Dow rose 211, advancers over decliners 3-2 & NAZ went up 60. The MLP index added 1+ to the 255s & the REIT index went up 1+ to 381 (a new record). Junk bond funds fluctuated & Treasuries were sold as stocks rose in price. Oil finished the month over 60 & gold crawled up 1 to 1297.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Federal Reserve Governor Randal Quarles voiced confidence in the US economy & added that more interest rate hikes likely will be appropriate, countering the prevailing market wisdom. Quarles, who serves as the central bank's vice chair for supervision, said the labor market looks strong & productivity is improving. At the same time, he was largely dismissive of recent data that showed a slowdown in nonfarm payrolls creation & weak consumer spending. “In regard to policy, I am very comfortable remaining patient at this point and monitoring the incoming data,” he said, echoing the Fed's most recent policy statement. “That said, my sense is that further increases in the policy rate may be necessary at some point, a stance I believe is consistent with my optimistic view of the economy’s growth potential and momentum. In the language of central banking, my estimate of the neutral policy rate remains somewhat north of where we are now.” The remarks come 9 days after the policymaking FOMC voted to hold rates steady & indicated that no additional increases are likely this year. However, in recent days several Fed officials have said that talk about rate cuts is premature. Current market pricing is for the first cut to come as soon as Sep, with about a 25% chance of another decrease before the end of 2019. Quarles acknowledged that “growth has slowed, at least temporarily,” as shown in recent data. “That said, I remain optimistic about the outlook for the U.S. economy, and I think that we have the potential to maintain growth at a healthy pace in the years ahead,” he said. “Looking past the near-term data, I see many reasons to expect relatively strong growth in the coming years, supported by gains in the productive capacity of the economy,” he added. While veering from the notion that the Fed is on indefinite hold, Quarles said the Fed should be data-dependent in its decision-making. However, he qualified that by saying that it shouldn't make decisions based on only isolated metrics. “I prefer a framework where we make it clear that we are focused on broad trends--elsewhere I have used the aviation analogy that we should not ‘chase the needles’ on the instrument panel. We should be clear that, while we will respond to clear& durable evolution in these broad trends, we are not reacting to every piece of volatile data,” he said.
Fed’s Quarles says more rate hikes could be ahead ‘at some point’ as economy improves
Larry Kudlow: ‘I don’t think the underlying economy is slowing’
New-home sales ran at a seasonally adjusted annual 667K pace in Feb, the Commerce Dept said. That was 4.9% higher than Jan's rate, but just 0.6% above year-ago levels. The pace of sales of newly-constructed homes in Feb was the highest since last Mar. It easily beat the consensus of a 625K annual pace, but downward revisions to prior months were hefty. At the current sales rate, it would take 6.1 months to exhaust the available supply of homes. Over many decades, 6 months of supply has been the number that's generally considered a sign of a market evenly balanced between supply & demand. The median price of a home sold during the month was $315K, about 4% lower than at the same time last year. The gov's home-construction reports are based on small samples & are often revised heavily, making it hard to rely on any one month's data for a complete picture of the housing market. For the year to date, sales were 2.8% higher than during the same period last year. Since the housing crisis of a decade ago, it’s been hard for home builders to get back into a groove. They've struggled to balance secular, long-term headwinds with the fallout from the housing bust & to meet customers at the price points they can afford. That’s kept conditions in the industry choppy. Thru the noise, however, there’s been steady, & growing, customer demand for new homes. The average existing home in America is 37 years old, according to the National Association of Home Builders. And many current homeowners aren't willing or able to sell their properties.
Trump threatens to close ‘large sections’ of US-Mexico border
Stocks had a rare sideways month in Mar, with the Dow finishing at around breakeven, as trade talks with China drone on. The roaring stock market ended its advance in mid Feb. Q2 should be very interesting.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Federal Reserve Governor Randal Quarles voiced confidence in the US economy & added that more interest rate hikes likely will be appropriate, countering the prevailing market wisdom. Quarles, who serves as the central bank's vice chair for supervision, said the labor market looks strong & productivity is improving. At the same time, he was largely dismissive of recent data that showed a slowdown in nonfarm payrolls creation & weak consumer spending. “In regard to policy, I am very comfortable remaining patient at this point and monitoring the incoming data,” he said, echoing the Fed's most recent policy statement. “That said, my sense is that further increases in the policy rate may be necessary at some point, a stance I believe is consistent with my optimistic view of the economy’s growth potential and momentum. In the language of central banking, my estimate of the neutral policy rate remains somewhat north of where we are now.” The remarks come 9 days after the policymaking FOMC voted to hold rates steady & indicated that no additional increases are likely this year. However, in recent days several Fed officials have said that talk about rate cuts is premature. Current market pricing is for the first cut to come as soon as Sep, with about a 25% chance of another decrease before the end of 2019. Quarles acknowledged that “growth has slowed, at least temporarily,” as shown in recent data. “That said, I remain optimistic about the outlook for the U.S. economy, and I think that we have the potential to maintain growth at a healthy pace in the years ahead,” he said. “Looking past the near-term data, I see many reasons to expect relatively strong growth in the coming years, supported by gains in the productive capacity of the economy,” he added. While veering from the notion that the Fed is on indefinite hold, Quarles said the Fed should be data-dependent in its decision-making. However, he qualified that by saying that it shouldn't make decisions based on only isolated metrics. “I prefer a framework where we make it clear that we are focused on broad trends--elsewhere I have used the aviation analogy that we should not ‘chase the needles’ on the instrument panel. We should be clear that, while we will respond to clear& durable evolution in these broad trends, we are not reacting to every piece of volatile data,” he said.
Fed’s Quarles says more rate hikes could be ahead ‘at some point’ as economy improves
Pres Trump's top economic advisor Larry Kudlow said he believes the “underlying” US economy “looks very good.” “I don’t think the underlying economy is slowing,” Kudlow added. “The fundamental economy,” a phrase he used to mean “consumption and business investment … looks very good,” Kudlow said. Kudlow, the director of Trump's National Economic Council, made the remarks shortly after saying in another interview that he wants the Federal Reserve to “immediately” cut US interest rates by ½ a percentage point. “I am echoing the president’s view – he not been bashful about that
view – he would also like the Fed to cease shrinking its balance sheet.
And I concur with that view,” Kudlow said. The
central bank announced last week that it would hold off on raising
interest rates & hinted that another rate hike might not be necessary
for the rest of the year. Though Fed Chairman Jerome Powell highlighted slowdowns in overseas economic growth, the Fed did not
indicate at its Mar meeting that rate cuts would be necessary. The
critiques from the Trump White House break with the precedent set by
past presidents, who have generally allowed the Fed to act
independently. Kudlow said that he respected the Fed’s independence — but noted that “we don’t want to threaten this great recovery.”
Larry Kudlow: ‘I don’t think the underlying economy is slowing’
New-home sales ran at a seasonally adjusted annual 667K pace in Feb, the Commerce Dept said. That was 4.9% higher than Jan's rate, but just 0.6% above year-ago levels. The pace of sales of newly-constructed homes in Feb was the highest since last Mar. It easily beat the consensus of a 625K annual pace, but downward revisions to prior months were hefty. At the current sales rate, it would take 6.1 months to exhaust the available supply of homes. Over many decades, 6 months of supply has been the number that's generally considered a sign of a market evenly balanced between supply & demand. The median price of a home sold during the month was $315K, about 4% lower than at the same time last year. The gov's home-construction reports are based on small samples & are often revised heavily, making it hard to rely on any one month's data for a complete picture of the housing market. For the year to date, sales were 2.8% higher than during the same period last year. Since the housing crisis of a decade ago, it’s been hard for home builders to get back into a groove. They've struggled to balance secular, long-term headwinds with the fallout from the housing bust & to meet customers at the price points they can afford. That’s kept conditions in the industry choppy. Thru the noise, however, there’s been steady, & growing, customer demand for new homes. The average existing home in America is 37 years old, according to the National Association of Home Builders. And many current homeowners aren't willing or able to sell their properties.
Pres Trump threatened to close large parts of the US-Mexico border next week if
America's southern neighbor does not “immediately” stop illegal
immigration. In a series of tweets, the pres wrote
that he would shut down “the Border, or large sections of the Border,”
if Mexico does not “immediately stop ALL illegal immigration coming into
the United States throug (sic) our Southern Border.” He claimed closing
off border crossings, key avenues for trade with a major partner,
“would be a good thing!” Trump,
who has made cracking down on illegal immigration a top political
priority, has said he could shut down border crossings before without
following thru on the threat. However, his threat today comes at a
particularly delicate time: his administration hopes Congress will ratify a replacement of the 1994 North American Free Trade Agreement by this summer. It would likely be difficult for Mexico to “immediately” stop “all” illegal immigration, as Trump asks. In
response to these tweets, Mexican Foreign Secretary Marcelo
Ebrard said Mexico would not respond to threats. He called Mexico a
“great neighbor” to the US & added that 1.5M Americans live in
Mexico. Trump has long hammered Mexico over
trade, pledging to crack down on what he calls abuses that sap American
jobs. His claims about Mexico making money off the United States appear
to relate to inaccurate assertions he has repeatedly made about the US
trade balance with other countries.
Trump threatens to close ‘large sections’ of US-Mexico border
Stocks had a rare sideways month in Mar, with the Dow finishing at around breakeven, as trade talks with China drone on. The roaring stock market ended its advance in mid Feb. Q2 should be very interesting.
Dow Jones Industrials
