sec Steve Mnuchin
demanded China cut the trade surplus with the US by $200B,
sharply lower tariffs and advance technology subsidies. China had a trade surplus of $375B with the US last year.\
Trump on China trade: ‘Be cool, it will all work out’
National Security Adviser John Bolton warned yesterday that DC is prepared to impose sanctions on European
companies if their govs don't heed Pres Trump's
demand to stop dealing with Iran. "Europeans are going to face the effective U.S. sanctions," he said. Bolton's comments are the latest salvo in the administration's
campaign to put economic pressure on Iran & America's European allies
to accept a new agreement that would impose tougher restrictions on the
Iran' nuclear activities, constrain its missile program & roll back
its support for militant groups. The new
agreement would supplant the Iran nuclear accord, which Trump
formally abandoned last week but which the leaders of Britain, France & Germany have vowed to preserve. European officials have said they looking for ways to help their
companies escape the brunt of the US sanctions. France's foreign
minister said he had asked for exemptions or longer grace periods
for the exit of French companies such as oil-&-gas giant Total SA &
car maker Peugeot that have returned to the Iranian market since the
2015 nuclear accord.
U.S. ready to impose sanctions on European companies in Iran, Bolton says
The Federal Reserve should continue its gradual approach to raising interest rates given that inflation has not yet reached the central bank's 2% goal in a sustained way, Cleveland Fed Pres Loretta Mester said. "In my view, the medium-run outlook supports the continued gradual removal of policy accommodation; it seems the best strategy for balancing the risks to both of our policy goals and avoiding a build-up of financial stability risks," Mester said in prepared remarks. Mester said she does not expect inflation to pick up sharply, adding that while it is close to the Fed's symmetric 2% target, it will only reach that level on a sustainable basis over the next 1-2 years. "We want to give inflation time to move back to goal ... this argues against a steep path," she added. The Fed unanimously decided to raise borrowing costs at its policy meeting in Mar & forecasts another 2 rate rises for this year, although an increasing number of policymakers see 3 as a possibility. Policymakers raised rates 3 times last year. The Fed's benchmark overnight lending rate now sits at 1.50-1.75%. The Fed's preferred measure of inflation increased to 1.9% in the 12 months thru Mar, effectively bringing price gains to the central bank's 2% target after undershooting that goal in recent years. Mester, who has a vote on monetary policy this year under a rotation system, also said the central bank could raise rates more rapidly if the US economy grew faster than expected, though she added it could go slower if inflation weakens again. Her views are consistent with the Fed's policy statement earlier this month. It emphasized that policymakers do not see their 2% inflation target as a ceiling & will not be unduly concerned with price gains above it for a time. Mester also used her speech to once again reiterate her stance that the central bank should begin to analyze whether its inflation framework is fit for the future. "Now is the time to assess whether changes to our current framework could make monetary policy more effective in achieving our goals," she said.
Fed's Mester reiterates support for gradual U.S. rate increases
Comments on trade talks yesterday sounded good to traders & they continue to bid prices higher. But talk is cheap & there is a lot going on with China, Iran & Israel. The Dow is pushing on 25K after an almost straight up rise in May. The stock market is overbought short term, making cautious investors nervous.
Dow Jones Industrials
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