Dow went up 132, advancers over decliners 3-2 & NAZ gained 31. The MLP index added 1+ to 190 & the REIT index was off 2 to the 479s. Junk bond funds edged higher & Treasuries were weak. Oil gained in the 81s & gold rose 6 to 1823.
AMJ (Alerian MLP index tracking fund)
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Federal Reserve Vice Chair Richard Clarida conceded that inflation is running well above a level that the central bank considers desirable, & if that continues it would signal a policy error. Though Clarida still subscribes to the broader description of current price pressures as “transitory,” he said they are more intense than expected & will be higher this year than the Fed’s most recent forecast. “Realized inflation so far this year represents to me much more than a moderate overshoot of our 2% longer-run goal, and I would certainly not consider a repeat performance a policy success,” he said. The remarks come a week after the Fed indicated that it would keep its benchmark interest rate anchored near zero for now, but later this month will start tapering the amount of bonds it purchases each month. The move will see the Fed reduce the program by $15B a month for at least Nov & Dec, then will continue each month so long as economic & market conditions hold up. Left unanswered is the question of when the Fed will hike rates. Current Fed forecasts indicate a slightly better-than-even chance for the first increase coming in 2022. Pricing in the federal funds futures market, however, indicates the rate will rise to 0.51% by the end of the year, which would mean 2 qtr-percentage-point increases. Clarida said he will be watching inflation, unemployment & GDP. Should they continue to improve – he projects full employment by the end of 2022 – then expects that rate hikes will be appropriate. “While we clearly are a ways away from considering raising interest rates, if the outlooks for inflation and unemployment … turn out to be the actual outcomes, then I do believe that these three conditions for raising the target range of the funds rate will have been met by year-end 2022,” he added.
Clarida says another year of inflation like this would not be a ‘policy success’
The US ended a pandemic travel ban that was in place for more than a year & a ½, a relief for the tourism industry & for families that have been separated by the rules since the crisis began. The ban, put in place in early 2020 & later expanded by Pres Joe Biden early this year, prohibited visitors from 33 countries, including the UK, much of Europe, China, Brazil & South Africa. Now, visitors can fly into the US with proof of full COVID-19 vaccination, though there are exemptions for travelers under age 18 & passengers from countries with low vaccination availability. Airline executives have said bookings have surged since the Biden administration said it would lift the restrictions.
Pandemic milestone: U.S. ends international travel ban, opening the door to vaccinated tourists
China's exports remained strong in Oct, a positive sign for an economy trying to weather power shortages & COVID-19 outbreaks. The country's customs agency said that exports totaled $300B, up 27% from a year ago. That was down from a 28% increase in Sep but still healthy. Imports came in at $216B, a 20.6% rise. Exports & imports are much higher than a year ago, when much of the world was in the throes of the COVID-19 pandemic, but there is widespread concern that economic headwinds are slowing growth. China's economy has been buffeted by the gov's tough COVID-19-related restrictions, which have depressed domestic travel & consumer demand, & power shortages that have pushed down factory production. Regulators are also cracking down on debt-laden real estate developers, slowing the housing market. China's trade surplus in Oct was $85B, up from $67B the previous month. The surplus with the US was down slightly to $41B, compared to $42B in Sep. With the EU, it was $26B.
China's exports remain strong despite power shortages, COVID outbreaks
The fight against the virus is going well, although improvement still comes in small steps. Thoughts of more gov spending excited investors today. However gold was bid higher by negative thinking investors who worry about high inflation levels.. Remarks above by Clarida did not get a lot of attention. Bottom line, the popular averages keep climbing to new records.
Dow Jones Industrials
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