Dow slid back 8, advancers over decliners 3-2 & NAZ was off 19. The MLP index added 1+ to the 227s & the REIT index stayed in the 361s. Junk bond funds were mixed & Treasuries saw only limited selling. Oil was up 1 to 73 & gold slid back 6 to 1970.
AMJ (Alerian MLP Index tracking fund)
A chorus of Federal Reserve officials are opening the door to at least one more interest rate hike in coming months amid signs of underlying inflationary pressures in the US economy. In separate speeches & interviews this month, several policymakers hammered home a hawkish message: While they welcome recent declines in inflation, they warn that inflation still remains too high for a pause in the central bank's tightening campaign. "I think we’re going to have to grind higher with the policy rate in order to put enough downward pressure on inflation and to return inflation to target in a timely manner," St Louis Federal Reserve Pres James Bullard said. "I’m thinking two more moves this year – exactly where those would be this year I don’t know – but I’ve often advocated sooner rather than later." Investors have been betting that the Fed would take a break in raising rates at its Jun meeting after policymakers approved a 10th increase in May, lifting the federal funds rate to 5.00-5.25%, the highest since 2007. But the hawkish comments from Bullard, as well as Minneapolis Fed Pres Neel Kashkari, have raised the specter of an 11th rate hike in Jun. Kashkari, a voting member of this year's policy-setting FOMC, said that he is not taking future rate hikes off the table, even if officials choose to pause the increases next month. "I think right now it’s a close call, either way, versus raising another time in June or skipping," he added. "What’s important to me is not signaling that we’re done." Kashkari continued: "If we were to skip in June that does not mean we’re done with our tightening cycle, it means to me we’re getting more information. Do we then start raising again in July, potentially?" he said. The probability that the Fed hikes its rates in Jun by a qtr-percentage point jumped to 26.8% – up from 17.4% the previous week, according to data from the CME Group's FedWatch tool, which tracks trading. Dallas Fed Pres Lorie Logan also indicated last week that inflation remains "much too high" & is not cooling quickly enough to justify a pause in the tightening cycle next month. "After raising the target range for the federal funds rate at each of the last 10 FOMC meetings, we have made some progress," she said. "The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet."
Fed presidents signal more interest rate hikes needed to cool inflation
Speaker Kevin McCarthy said that his 90-minute meeting with Pres Biden did not yield an agreement on how to raise the debt ceiling, but said the talks were "productive" & that staff would continue to meet to find a way forward. "I felt we had a productive discussion," McCarthy said. "We don’t have an agreement yet, but I did feel the discussion was productive in areas that we have differences of opinion." An agreement is needed by early Jun if the gov is going to be able to borrow more money to keep current spending obligations afloat. McCarthy said that he expects to be in touch with Biden every day until the issue is resolved. "I would assume I'd meet with President Biden every day til we get this done," the speaker said. "If we don't meet, I'm sure we're going to talk on the phone." The meeting was the first time this month that the speaker met with Biden without the Senate leaders in the room. Senate Majority Leader Chuck Schumer has been among Congress’ biggest critics of House GOP calls for spending cuts. McCarthy said the tone of yesterday's meeting was "better than any other time we’ve had discussions." Reps have been adamant about pairing any debt ceiling increase with legislation aimed at cutting gov spending, while Dems for weeks insisted on a "clean" debt limit hike without preconditions. McCarthy made clear that the House GOP was still pushing for work requirements for federal benefits to be part of any final deal, something that nearly every Dem in Congress has opposed. "How do we get people back into the workforce?" the speaker asked. "We're only talking about work requirements [for] able-bodied people who have no dependents… we have found every study, it takes people off poverty rolls and puts them into jobs. It gives them a sense of worth, they're able to buy a house, or even send their kids to college." McCarthy also seemed to leave open the possibility of negotiating on border security measures as part of any debt limit deal. "I've always said, Mr. President, if we could find that we could do something on the border, even though it wouldn't look like it would score as savings, I know I would count it as savings because I believe it would save Americans' lives with fentanyl. It would save America by being stronger…on border security," he said.
McCarthy details debt meeting with Biden as deadline looms
Lowe's (LOW) cut its full-year outlook, as lumber prices fell & do-it-yourself customers bought fewer items. The
home improvement retailer's lowered its forecast even as it beat revenue & earnings expectations for the fiscal first qtr. CEO Marvin Ellison said lumber deflation,
unfavorable weather & lower spending by DIY customers hurt quarterly
sales. He said the company expects “a pullback in discretionary consumer
spending over the near term.” Even so, he said the company is in a
better spot than other retailers. He noted 2/3 of its sales come
from nondiscretionary purchases, such as new appliances that replace
broken ones or supplies for home repairs. He added that “despite
the macroeconomic environment with mixed-signals creating near-term
pressures, we remain optimistic about the future of home improvement.” Q1 EPS was $3.77, compared with $3.51 a year earlier. Net sales fell nearly 6% to $22.3B from $23.6B in the year-ago period, but exceeded expectations. Comparable sales dropped 4.3% in the fiscal Q1. That's lower than the 3.4% decline that was expected. LOW expects total sales for the
full year to be $87-89B, lower than the
$88-90B it had previously forecast. It projects comparable sales to decline by 2-4% this fiscal year, below
the flat to down 2% that it had said before. Adjusted EPS will be $13.20-13.60, below its previous range of $13.60-14.00. The stock rose 5.65.
If you would like to learn more about LOW, click on this link:
club.ino.com/trend/analysis/stock/LOW_aid=CD3289&a_bid=6aeoso5b6f7
Lowe’s cuts full-year sales forecast, as do-it-yourself spending weakens
Traders want to hear more about the debt ceiling negotiations before they make signigicant investment decisions.Dow Jones Industrials
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