Dow shot up 260, advancers over decliners about 2-1 & NAZ gained 26. The MLP index added 1 to the 181s & the REIT index went up 1+ to the 481s. Junk bond funds slid lower & Treasuries were sold, bringing higher yields (more below). Oil went up to the 76s & gold tumbled 32 to 1819.
AMJ (Alerian MLP index tracking fund)
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Pres Biden announced that he will nominate Jerome Powell to a 2nd term as chair of the Federal Reserve, signaling that he believes the battle-tested central bank chief, who navigated the US economy thru the depths of the worst recession in nearly a century, is the best person for one of the most high-stakes jobs in the world. The announcement ends months of speculation over whether Biden would stick with Powell, a Rep nominated by former Pres Trump in 2017, or attempt to reshape the central bank by tapping Lael Brainard, the sole Dem on the Fed's Board of Governors, to lead it. Only one Dem has been selected for the top post in more than 3 decades. Brainard has instead been chosen as vice chair of the board of governors, the #2 job at the Fed; she will succeed Richard Clarida, whose term expires Jan 31, 2022. The nominations now head to the Senate for confirmation. The Fed chair – one of the most powerful players, with the ability to dictate the pace of economic growth – is typically nominated for a 2nd term, often to reinforce the central bank's independence from politics. Powell's 4-year term was slated to end in Feb. Choosing whom to tap is one of the most consequential economic decisions that Biden has made during his first year in the Oval Office, particularly as the White House seeks to quell growing voter unrest about the state of the US economy amid surging prices for everything from meat to gasoline to clothing.
Biden taps Jerome Powell for second term as Fed Chair as inflation soars
Global supply chain woes are beginning to recede, but shipping, manufacturing & retail execs say that they don't expect a return to more normal operations until next year & that cargo will continue to be delayed if Covid-19 outbreaks disrupt key distribution hubs. In Asia, Covid-related factory closures, energy shortages & port-capacity limits have eased in recent weeks. In the US, major retailers say they have imported most of what they need for the holidays. Ocean freight rates have retreated from record levels. Still, execs & economists say strong consumer demand for goods in the West, ongoing port congestion in the US, shortages of truck drivers & elevated global freight rates continue to hang over any recovery. The risk of more extreme weather & flare-ups of Covid-19 cases can also threaten to clog up supply chains again. An easing of supply-chain choke points would allow production to move toward meeting strong demand & would lower logistics costs. If sustained, that, in turn, would help alleviate the upward pressure on inflation. The number of ships waiting to unload at the ports of Los Angeles & Long Beach, the biggest US gateway for imports from Asia, has improved but is still hovering near record levels. There were 71 container ships anchored offshore on Nov 19, down from a peak of 86 3 days before, according to the Marine Exchange of Southern California & 17 more were expected to arrive within 3 days. Before the pandemic, it was unusual for any ships to anchor offshore. Shipping& retail execs say they expect the US port backlogs to clear in early 2022, after the holiday shopping season and when Lunar New Year shuts many factories for a week in Feb, slowing output.
Supply chain problems show signs of easing
Treasury yields rose after Pres Biden renominated Jerome Powell for a 2nd term as Federal Reserve chair. The yield on the benchmark 10-year Treasury note climbed by 5.8 basis points to 1.594% & the yield on the advanced by 3.4 basis points to 1.941%. Yields move inversely to prices & 1 basis point is equal to 0.01%. Biden announced Powell as his pick for the central bank chief nomination in a closely-watched decision. The pres named Fed Governor Lael Brainard as vice chair. If Brainard had been nominated for the top Fed position, many expected more dovish monetary policy, meaning it may have taken the Fed longer to pull back its emergency stimulus measures.
Treasury yields rise after Biden picks Powell over Brainard for top Fed post
Traders like the news that Powell will continue for another term. Favorable supply chain news was also helpful. However techs stocks on NAZ are lagging.
Dow Jones Industrials
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