Dow added 10, decliners over advancers 4-3 & NAZ lost 7. The MLP index crawled higher to the 206s (still depressed) & the REIT index was up 3 to the 398s. Junk bond funds fluctuated & Treasuries were bid higher. Oil climbed back to the 56s & gold rose 11 to 1465.
AMJ (Alerian MLP Index tracking fund)
Stocks opened lower after Pres Trump said the day prior that he could raise tariffs on Chinese goods. All 3 major averages opened in negative territory after the NAZ & Dow finished yesterday at all-time highs. Tues gains came after Trump threatened more tariff hikes on Chinese imports if talks aimed at ending the trade war fail to produce an interim agreement. Trump said an agreement on the phase 1 deal announced last month "could happen soon," but he warned he was ready to raise tariffs "very substantially" if that fails. Economic data today was light. Consumer prices rose 0.4% last month, slightly above the 0.3% gain expected. Treasuries gained, pushing the yield on the 10-year note down 3.9 basis points to 1.87%. Elsewhere, commodities were mixed as gold traded up 0.7% near $1464 an ounce & West Texas Intermediate crude oil was down 0.6% at $56.54 a barrel. In Europe, Germany's DAX paced the decline with a loss of 0.5%. In Asian markets, the Shanghai Composite lost 0.4% & Tokyo's Nikkei sank 0.9%. Hong Kong's Hang Seng tumbled 2% on more unrest.
Federal Reserve Chair Jerome Powell said policymakers at the central bank are unlikely to cut interest rates in Dec, so long as the economy remains on its current path of growth. In testimony he provided to the Joint Economic Committee of Congress, Powell reiterated what he said during the Fed's 2-day meeting in Oct: The current level on its benchmark interest rate will likely remain "appropriate," despite persistent risks to the economic outlook. Those risks, he said, include slow global growth & the US-China trade war. "We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective," he added. Powell is scheduled to appear before Congress twice this week & face a wide range of questions about the state of the US economy. He sounded an upbeat note in his opening remarks, attributing some of the economy's strength to the 3 qtr-percentage interest rate cuts that officials made this year. “Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely,” he said. “This favorable baseline partly reflects the policy adjustments that we have made to provide support for the economy.” However, Powell warned that as a result of the "mid-cycle adjustment," interest rates are historically low, giving the Fed few tools in its arsenal to respond to an economic downturn, should one happen.
US consumer prices rebounded more than expected in Oct & underlying inflation picked up, which together with abating trade tensions and fears of a recession, support the Federal Reserve's signal for no further interest rate cuts in the near term. The Labor Dept said its consumer price index increased 0.4% last month as households paid more for energy products, healthcare, food & a range of other goods. That was the largest gain in the CPI since Mar & followed an unchanged reading in Sep. In the 12 months thru Oct, the CPI increased 1.8% after climbing 1.7% in Sep. The forecast called for the CPI advancing 0.3% in Oct & gaining 1.7% on a year-on-year basis. Excluding the volatile food and energy components, the CPI rose 0.2% after edging up 0.1% in Sep. The core CPI rose as healthcare costs jumped by the most in more than 3 years. There were also increases in prices of used cars & trucks along with recreation & rents. In the 12 months thr October, core CPI increased 2.3% after rising 2.4% in Sep. The Fed tracks the core personal consumption expenditures (PCE) price index for its 2.0% inflation target. The core PCE price index rose 1.7% on a year-on-year basis in Sep & has fallen short of its target this year. Oct's firmer monthly CPI reading & jump in healthcare costs suggest a pick-up in the core PCE price index last month. The central bank last month cut interest rates for the 3rd time this year & signaled a pause in the easing cycle that started in Jul when it reduced borrowing costs for the first time since 2008. Stable inflation comes on the heels of fairly upbeat data, including better-than-expected job growth in Oct & an acceleration in services sector activity.
US consumer prices increase more than expected in October
Trump advisor Kudlow teases middle class tax cut as 2020 campaign heats up
Stocks are looking for direction. Traders want to hear more from Powell & what Trump has to say about China trade. After the recent rally, the market needs time to rest (at record levels).
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 57.00 | +0.20 | +0.4% |
| GC=F | Gold | 1,464.40 | +10.70 | +0.7% |
Stocks opened lower after Pres Trump said the day prior that he could raise tariffs on Chinese goods. All 3 major averages opened in negative territory after the NAZ & Dow finished yesterday at all-time highs. Tues gains came after Trump threatened more tariff hikes on Chinese imports if talks aimed at ending the trade war fail to produce an interim agreement. Trump said an agreement on the phase 1 deal announced last month "could happen soon," but he warned he was ready to raise tariffs "very substantially" if that fails. Economic data today was light. Consumer prices rose 0.4% last month, slightly above the 0.3% gain expected. Treasuries gained, pushing the yield on the 10-year note down 3.9 basis points to 1.87%. Elsewhere, commodities were mixed as gold traded up 0.7% near $1464 an ounce & West Texas Intermediate crude oil was down 0.6% at $56.54 a barrel. In Europe, Germany's DAX paced the decline with a loss of 0.5%. In Asian markets, the Shanghai Composite lost 0.4% & Tokyo's Nikkei sank 0.9%. Hong Kong's Hang Seng tumbled 2% on more unrest.
Stocks fall as Trump threatens more China tariffs
Federal Reserve Chair Jerome Powell said policymakers at the central bank are unlikely to cut interest rates in Dec, so long as the economy remains on its current path of growth. In testimony he provided to the Joint Economic Committee of Congress, Powell reiterated what he said during the Fed's 2-day meeting in Oct: The current level on its benchmark interest rate will likely remain "appropriate," despite persistent risks to the economic outlook. Those risks, he said, include slow global growth & the US-China trade war. "We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective," he added. Powell is scheduled to appear before Congress twice this week & face a wide range of questions about the state of the US economy. He sounded an upbeat note in his opening remarks, attributing some of the economy's strength to the 3 qtr-percentage interest rate cuts that officials made this year. “Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely,” he said. “This favorable baseline partly reflects the policy adjustments that we have made to provide support for the economy.” However, Powell warned that as a result of the "mid-cycle adjustment," interest rates are historically low, giving the Fed few tools in its arsenal to respond to an economic downturn, should one happen.
Powell to tell Congress Fed is unlikely to cut interest rates again
US consumer prices rebounded more than expected in Oct & underlying inflation picked up, which together with abating trade tensions and fears of a recession, support the Federal Reserve's signal for no further interest rate cuts in the near term. The Labor Dept said its consumer price index increased 0.4% last month as households paid more for energy products, healthcare, food & a range of other goods. That was the largest gain in the CPI since Mar & followed an unchanged reading in Sep. In the 12 months thru Oct, the CPI increased 1.8% after climbing 1.7% in Sep. The forecast called for the CPI advancing 0.3% in Oct & gaining 1.7% on a year-on-year basis. Excluding the volatile food and energy components, the CPI rose 0.2% after edging up 0.1% in Sep. The core CPI rose as healthcare costs jumped by the most in more than 3 years. There were also increases in prices of used cars & trucks along with recreation & rents. In the 12 months thr October, core CPI increased 2.3% after rising 2.4% in Sep. The Fed tracks the core personal consumption expenditures (PCE) price index for its 2.0% inflation target. The core PCE price index rose 1.7% on a year-on-year basis in Sep & has fallen short of its target this year. Oct's firmer monthly CPI reading & jump in healthcare costs suggest a pick-up in the core PCE price index last month. The central bank last month cut interest rates for the 3rd time this year & signaled a pause in the easing cycle that started in Jul when it reduced borrowing costs for the first time since 2008. Stable inflation comes on the heels of fairly upbeat data, including better-than-expected job growth in Oct & an acceleration in services sector activity.
US consumer prices increase more than expected in October
Pres Trump's top economic advisor,
Larry Kudlow, hinted at a middle-class tax as the pres
searches for an edge in his 2020 reelection bid. With just under a
year until voters decide whether Trump gets a 2nd term in the White
House, the National Economic Council Director said “the president has
asked me to pursue something called Tax Cuts 2.0.” While a report said Trump would propose a 15% middle-class rate, Kudlow said it's “way too soon” to get into specifics of a plan. “We’re
in very preliminary stages right now,” Kudlow added, noting that he has spoken to lawmakers & administration
officials about a tax proposal. “This thing will not be completed for
many months, as I say, it will be released as a strategic pro-growth
document for the campaign. We want to see middle-income taxpayers get
the lowest possible rates.” It’s doubtful a Dem-controlled
House
would pass such a tax cut & give Trump an apparent victory heading
into the 2020 election. The White House has teased middle class
tax relief repeatedly since Reps passed the 2017 tax law. Just
before last year's midterm elections, Trump pledged to cut middle-class taxes by 10%. Nothing came of the promise.
Trump advisor Kudlow teases middle class tax cut as 2020 campaign heats up
Stocks are looking for direction. Traders want to hear more from Powell & what Trump has to say about China trade. After the recent rally, the market needs time to rest (at record levels).
Dow Jones Industrials
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