Dow dropped 167, decliners over advancers 2-1 & NAZ was off 13. The MLP index remained near 190 & the REIT index sank 5+ to the 474s. Junk bond funds fluctuated & Treasuries were little changed. Oil fell 1+ to the 79s & gold jumped 11 to 1865.
AMJ (Alerian MLP index tracking fund)
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As House Dems push to finally vote for their massive reconciliation spending bill before Thanksgiving, budget watchdogs are arguing their estimates are systematically undercounting how much the bill will cost taxpayers. The
Committee for a Responsible Federal Budget (CRFB) is the loudest among
these voices. It released a report Mon saying that the real cost of
the reconciliation bill could be nearly $5T if programs that are
being artificially cut short are made permanent. "They want to
spend $2.4 trillion and buy with that almost $5 trillion worth of stuff.
So the way they're doing that is by making a number of the policies
temporary," CRFB senior VP Marc Goldwein said. CRFB
also said the Congressional Budget Office (CBO) is likely to strongly
disagree with Dems over how much stepped-up IRS enforcement efforts
will raise to offset the costs of the bill. Goldwein said the Biden administration's estimate that increased IRS
enforcement efforts will raise $400B is significantly off from
what the CBO is going to say. "The number we have is 125 [billion]," Goldwein told FOX Business. "I
would not be surprised if it was 150. But I would be extremely
surprised if it were 200. And I would be flabbergasted beyond disbelief
if it were 400." Goldwein said the reason the numbers are so
different is because the Treasury is overestimating how effective its
policy will in 2 respects. "Unlike the CBO, they don't think that taxpayers get smarter and
better at avoiding over time," he said. "The Treasury thinks it's going
to be a really large deterrent effect that basically once there's more
audits, people are going to voluntarily pay a lot more of their taxes.
And CBO doesn't think there's going to be a large effect." White
House deputy press secretary Andrew Bates said that the CBO does
not have the proper experience to analyze how the increased IRS
enforcement will work.
Dems’ spending bill may cost taxpayers WAY more than what they’re letting on
US homebuilding unexpectedly slowed in Oct as builders continued to struggle with higher costs & supply shortages. Housing starts fell 0.7% last month to a seasonally adjusted annualized rate of 1.52M, the Commerce Dept said. The forecast was expecting 1.58M starts. Meanwhile, permits for future construction rose 4% to 1.65M, exceeding the 1.64M units that were anticipated. Supply
chain disruptions that developed in the wake of the pandemic have made
it more difficult for builders to find materials. The shortages have led
to higher costs, which have caused many builders to delay projects. Despite
the shortages, the National Association of Home Builders said in a
report that strong demand & tight supplies caused
builder confidence to rise for a 3rd consecutive month in Nov.
Housing starts unexpectedly drop as materials shortages persist
US consumer confidence plunged to a 10-year low in Nov, reflecting heightened concerns among Americans about hotter-than-expected inflation & the rising price of everyday goods. The University of Michigan's consumer sentiment index fell to 66.8 in Nov – down sharply from the Oct reading of 71.7 & well below the forecast for a reading of 72.4. "Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation," Richard Curtin, the survey's chief economist, said. The survey showed that 1 in 4 consumers have reduced their living standards as a result of higher prices & more than ½ of families expect to see their real income reduced in the year ahead when adjusted for inflation. "Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century," Curtin added. The latest consumer sentiment reading comes after the gov reported last week that prices for US consumers surged 6.2% in Oct compared with a year earlier. Core prices, which exclude the more volatile measurements of energy & food, rose 4.6% over the past year. Both are the largest increases since 1990. From Sep to Oct, prices jumped 0.9%. Rising inflation is eating away at strong gains & wages & salaries that American workers have seen in recent months (average hourly wages in the US. actually fell 1.2% last month compared with Oct 2020 when accounting for inflation). The Oct study suggests that consumer expectations indexes from the Conference Board & the University of Michigan tend to predict economic downturns up to 18 months in advance in the US. Every recession since the 1980s has been precipitated by at least a 10-point drop in the expectations indices, they found. Other reliable indicators include a single monthly rise of at least 0.3 percentage points in unemployment & 2 consecutive months of employment rate declines. The "clear downward movements in consumer expectations" over the past 6 months are evidence the US is currently heading into a recession, the economists said. Although that's not reflected in the hiring situation – the unemployment rate is falling & the economy is adding jobs, albeit at a slower-than-expected pace – that's likely because the gov has played a large role in propping up the labor market. "It seems to us that there is every likelihood that the U.S. is entered recession at the end of 2021," they wrote.
Consumer confidence plunges to lowest level in a decade as inflation soars higher
The gloomy thought about a possible recession put a damper on investors' enthusiasm for stocks. Meanwhile demand for safe haven gold continues very strong.
Dow Jones Industrials
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