AMJ (Alerian MLP index tracking fund)
Retail industry groups reacted to the possibility of a rail strike happening in early Dec going up. The Transportation Division of the International Association of Sheet Metal, Air, Rail & Transportation Workers (SMART-TD) announced that member voting on the Sep agreement negotiated by Pres Biden's Presidential Emergency Board had returned split results. SMART-TD-represented yardmaster members voted in favor of contract ratification, whereas its train & engine service members rejected theirs. As of yesterday, 1/3 of the 12 rail unions have voted against the agreement. That means a strike could potentially happen in early Dec, unless the railroads & unions reach a deal or Congress intervenes before then. Jess Dankert, the VP of supply chains at the Retail Industry Leaders Association, said a rail strike "would cause enormous disruption to the flow of goods nationwide, the effects of which would ripple through the supply chain and the U.S. economy at large." National Retail Federation CEO Matthew Shay also said a strike during the holiday season would be "devastating for American businesses, consumers & the US economy," according to a release from the trade association. Both trade groups raised concerns about a potential rail strike contributing to higher inflation.
Retail trade groups warn rail strike would devastate economy
Credit card applications rose this year as Americans confront higher
everyday expenses for necessities like food, gasoline & rent,
according to a New York Federal Reserve Bank survey published yesterday. The application rate for credit cards
hit 27.1% in Oct, above last year's level of 26.5% & the
pre-pandemic reading of 26.3%. In 2022, the typical application rate for
credit cards was 26.7%, about 3.6 percentage points higher than last
year. Application rates rose for Americans with credit scores over 760 & fell for those with a score under 680. Although fewer Americans anticipate needing to find $2000 for an unexpected expense in the next month (32% vs 33.1% in 2021), more respondents said they would struggle to come up with the extra cash. "Looking ahead over the next 12 months, households anticipate they
will be less likely to apply for an auto loan, mortgage, or
mortgage-refinance loan, but report a higher average likelihood of
applying for a credit card or credit-card limit increase," the New York Fed
said. "Consumers expect some easing in credit standards,
reporting slightly lower average perceived likelihoods of a future
credit application being rejected, conditional on applying over the next
12 months." The rise in credit card applications is somewhat
concerning, because interest rates are astronomically high right now. The average credit card APR, or annual percentage rate, set a new record
high of 19.14% last week, according to a Bankrate.com database that
goes back to 1985. The previous record was 19% in 1991.
WALLET WORRIES: Credit card debt hits record high as inflation rages
Cleveland Federal Reserve Pres Loretta Mester said inflation will need to show more signs of progress before she's ready to stop advocating for interest rate increases. While acknowledging that recent data has been encouraging, the central bank official said that the progress is only a start. "We're going to have more work to do, because we need to see inflation really on a sustainable downward path back to 2%," she said. "We've had some good news on the inflation front, but we need to see more good news and sustained good news to make sure that we are returning to price stability as soon as we can." Markets widely expect the Fed in Dec to approve its 7th rate hike of the year, but this time slowing down to a 0.5 percentage point increase from a string of 4 straight 0.75 percentage point moves. Mester said she's on board with the reduced pace. "We're at a point where we're going to enter a restrictive stance of policy. At that point, I think it makes sense that we can slow down a bit the ... pace of increases," she added. "We're still going to raise the funds rate, but we're at a reasonable point now where we can be very deliberate in setting monetary policy."
Investors are risk averse, so they are buying stocks. The cautious ones are buying gold. In the meantime, pay attention to what Fed officials have to say.
Dow Jones Industrials
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