Dow rose 62, advancers were modestly ahead of decliners & NAZ went up 14. The MLP index fell 1+ to the 226s & the REIT index was flattish in the 413s (near recent record highs). Junk bond funds fluctuated & Treasuries were weak while stocks rallied. Oil slid back pennies in the 58s & gold added 4 to 1555.
AMJ (Alerian MLP Index tracking fund)
Stocks continued their record run as all 3 major averages opened at all-time highs, boosted by strong housing data. Housing starts surged 16.9% in Dec to an annualized 1.608M units, the census bureau said, topping the 1.375M units expected. The S&P 500, the Dow & NAZ were all trading in record territory, adding to yesterday's gains that were fueled by the Senate's ratification of the US-Mexico-Canada Agreement. The day prior, Pres Trump & a Chinese official inked a partial trade deal. Together, the 2 deals cover more than $2T of trade. Gold was up 0.7% at $1561 an ounce & West Texas Intermediate crude oil was higher by 0.5% at $58.85 a barrel. Treasuries were lower, causing the yield on the 10-year note to climb by 2.1 basis points to 1.83%. Markets rallied across Europe with Britain's FTSE up 1%, France's CAC higher by 0.8% & Germany's DAX gaining 0.5%. Hong Kong's Hang Seng paced the advance in Asia, up 0.6%, while Japan's Nikkei added 0.5%. China's Shanghai Composite ended little changed.
White House officials are scrambling to produce an election year fiscal stimulus plan that is likely to include tax cuts to juice the economy & stock market ahead of the 2020 presidential contest. The stimulus would be a way to have an alternate message to the proposals from nearly every Dem candidate looking to unseat Trump in the Nov election. Top-tier Dem are proposing massive increases in the size of gov, with programs like Medicare for all, coupled with tax increases that will likely fall on the middle class. Larry Kudlow, Trump's director of the National Economic Council, is leading the effort. He & his team are weighing the proposals and they are consulting with members of Congress on the appropriate package of tax cuts. The measures being discussed with Congressional leaders include options like increasing the earned income tax credits, which is a subsidy targeted at lower-income workers with families, & cutting corp & individual tax rates. There has also been talk of proposing payroll tax cuts. These sources add that the tax-cut proposal could be part of the White House budget, to be submitted in Feb even if getting a tax-cut plan thru a divided Congress may be difficult during an election year. Still, sources say the White House will likely want to showcase a tax-cut proposal, particularly one that targets the middle class, as a way of contrasting the fiscal policies advocated by most Dems looking to oust Pres Trump. Leading Dem candidates are proposing massive increases to the size of the federal gov, including payroll tax increases, which affects all wage earners, not just the rich. It was reported this week that the Trump administration would be proposing some sort of fiscal stimulus involving tax cuts. Kudlow confirmed to that such a plan is in the works. “The president directed me to produce what we’re calling tax cuts 2.0,” Kudlow said. “It will be published some time during the campaign, as a message for future Trump economic growth policies, particular emphasis on the middle class, in his second term. . . We are looking at a variety of tax cuts, sometimes making permanent some existing tax cuts, some existing corporate tax cuts.”
Touting the historic US-China tyrade deal & the US-Mexico-Canada Agreement (USMCA) signings, Commerce Secretary Wilbur Ross said Pres Trump has turned back any economic jitters for 2020. "Whatever fears people might have had of a recession next year, forget it," Ross said. "I think that's almost mechanically impossible to have a recession next year." However, Ross said there is one wild card in that equation: the Federal Reserve. "If the Federal Reserve goes crazy and raises rates could be all bets are off," Ross said.
US housing starts soar 16.9% in December to a 13-year high
This week the Dow is up 530 to new records as the bulls continue to be in command of the stock market. The trade deals are stimulating buying of stocks. Additionally, economic data & earnings have been fairly good. Thoughts about tax cuts adds to investor enthusiasm. Even if the latest rally is tired, investor optimism is very high.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 58.63 | +0.11 | +0.2% |
| GC=F | Gold | 1,558.40 | +7.90 | +0.5% |
Stocks continued their record run as all 3 major averages opened at all-time highs, boosted by strong housing data. Housing starts surged 16.9% in Dec to an annualized 1.608M units, the census bureau said, topping the 1.375M units expected. The S&P 500, the Dow & NAZ were all trading in record territory, adding to yesterday's gains that were fueled by the Senate's ratification of the US-Mexico-Canada Agreement. The day prior, Pres Trump & a Chinese official inked a partial trade deal. Together, the 2 deals cover more than $2T of trade. Gold was up 0.7% at $1561 an ounce & West Texas Intermediate crude oil was higher by 0.5% at $58.85 a barrel. Treasuries were lower, causing the yield on the 10-year note to climb by 2.1 basis points to 1.83%. Markets rallied across Europe with Britain's FTSE up 1%, France's CAC higher by 0.8% & Germany's DAX gaining 0.5%. Hong Kong's Hang Seng paced the advance in Asia, up 0.6%, while Japan's Nikkei added 0.5%. China's Shanghai Composite ended little changed.
Stocks rally to new records as housing booms
White House officials are scrambling to produce an election year fiscal stimulus plan that is likely to include tax cuts to juice the economy & stock market ahead of the 2020 presidential contest. The stimulus would be a way to have an alternate message to the proposals from nearly every Dem candidate looking to unseat Trump in the Nov election. Top-tier Dem are proposing massive increases in the size of gov, with programs like Medicare for all, coupled with tax increases that will likely fall on the middle class. Larry Kudlow, Trump's director of the National Economic Council, is leading the effort. He & his team are weighing the proposals and they are consulting with members of Congress on the appropriate package of tax cuts. The measures being discussed with Congressional leaders include options like increasing the earned income tax credits, which is a subsidy targeted at lower-income workers with families, & cutting corp & individual tax rates. There has also been talk of proposing payroll tax cuts. These sources add that the tax-cut proposal could be part of the White House budget, to be submitted in Feb even if getting a tax-cut plan thru a divided Congress may be difficult during an election year. Still, sources say the White House will likely want to showcase a tax-cut proposal, particularly one that targets the middle class, as a way of contrasting the fiscal policies advocated by most Dems looking to oust Pres Trump. Leading Dem candidates are proposing massive increases to the size of the federal gov, including payroll tax increases, which affects all wage earners, not just the rich. It was reported this week that the Trump administration would be proposing some sort of fiscal stimulus involving tax cuts. Kudlow confirmed to that such a plan is in the works. “The president directed me to produce what we’re calling tax cuts 2.0,” Kudlow said. “It will be published some time during the campaign, as a message for future Trump economic growth policies, particular emphasis on the middle class, in his second term. . . We are looking at a variety of tax cuts, sometimes making permanent some existing tax cuts, some existing corporate tax cuts.”
White House officials confirm election year stimulus plan focusing on tax cuts
Touting the historic US-China tyrade deal & the US-Mexico-Canada Agreement (USMCA) signings, Commerce Secretary Wilbur Ross said Pres Trump has turned back any economic jitters for 2020. "Whatever fears people might have had of a recession next year, forget it," Ross said. "I think that's almost mechanically impossible to have a recession next year." However, Ross said there is one wild card in that equation: the Federal Reserve. "If the Federal Reserve goes crazy and raises rates could be all bets are off," Ross said.
Wilbur Ross: No recession in 2021
US homebuilding surged to a 13-year high in
Dec as activity increased across the board, suggesting the housing
market recovery was back on track amid low mortgage rates & could
help support the longest economic expansion on record. Housing
starts jumped 16.9% to a seasonally adjusted annual rate of 1.608M units last month, the highest level since 2006 & the
percentage gain was the largest since 2016. Data for Nov
was revised higher to show homebuilding rising to a pace of 1.375M units, instead of advancing to a rate of 1.365M units as
previously reported. The forecast housing starts was increase to a pace of 1.375M units in Dec. Housing
starts soared 40.8% on a year-on-year basis in Dec. An estimated
1.290M housing units were started in 2019, up 3.2% compared to
2018. Building permits fell 3.9% to a rate of 1.416M units
in Dec after hitting their highest level in more than 12 years
in Nov. The housing market is regaining momentum after the
Federal Reserve cut interest rates 3 times last year, pushing down
mortgage rates from last year's multi-year highs. The 30-year fixed
mortgage rate has dropped to an average of 3.65% from its peak of 4.94%
in Nov 2018, according to data from mortgage finance agency Freddie
Mac. Though a survey on Mon showed confidence among
homebuilders dipped in Jan, it remained near levels last seen in
mid-1999. Builders said they “continue to grapple with a shortage of
lots and labor while buyers are frustrated by a lack of inventory,
particularly among starter homes.” The
housing market accounts for about 3.1% of the economy. Residential
investment rebounded in Q3 after contracting for 6
straight qtrs, the longest such stretch since the 2007-2009
recession. It is expected to contribute to GDP again
in Q4. Single-family homebuilding, which accounts
for the largest share of the housing market, jumped 11.2% to a rate of
1.055 units in Dec, the highest level since 2007.
Single-family housing starts rose in the Midwest & the populous South.
They, however, fell in the Northeast & West. Single-family
housing building permits slipped 0.5% to a rate of 916K units in
Dec after rising for 7 straight months. Starts for the
volatile multi-family housing segment vaulted 29.8% to a rate of 553K
units last month. Permits for the construction of multi-family homes
fell 9.6% to a rate of 500K units.
US housing starts soar 16.9% in December to a 13-year high
This week the Dow is up 530 to new records as the bulls continue to be in command of the stock market. The trade deals are stimulating buying of stocks. Additionally, economic data & earnings have been fairly good. Thoughts about tax cuts adds to investor enthusiasm. Even if the latest rally is tired, investor optimism is very high.
Dow Jones Industrials
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