Dow finished down 184, decliners over advancers 3-2 & NAZ fell 124. The MLP index stayed in the 224s & the REIT index was off 1+ to the 424s. Junk bond funds continued weak & Treasuries were sold, bringing higher yields. Oil rose almost 4 to 97 & gold remained steady at 1749 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
A new study argues that central banks will fail to temper inflation & possibly push price growth even higher unless govs implement more sensible budget policies. The study was presented to policymakers at the Kansas City Federal Reserve's Jackson Hole Economic Symposium. Francesco Bianchi of Johns Hopkins University & Leonardo Melosi of the Chicago Fed argued that if monetary tightening was not supported by appropriate fiscal adjustments, then "the deterioration of fiscal imbalances (will lead) to even higher inflationary pressure." "As a result, a vicious circle of rising nominal interest rates, rising inflation, economic stagnation, and increasing debt would arise," the paper argued. "In this pathological situation, monetary tightening would actually spur higher inflation and would spark a pernicious fiscal stagflation." The study concluded that US fiscal policy was one of the factors behind the recent surge in US inflation & that even if central banks had raised interest rates earlier, it likely wouldn't have made much of a difference. "More hawkish (Fed) policy would have lowered inflation by only one percentage point at the cost of reducing output by around 3.4 percentage points," the authors added. "This is quite a large sacrifice ratio." The central bank, as it is doing now, raises its benchmark short-term rate when it wants to lower inflation & reduces it when it wants to accelerate hiring. Such moves, in turn, affect borrowing costs throughout the economy — for mortgages, auto loans & business loans, among others. On Fri, in his speech to the Jackson Hole symposium, Chair Jerome Powell stressed that the Fed plans further rate hikes & expects to keep its benchmark rate high until the worst inflation bout in 4 decades eases considerably — even if doing so causes job losses & financial pain for households & businesses.
Central banks can’t tackle inflation without sensible fiscal policy: study
Consumers who have been squeezed by higher prices may be experiencing a little relief. Fewer adults now say they are living paycheck to paycheck, according to a new LendingClub report. As of Jul, 59% of Americans said they lived paycheck to paycheck, down from 61% in Jun but still higher than a year ago, when the number of adults who felt stretched too thin was 54%. Lower-income workers have been the hardest hit by price spikes this year, particularly for food & other staples, since those expenses account for a bigger share of the budget, studies show. Roughly ¾ of consumers annually earning less than $50K & 63% of those earning $50-100K were living paycheck to paycheck in Jul, based on LendingClub’s numbers. Consumers who have been squeezed by higher prices may be experiencing a little relief. Fewer adults now say they are living paycheck to paycheck. Even though top earners have also been struggling to make ends meet, wealthier Americans feel less financially strained, the report found. Of those earning $200K or more, roughly 30% reported living paycheck to paycheck, down from 36% the previous month. Recent signs that inflation has passed its peak & may be cooling off is welcome news for cash-strapped Americans. The Jul consumer price index report finally showed that the prices consumers pay for a variety of goods & services started to ease after average gas prices fell below $4 for the first time since Mar & are now down to $3.85. As a result, real inflation-adjusted average hourly earnings for the month rose 0.5%, according to the Bureau of Labor Statistics.
Fewer Americans say they are living paycheck to paycheck as inflation begins to ease
While Walt Disney (DIS), a Dow stock, theme parks in Florida & California have had fewer guests in the wake
of the pandemic, the parks have still managed to generate record sales & profits thanks to price hikes & other changes that have increased
the cost of visits, according to a report. The business unit that includes the theme parks recorded record revenue
of $5.4B & a record operating income of $1.6B in the
qtr ending on Jul 2. One
change that has helped the company increase profits is its Genie+ phone
app, which costs $15 per person a day on top of admission & allows
guests to skip lines for some attractions. However,
the app cost doesn't cover all attractions & parkgoers will have to
pay an additional $10-17 to skip standby lines to experience some
rides including Star Wars- & Guardians of the Galaxy-themed rides. Other benefits that used to be free have since been eliminated or slapped with a new price tag. Prices
for certain tickets, food items, hotels & souvenirs like the famous
Mickey Mouse ears headbands have also climbed, outpacing inflation over
the past decade. A DIS spokeswoman said that its theme-park pricing is determined by "pure supply and demand" & is "no different than airplanes, hotels or cruise ships." The stock went up 52¢.
If you would like to learn more about DIS, click on this link:
club.ino.com/trend/analysis/stock/DIS?a_aid=CD3289&a_bid=6ae5b6f7
Disney’s theme park price hike nets more profit from fewer visitors
Oil futures rallied,
with US prices up more than 4% to settle at their highest in a month. Prices got a boost given rising risks of a potential civil war that
could put Libyan output at risk & growing expectations that OPEC+ is
positioning themselves to cut production. Oct WTI rose $3.95 (4.2%) to settle at $97.01 a barrel. Front-month prices marked their highest finish
since Jul 29.
Oil futures rally to mark highest settlement in a month
Gold prices finished with a modest loss, pressured by strength in Treasury yields. Gold futures for Dec fell pennies to settle at $1749 ounce after tapping an intraday high of $1757. Gold futures fell with modest weakness in the $ helping to limit losses for $-denominated prices of the precious metal. The $, as measured by the ICE US Dollar index, was down 0.1%, but traded 2.6% higher month to date. 10-year Treasury yields climbed 7 basis points to 3.108% today.
Gold futures finish slightly lower; silver prices mark lowest finish in a month
Dow Jones Industrials
No comments:
Post a Comment