Markets climb carefully to finish the best monthly advance in 2023

Dow shot up 520 with heavy buying into the close & touched an intra day high, advancers over decliners about 2-1 but NAZ slid back 32.  The MLP index added 2+ to 259 & the REIT index eased up 2+ to the 265s.  Junk bond funds continued mixed & Treasuries saw more selling, driving yields higher.  Oil dropped 1+ to the low 76s & gold fell 10 to 1056, still near record highs (more on both below).

AMJ (Alerian MLP Index tracking fund)

The influential Organization of the Petroleum Exporting Countries coalition & its allies, collectively known as OPEC+, opted against formally deepening production cuts, while de facto leader Saudi Arabia extended its 1M barrel per day voluntary trim into the first qtr & other members announced further reductions.  The policy steps were decided in a virtual meeting delayed by internal disagreements over the baselines, the levels off which quotas are decided, of the OPEC group's largest West African members, Nigeria & Angola.  The spat postponed talks initially scheduled to be held in person in Vienna over the weekend of Nov 25-26.  The baselines of Angola, Nigeria & Congo remain under study.  The OPEC+ alliance had already instituted a 2M barrel per day cut in place until the end of 2024, with several coalition members voluntarily pledging a further 1.66M barrel per day decline over that same period.  While OPEC+ has not formally endorsed production reductions, market participants are following the possibility of further voluntary cuts announced by key participants to the coalition.  Already, Saudi state media has announced that Riyadh will extend its voluntary reduction of 1M barrels per day, which it has had in place since Jul, until the end of Q1-2024.  Russian Deputy Prime Minister Alexander Novak, who represents his country in OPEC+ affairs, has said Moscow will implement a voluntary supply cut totaling 300K barrels per day of crude & 200K barrels per day of petroleum products over that same period.  Close Saudi ally Kuwait will enforce a 135K barrel per day reduction in Q1, while the Energy Ministry of OPEC member Algeria said it would trim a further 51K barrels per day.  Oman said it will also reduce output by 42K barrels per day in that same period.

Oil kingpin Saudi Arabia extends its production cut as OPEC+ holds policy

Mortgage rates fell again this week, continuing a downward trend that has sparked a recent uptick in demand & fueled hopes that more homeowners will be willing to sell amid an ongoing inventory shortage.  Still, affordability struggles remain.  Freddie Mac reported that the average rate on the benchmark 30-year fixed mortgage fell for the 5th straight week to 7.22%, down from 7.29% last week.  At this time a year ago, the 30-year note averaged 6.49%.  The average rate for a 15-year fixed mortgage also declined, dropping to 6.56% from 6.67% the week prior.  The 15-year rate averaged 5.67% a year ago.  "Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates," said Sam Khater, Freddie Mac's chief economist.  "The current trajectory of rates is an encouraging development for potential homebuyers, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels," Khater continued.  "The modest uptick in demand over the last month signals that there will likely be more competition in a market that remains starved for inventory."  The Mortgage Bankers Association (MBA) reported that mortgage applications have climbed for 4 straight weeks.  The decline in rates helped to spur more housing demand, with applications for a mortgage to purchase a home climbing 5% for the week.  Still, application volume remains down 19% compared with the same time last year.  "In addition to helping to improve affordability for homebuyers, a continued decline in mortgage rates could also convince some homeowners to sell, which would increase the low supply of existing homes on the market," MBA Pres & CEO Bob Breoksmit said.  But many homeowners who are locked in at significantly lower rates than are available today are reluctant to move or unable to afford to do so.  Realtor.com reported that pending home sales fell 1.5% in Oct to the lowest level since the real estate agency began tracking the data in 2001.  More prospective buyers are now looking to new construction rather than existing homes, as builders can often offer more favorable rate terms, but builders appear to be having some jitters, too.  "While buyers faced limited existing home inventory, especially as mortgage rates climbed in October, new construction activity picked up, offering hope that additional home supply is inbound," said Realtor.com senior economic research analyst Hannah Jones.  "However," Jones added, "as the cost of homeownership remains out of reach for many would-be buyers, homebuilder sentiment fell to the lowest level since December 2022, suggesting builders are concerned about how ongoing affordability headwinds will impact buyer demand."

Mortgage rates continue downward trend, remain above 7%

Signed contracts to buy previously owned homes in the US fell last month to the lowest level on record as a spike in mortgage rates locked many would-be buyers out of the market.  The National Association of Realtors (NAR) said that its pending home sales index decreased 1.5% in Oct to the lowest reading since the gauge was established in 2001.  The forecast expected contracts to decline by 2%.  "During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years," said Lawrence Yun, NAR chief economist.  "Recent weeks' successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied."  Pending sales remain down 8.5% from the same time last year.  The report suggests that the housing market still has a long way to go before it recovers from the deep freeze that it entered as a result of the Federal Reserve's interest-rate hike campaign.  "Given that inventory levels remain low, and the real estate market generally slows heading into the holidays, pending home sales might not bounce right back from this low point," said Kate Wood, a home & mortgage expert at NerdWallet.  Borrowing costs have retreated noticeably over the course of Nov, as many investors believe the Fed is done hiking interest rates following two cooler-than-expected inflation reports last week.  Rates on the popular 30-year fixed mortgage fell to a 2-month low of 7.44% last week, according to Freddie Mac, down from a high of 7.79% at the end of Oct.  Still, rates remain well above the pre-pandemic average of 3.9%.  The astronomic rise in mortgage rates over the past year is not only dampening consumer demand but is also limiting inventory.  That is because sellers who locked in a low mortgage rate before the pandemic have been reluctant to sell with rates continuing to hover near a 2-decade high, leaving few options for eager would-be buyers.  A recent report from Realtor.com shows that the total number of homes for sale, including those that were under contract but not yet sold, fell by 4% in Sep, compared with the same time a year ago.  Available home supply remains down a stunning 45.1% from the typical amount before the COVID-19 pandemic began in early 2020.

High mortgage rates continue to take their toll on the US housing market

Gold closed lower as the $ moved higher even after a key US inflation measure eased last month.  Gold for Feb closed down $9 to settle at $2057 per ounce.  US core personal consumption expenditures, the Federal Reserve's preferred inflation gauge, rose by 0.2% in Oct, down from 0.3% a month earlier & 3.5% on an annualized basis, down from 3.7%.  The results met the consensus estimate.  The result shows US inflation continues to slow with interest rates at the higher in more than 2 decades.  With inflation on the downswing, the Federal Reserve is no longer expected to further hike rates & the focus is turning to when the central bank will begin cutting them.  Despite the dovish result, the $ & treasury yields rose, bearish for gold.  The ICE dollar index was last seen up 7.8 points to 103.54 & the 2-year note was last seen paying 4.713%, up 3.3 basis points, while the yield on the 10-year note was up 7.3 points to 4.338%.

Gold Closes with a Loss as the Dollar and Yields Rise Even as a US Measure Showed Inflation Slowed Last Month

US oil futures settled with a loss of more than 2%, even as OPEC+ announced that several of its member countries agreed to voluntary cuts totaling 2.2M barrels a day for Q1-2024 (see above).  While oil prices initially rallied on the extension & expansion of OPEC+ output cuts into 2024, investors remain concerned about OPEC compliance & global demand growth going into the seasonally soft winter demand period.  Outside of Saudi Arabia, OPEC+ members historically struggle in compliance with planned cuts, leading to some market skepticism about the actual magnitude of cuts that will be implemented.  Jan West Texas Intermediate crude fell $1.90 (2.4%) to settle at $75.96 a barrel.

U.S. Oil Futures Settle More Than 2% Lower After OPEC+ Announces Voluntary Output Cuts

Look below, the Dow had a stellar month up 2900 for a new record.  But market breadth was only a mediocre 3- 2 & NAZ did not participate in the rally.  Many stocks remain below record levels.  Bulls say this performance will bring new records shortly.  Maybe.  At the same time safe haven gold is only 1% below its record.  Stocks are risky investments while gold is the classic safe haven investment.  Something has to give.

Dow Jones Industrials 

Markets rise as the Fed's key reading on consumer inflation cools

Dow went up 299, advancers over decliners a relatively modest 3-2 & NAZ fell 88.  The MLP index gained 3 to 258 & the REIT index added 2+ to the 364s.  Junk bond funds were mixed & Treasuries had selling which drove yields higher following recent reclines.  Oil rose fractionally to the 78s ahead of OPEC's meeting on setting production goals & gold was down 10 to 2066.

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An inflation measure closely watched by the Federal Reserve eased in Oct, providing some welcome relief to Ms of Americans who have been crushed by higher prices.  The personal consumption expenditures (PCE) index showed that consumer prices were unchanged from the previous month, according to the Labor Dept.  On an annual basis, prices climbed 3%, down from the 3.4% recorded the previous month.  The figures were both mostly in line with estimates.  In another sign the Fed's fight against inflation is making progress, core prices, which strip out the more volatile measurements of food & energy, climbed 0.2% from the previous month & 3.5% from the previous year.  It marked the best reading for core inflation since 2021.  While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously said that core data is actually a better indicator of inflation.  Still, both the core & headline numbers point to inflation that continues to run above the Fed's preferred 2% target.  Other figures included in the report showed that consumer spending rose just 0.2% in Oct, compared to a 0.7% increase in Sep.  Many economists anticipate that spending will slow in the coming months as consumers continue to grapple with expensive goods, high interest rates & the resumption of federal student loan payments.

Fed's preferred inflation gauge eases in October

A key measure of home-purchase applications rose for the 4th straight week as an ongoing drop in mortgage rates reignited demand among consumers.  The Mortgage Bankers Association's (MBA) index of mortgage applications rose 3% last week, compared with the previous week.  The data also showed that the average rate on the popular 30-year loan dropped to 7.37%, the lowest level in 10 weeks.  That is also a notable drop from just one month ago, when rates hovered around 7.91%.  The decline in rates helped to spur more housing demand, with applications for a mortgage to purchase a home climbing 5% for the week.  Still, application volume remains down 19% compared with the same time last year.  However, demand for refinancing plunged 9% for the week & remains up just 1% from the year-ago period.  Although mortgage rates are falling, they remain 88 percentage points higher than they were a year ago, offering little incentive to homeowners who already locked in a lower rate.  "The purchase market remains depressed because of the ongoing, low supply of existing homes on the market," said Joel Kan, MBA deputy chief economist.  "Similarly, refinance activity will likely be muted for some time, even with the recent decline in rates, as many borrowers locked in much lower rates in 2020 and 2021."  The interest rate-sensitive housing market has cooled rapidly following the Federal Reserve's aggressive tightening campaign.  Policymakers have raised the benchmark federal funds rate 11 consecutive times since Mar 2021 in an attempt to crush stubborn inflation & slow the economy.  A recent report from Realtor.com shows that the total number of homes for sale, including those that were under contract but not yet sold, fell by 4% in Sep, compared with the same time a year ago.  Available home supply remains down a stunning 45.1% from the typical amount before the COVID-19 pandemic began in early 2020.

Mortgage demand rises again as rates drop to 10-week low

Pending home sales, a measure of signed contracts on existing homes, dropped 1.5% in Oct from Sep.  They hit the lowest level since the National Association of Realtors (NAR) began tracking this metric in 2001, meaning it's even worse than readings during the financial crisis over a decade ago.  Sales were down 8.5% from Oct of last year.  Because the index measures signed contracts, it is the most recent indicator of housing demand.  It reflects the buyers who were out shopping in Oct, which was when the popular 30-year fixed mortgage rate briefly shot higher than 8%.  Rates have since pulled back to around 7.3%, according to Mortgage News Daily.  The realtors continue to say it's not just high rates but still very low supply of homes for sale that is deflating activity.  “Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” Lawrence Yun, chief economist for the NAR, said.  “Multiple offers, of course, yield only one winner, with the rest left to continue their search.”  Pending sales fell in all regions month-to-month except in the Northeast.  They fell most steeply in the West, which is where homes are most expensive.  Sales were down everywhere compared with a year ago.  Tight supply still-strong demand have kept pressure on home prices, which not only continue to hit new highs but appear to be accelerating in their gains.  Realtors noted that sales of homes priced above $750K have been increasing simply because there is more supply on the high end of the market.

Pending home sales drop to a record low, even worse than during the financial crisis

Today's inflation news was good, but not a great surprise.  While times of extraordinary high rates should be over, inflation is still around.  Meanwhile Nov is shaping up as the best month of this year.  Results from the OPEC+ meeting on setting production levels going forward should be announced today or tomorrow.  Whatever is decided will influence investors' attitude towards stocks.

Dow Jones Industrials

Markets waver after GDP data for the third quarter

Dow inched up 13 after selling in the last 2 hours of trading, advancers over decliners about 2-1 & NAZ slid back 23.  The MLP index rose 2 to the 255s & the REIT index remained higher, up 2+ to the 362s.  Junk bond funds rose along with the stock market rise & Treasuries had more buying which lowered yields.  Oil rose 1+ to the high 77s & gold was up 7 to 2067 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Richmond Federal Reserve Pres Thomas Barkin said that policymakers need to retain the option of raising interest rates if inflation doesn't show enough progress coming down.  Markets largely expect the Fed has stopped raising rates & will start cutting in 2024.  But Barkin said he's not ready to commit to a particular policy path with so much uncertainty in the air.  “If inflation comes down naturally and smoothly, awesome, you know, there’s no particular need to do anything with interest rates if inflation steps down,” he said.  “But if inflation is going to flare back up, I think you want to have the option of doing more on rates,” Barkin added.  “I guess the bigger point is, there’s no precision that anyone can point to at exactly what the level of rates that exactly handles inflation and exactly the way you want to handle it. So you’re constantly trying to adjust on the fly as you learn more about the economy.”  Barkin spoke shortly after the Commerce Dept reported that the economy grew at a 5.2% annualized pace in the 3rd qtr.  As growth has held strong, inflation is still above the Fed's 2% annual target, though it has shown a consistent progression lower in recent months.  The Fed's preferred inflation measure of core personal consumption expenditures showed a 12-month rate of 3.7% in Sep & is expected to show a slightly lower reading in Oct.  Pricing in futures markets indicates the Fed could cut rates as much as 4 times, or a full percentage point, next year.  Fed Governor Christopher Waller said yesterday that he'd consider cuts if the inflation data shows progress over the next several months.  However, Barkin called the possibility of easing policy “a forecasting question” that he's not ready to answer.  “I don’t see it as a there’s a right answer on rates or a wrong answer on rates,” he said, adding that he’s “skeptical” about inflation and thinks it’s going to be “stubborn” ahead.  Atlanta Fed Pres Raphael Bostic also offered commentary, saying in an essay that he sees economic growth slowing substantially & believes inflation will come down further as well.  “Altogether, the research, data, survey results, and input from business contacts tell me that tighter monetary policy and tighter financial conditions more broadly are biting harder into economic activity,” Bostic wrote.  “At the same time, I don’t think we’ve seen the full effects of restrictive policy, another reason I think we’ll see further cooling of economic activity and inflation.”  Bostic said his staff expects the inflation rate to decline to 2.5% by the end of 2024 & then get back to the Fed's 2% target by the end of 2025.  Both Bostic & Barkin will be voters in 2024 on the rate-setting Federal Open Market Committee.

Fed’s Barkin says hikes still on the table if inflation doesn’t continue to ease

General Motors (GM) is working to regain confidence heading into 2024 with several investor-focused initiatives following a tumultuous year of labor strikes & setbacks in its plans for electric & autonomous vehicles.  The automaker plans to increase its quarterly div next year by 33% to 12¢ per share; initiate an accelerated $10B share repurchase program; & reinstate its 2023 guidance to include an estimated $1.1B in earnings before interest and tax, or EBIT-adjusted, impact from roughly 6 weeks of US labor strikes by the United Auto Workers (UAW) union.  GM CEO Mary Barra said the company is finalizing a budget for next year that will “fully offset the incremental costs of our new labor agreements.  “The long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” she said.  GM’s reinstated 2023 guidance also includes:

• Net income attributable to stockholders of $9.1-9.7B, compared with a previous outlook of $9.3-10.7B.
  
• Adjusted EBIT of $11.7-12.7B, compared with the previous outlook of $12-14B.
• Adjusted EPS of roughly $7.20-7.70 including the stock buyback, compared with the previous outlook of $7.15-8.15.
• EPS in of $6.52-7.02, including the stock buyback, compared with the previous outlook of $6.54-7.54.
• Adjusted automotive free cash flow of $10.5-11.5B, compared with the previous outlook of $7-9B.
• Net automotive cash provided by operating activities of $19.5-21B, compared with the previous outlook of $17.4-20.4B.

Before the UAW strikes, CFO Paul Jacobson said the company was on track to achieve “toward the upper half” of its earnings forecast.  Today the automaker said new labor deals in the US & Canada are expected to increase costs by $9.3B & add approximately $575 in costs per vehicle.  A majority of that impact is from the UAW deal, which expires in Apr 2028.  The stock rose 3.83 (16%).

GM shares jump 10% on stock buyback, dividend hike and 2023 guidance

Foot Locker (FL) posted surprise earnings & sales beats & said it saw strong results over the Thanksgiving weekend.  The sneaker & sportswear retailer narrowed its full-year forecast, reflecting slightly better sales trends.  It said it now expects sales to drop by 8-8.5% for the year, compared with a previously issued forecast of an 8-9% decrease.  It projects a same-store sales decline of 8.5-9%, compared with its previous guidance of a 9-10% drop.  Yet FL lowered the high end of its adjusted EPS guidance, dropping to $1.30-1.40 per share, down from the previous $1.30-1.50.  CEO Mary Dillon said the company has made progress with its turnaround initiatives.  She pointed to a new marketing deal with the NBA & said the holiday qtr is off to a strong start.  Over Thanksgiving week, FL saw solid traffic & sales in stores & online, with some gains in the amount that customers spent & number of items they put in their baskets.  Dillon added shoppers have shown they're willing to pay full price for items “when the product is new, compelling, and trend right.”  But she said it is still early.  “We know we’re vying for wallet share with a value-conscious consumer this holiday season,” Dillon added.  “While our customers remain discerning with their discretionary dollars and we expect that will continue to through the season, we’re also seeing them respond to newness at key moments.”  In the fiscal 3rd qtr, EPS was 30¢, compared with $1.01 in the year-ago period.  Total revenue fell about 8.6% from $2.18B in the year-ago period.  Same-store sales fell 8% year over year, which the company said reflected “ongoing consumer softness,” a change in its mix of vendors & a 3% negative impact as it closes some Champs stores.  Even so, that was slightly better than the 9.7% drop expected.  Digital sales fell by 5.6% year over year, Chief Commercial Officer Frank Bracken said.  Yet excluding Eastbay, a digital brand that the company wound down last year, digital sales rose 0.4%.  The stock jumped 2.70 (9%).

Foot Locker shares jump after earnings beat, more upbeat sales outlook

Gold closed at the highest in more than 3 years as the $ gave up early gains after US 3rd-qtr GDP growth was revised even higher than the 4.9% increase initially reported, while lower treasury yields also offered support.  Gold for Feb closed up $6 to $2067 per ounce, the highest since more than 3 years.  US 3rd-qtr GDP growth was revised up to 5.2% by the Bureau of Economic Analysis, above consensus expectations for a 5% increase.  The $ rose early following the data, but fell back in later trade.  The ICE dollar index was last seen down 0.1 points to 102.74.  Treasury yields weakened, lowering the carrying cost of owning gold.  The 2-year note was last seen down 7.5 basis points to 4.66%, while the 10-year note was paying 4.268%, down 5.7 basis points.

Gold Climbs to the Highest in More than Three Years as the Dollar and Yields Ease

West Texas Intermediate (WTI) crude oil closed higher for 2nd day despite rising US oil inventories following a report OPEC+ plans 1M barrels per day of new production cuts at its  meeting.  WTI crude oil for Jan closed up $1.45 to settle at $77.86 per barrel, while Jan Brent crude, the global benchmark, closed up $1.42 to $83.10.  Delegates to a meeting said OPEC+ may production by another 1M barrels per day to support prices, on top of 5-million bpd in current cuts.  The meeting was delayed from Nov 26 amid internal squabbling as Angola & Nigeria sought higher quotas, while the UAW is also seeking to raise output.  In its weekly survey, the Energy Information Administration said US oil inventories rose by 1.6-M barrels. the 6th-straight rise & counter to a survey from the American Petroleum Institute released a day earlier that showed an 817K-barrel drop in stocks.  Prices are also being supported by a winter storm in the Black Sea region that has disrupted more than ½ of Kazakhstan's production & slowed seaborne exports from Russia.

WTI Crude Oil Rises Again Following a Report OPEC+ Plans Another Production Cut

The stock market had a solid rally today but gave most of that back in the last 2 hours.  However Dow has had a very good month, up over 2300.  Gold is also doing well, up 70 taking it close to its record.   Hmmm!!               

Dow Jones Industrials 

Markets rise carefully as gold nears its record price

Dow went up 58 , advancers over decliners better than 3-1 & NAZ rose 54.  The MLP index added 1+ to the 255s & the REIT index advanced 3+ to 364.  Junk bond funds crawled higher & Treasuries saw more buying which reduced yields (more below).  Oil was steady in the 76s before tomorrow's important OPEC+ meeting to set production levels (more below) & gold added 3 to 2063, edging closer to its record at 2078.

AMJ (Alerian MLP Index tracking fund)

The US economy grew at a faster pace in the 3rd qtr than previously reported, underscoring its resilience even in the face of still-high inflation & steep interest rates.  Gross domestic product, the broadest measure of goods & services produced across the economy, grew by 5.2% on an annualized basis in the 3-month period from Jul-Sep, the Commerce Dept said in its 2nd reading of the data.  That compares with the previously reported 4.9% increase.  It marks the fastest pace of growth in nearly 2 years.  The change largely stemmed from upward revisions to both gov & business spending.  However, the report also included a downward revision to consumer spending, which was lowered to a 3.6% rate.  Despite the surprising show of strength, there are other signs the economy is beginning to slow.  Job growth is moderating; the housing market – which is vulnerable to higher interest rates – is trapped in a prolonged downturn; & consumer spending has shown signs of cooling off.  Many economists expect to see further cooling in coming months as higher interest rates continue to work their way thru the economy.  Steeper borrowing costs tend to create higher rates on consumer & business loans, which slows the economy by forcing employers to cut back on spending.

US economy grew faster than previously reported in the third quarter

The influential Organization of Petroleum Exporting Countries & its allies, collectively known as OPEC+, convene to decide next production policy steps tomorrow, in a postponed virtual meeting overshadowed by conflict in the Middle East, internal disgruntlement & the imminent expiry of a key Saudi supply cut.  All eyes have turned on whether the OPEC subset of the group — steered by heavyweight Saudi Arabia — will have mended its differences, after sources said that Angola & Nigeria objected to lower baselines for next year.  Baselines, levels off which cuts & quotas are decided, have been a bone of contention within OPEC+, stalling talks amid UAE pushback in the summer of 2021.  Angola & Nigeria have struggled with declining output amid underfunding, spare capacity depletion & infrastructural sabotage.  But accepting lower baselines would pose risks in the event of future output recoveries.  The 2 countries' baselines for 2024, & implicitly their production quotas, were due to be studied following assessment from 3 independent data providers.  2 OPEC+ delegates said that a compromise had yet to be reached, as the clock ticks toward key meetings between OPEC, OPEC+ and their technical committee.  The gatherings were initially scheduled as in-person meetings last weekend in Vienna, before a last-minute downgrade to virtual conferences.  Their new date overlaps with the first day of the 2023 United Nations Climate Change Conference (COP28) hosted by key OPEC member the UAE, which is trying to raise its profile as a champion of the green transition.  Beyond internal strife, OPEC+ has been contending with a perceived disconnect between prices & supply-demand fundamentals, which has frustrated the group, including Saudi Energy Minister Prince Abdulaziz bin Salman, who warned market speculators they should “watch out” in May.  OPEC+ members already have a 2M barrels-per-day production cut in place, compounded by 1.66M-barrels-per-day voluntary declines from some members.  Both were agreed until the end of 2024.  Topping this, Saudi Arabia & Russia instituted respective supply drops of 1M barrels per day & 300K barrels per day until the end of this year.  These drops fleetingly boosted prices that languished amid high interest rates & banking turmoil in the first ½ of the year, but gains have since retreated, given a fragile recovery in China & political uncertainty in the Middle East.

OPEC+ oil producers head into meeting with quota unease and geopolitical risks casting a shadow

Treasury yields fell as investors considered the outlook for interest rates & awaited fresh data that could provide hints about the state of the economy.  The yield on the 10-year Treasury was 4 basis points lower at 4.296%. That marks the first time since Sep that the benchmark rate trades below 4.3% & the 2-year Treasury  yield was last down by more than 3 basis points at 4.703%.  The yield on the 2-year note had hit a low of 4.666%, marking the lowest level since Jul 18 when it yielded as low as 4.660%.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Investors assessed the outlook for interest rates as they digested comments from Federal Reserve Governor Christopher Waller & looked to upcoming economic data.  Waller yesterday said that monetary policy was “well positioned” to achieve the Fed's goals of slowing the economy & lowering inflation.  Many investors took this as a sign that the central bank could be done hiking rates.  Uncertainty about the path ahead for monetary policy & especially around how long rates are set to stay elevated & when they may be cut have grown louder among investors in recent weeks.  One last Fed meeting is scheduled for this year on Dec 12-13.  Markets are expecting the central bank to keep rates unchanged then & are hoping for hints about when policymakers believe rates could come back down.  Concerns about the state of the economy & whether higher rates will lead to a recession have also continued.  Data today suggests that consumers still expect economic contraction, however their overall confidence in the economic outlook rose in Nov.

10-year Treasury yield falls below 4.3% for the first time since September

Stocks have had an excellent rise in the last month (see below).  But nervous investors are buying gold, taking it near its record.  The 2 typically do not rise at the same time.

Dow Jones Industrials

Markets hesitate on concerns the November rally could be overdone

Dow finished up 83, advancers modestly ahead of decliners & NAZ rose 40.  The MLP index stayed in the 253s & the REIT index added 2+, taking it lover 360.  Junk bond funds fluctuated & Treasuries were purchased which lowered yields.  Oil bounced back 1+ to the 76s & gold advanced 30 to 2042 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Amazon (AMZN) has announced that its Black Friday & Cyber Monday holiday shopping event that kicked off around a week before Thanksgiving was its "biggest ever" compared to the same 11-day period in previous years.  The e-commerce giant said, "Customers around the world purchased more than one billion items on Amazon, with shoppers saving nearly 70% more on Amazon during the 11 days of deals compared to the same period last year," ending on Cyber Monday.  AMZN also said more than 500M of those items were sold by independent sellers, "most of which are small and medium-sized businesses."  "There are many customers who are still checking off their shopping lists, and we are excited to announce that we will have millions more deals on a wide selection of products to come, with new deals dropping every day through December 24, along with fast, convenient delivery options," said Doug Herrington, CEO of Worldwide Amazon Stores.  The sales figures come as online shoppers who took advantage of Black Friday spent enough with retailers to set a new record this year, according to Adobe Analytics.  The company said online Black Friday shopping sales came in at $9.8B in 2023 & it climbed 7.5% from the total that Black Friday online shoppers forked over in 2022, according to Adobe Analytics.  The stock fell 70¢.

Amazon says Black Friday, Cyber Monday sales event was its 'biggest ever'

Shoppers kicked off the holiday season with a bang, as a record 200.4M people hit stores & searched websites for gifts from Thanksgiving Day thru Cyber Monday, according to a survey by the National Retail Federation (NRF).  The turnout marks an all-time high since the major trade group & Prosper Insights & Analytics began tracking total in-store & online traffic in 2017.  It topped last year's figure of 196.7M shoppers & NRF's forecast for 182M people during the 5-day weekend.  The number of people shopping online rose to 134.2M this year, up from 130.2M a year ago.  Consumers who shopped at stores fell slightly, from 122.7M people in 2022 to 121.4M people this year.  The trade group did not estimate total spending, but said shoppers shelled out an average of $321.41 on holiday-related purchases over the weekend.  That’s roughly in line with the $325.44 average last year.  But the number is not adjusted for inflation.  NRF CEO Matt Shay said the large turnout “speaks to the way consumers are feeling, but also the deals that were out there.”  He said other factors including the weather worked in retailers' favor.  Cooler temperatures, which many parts of the country had this weekend, can help motivate shoppers to spring for seasonal items like jackets, sweaters & boots.  As of Thanksgiving weekend, consumers said they were about halfway done with their holiday shopping, according to the results.  NRF's survey of 3498 adult consumers was conducted Nov 22-26.   Yet it is too soon to predict how the rest of the peak retail season may play out.  Strength in early shopping could reflect shoppers' hunger for good deals rather than their desire to spend.  It could also show a reversion to a pre-pandemic pattern of holiday shopping, when customers concentrated their spending during peak times like Black Friday sales events & the final days before Christmas.  Retailers struck a cautious note about the season when reporting earnings earlier this month. 

Black Friday weekend shopping turnout soars, as consumers seek bargains

US consumer confidence rose in Nov after 3 straight monthly declines, with Americans planning big-ticket purchases like motor vehicles & houses over the next 6 months even as they continued to fret over higher prices & interest rates.  Despite the rebound in morale, which was driven by an improvement in expectations, about 2/3 of consumers surveyed this month still perceived a recession to be "somewhat" or "very likely" to happen over the next year, the survey from the Conference Board showed.  Most economists are, however, not forecasting a recession, but rather a period of very slow growth.  Those expectations were strengthened by recent inflation-friendly data, including a moderation in job gains in Oct, that have led financial markets to believe that the Federal Reserve was probably done raising interest rates this cycle.  "Overall, this data supports the idea of slower growth at the moment but the prospect of continued growth into next year," said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts.  The Conference Board said its consumer confidence index increased to 102.0 this month from a downwardly revised 99.1 in Oct.  The forecast called for the index dipping to 101.0.  The improvement in confidence was concentrated mostly among households aged 55 & up.   Consumers in the 35-54 age group were less optimistic about their prospects.  The survey's present situation index, based on consumers' assessment of current business & labor market conditions, edged down to 138.2 from 138.6 in Oct.  Its expectations index, based on consumers' short-term outlook for income, business & labor market conditions, rose to 77.8 from 72.7.  It remains below 80, a level historically associated with a recession within the next year.  "General improvements were seen across the spectrum of income groups," said Dana Peterson, chief economist at the Conference Board.  "Nonetheless, write-in responses revealed consumers remain preoccupied with rising prices in general, followed by war/conflicts and higher interest rates."  Consumers' 12-month inflation expectations fell to 5.7% from 5.9% in Oct, likely reflecting news this month that inflation subsided in Oct.  The share of consumers in the Conference Board survey expecting higher interest rates was the smallest since Apr 2021, while the proportion anticipating lower borrowing costs was the largest in nearly 3 years.  The cooling inflation backdrop has left financial markets anticipating a rate cut from the Fed in mid-2024, according to CME Group's FedWatch Tool.

US consumer confidence rises in November

Gold closed at the highest in more than a year as the $ fell to the lowest in 3 months & treasury yields fell following dovish comments from a Federal Reserve official.  Gold for Feb delivery closed up $27 to $2060 per ounce.  The rise comes as the $ continues to depreciate, with the ICE dollar index last seen down 0.38 points to 102.8, the lowest since Aug 10.  The $ has weakened amid expectations the Federal Reserve is done with raising interest rates after a series of weaker than expected economic reports showed the central bank has successfully slowed the economy to bring down inflation.  Comments from Christopher Waller, a voting member of the Fed's policy committee, that the central bank could lower interest rates if inflation continues to decline, helped push the currency lower.  Treasury yields also eased, lowering the carrying cost of owning gold.  The 2-year note was last seen down 10.8 basis points to 4.747%, while the 10-year note was paying 4.353%, down 3.9 basis points.

Gold Closes at the Highest in More than a Year as the Dollar and Yields Weaken

Oil snapped a 3-session losing streak as OPEC+ members continued negotiations over output levels & a Federal Reserve official signaled the central bank’s rate-hiking campaign may be complete.  West Texas Intermediate rose 2.2% to settle above $76 as the production cartel worked to resolve the deadlock over oil-output quotas for some African nations.  The stalemate may not be resolved before the group’s scheduled meeting, possibly requiring further delay, one delegate said.  Meanwhile, Fed Governor Christopher Waller said in prepared remarks that he’s “increasingly confident” that monetary policy is tight enough to reduce inflation.  The $ also weakened after Waller's comments, making commodities priced in the currency more appealing.  Crude futures have moved into a broad holding pattern ahead of the OPEC+ meeting planned for Thurs, with traders awaiting a decision on next year's output levels.  Among the particular hurdles are production quotas for African members Nigeria & Angola, which have frequently underproduced in recent years.  WTI for Jan increased 2.1% to settle at $76.41 a barrel & Brent for Jan rose 2.1% to settle at $81.68 a barrel.

Oil Rises as Traders Parse OPEC+ Signals, Fed’s Rate Comments

Dow rallied during midday trading, but lost much those gains in the PM.  Data is coming in mixed.  After its rally of about 3000 in the last 30 days, stocks need time to rest.  Meanwhile the record high for gold futures is $2078.80.

Dow Jones Industrials 

Markets edge higher after remarks from Fed Governor Waller

Dow went up 129, advancers over decliners 3-2 & NAZ rose 10.  The MLP index crawled up to the 254s & the REIT index added 1+ to the 359s.  Junk bond funds edged higher along with stocks & Treasuries had modest buying which slightly reduced yields (more below).  Oil rebounded 1+ to the 76s as the important OPEC+ meeting on Thurs looms & gold jumped 19 to 2032, nearing its record high.

AMJ (Alerian MLP Index tracking fund)

 

Online shoppers who took advantage of Black Friday spent enough with retailers to set a new record this year, according to Adobe Analytics.  The company said online Black Friday shopping sales came in at $9.8B.  It climbed 7.5% from the total that Black Friday online shoppers forked over in 2022.  Last year, consumers spent $9.2B online on the day after Thanksgiving.  "The decline in online prices over the last year has created a favorable environment for consumers with strong discounts this season that are tempting to even the most price conscious consumers," Adobe Digital Insights lead analyst Vivek Pandya said.  Purchases of electronics in particular contributed to this year's Black Friday online sales, climbing 152% from their daily averages in Oct.  Many consumers picked up smartwatches, TVs & audio equipment.  Buy Now, Pay Later has been an increasingly popular option for shoppers, with Adobe Analytics reporting a 20% year-over-year increase in online customers using it over the weekend.  On Cyber Monday, online consumers are projected to choose this method for $782M worth of shopping.  Total online sales on Cyber Monday could wind upcoming in at $12-12.4B, setting the day up to break a record of its own, Adobe Analytics also predicted.

Black Friday online sales reach record level, according to Adobe Analytics

Federal Reserve Governor Christopher Waller said he's growing more confident that policy is in a place now to bring inflation back under control.  There was nothing in Waller's prepared remarks for a speech that suggests he's contemplating cutting interest rates & he noted that inflation currently is still too high.  But he pointed out a variety of areas where progress has made, suggesting the Fed at least won't need to hike rates further from here.  “While I am encouraged by the early signs of moderating economic activity in the fourth quarter based on the data in hand, inflation is still too high, and it is too early to say whether the slowing we are seeing will be sustained,” he said.  “But I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent.”  A subsequent speech today from Governor Michelle Bowman offered a contrasting view, in which she reiterated her belief that more rate hikes likely will be needed as evolving dynamics keep inflation elevated.  The commentary comes 2 weeks before the rate-setting Federal Open Market Committee's Dec 12-13 policy meeting.  Markets largely expect the committee to hold its key lending rate steady at 5.25-5.50%.  But Fed officials have stressed the importance of remaining vigilant on inflation & keeping their options open.  During the central bank’s ongoing battle against inflation, Waller has been one of the more hawkish members, meaning he has favored tighter policy & higher rates.  However, he titled his  speech today, “Something Appears to Be Giving,” a contrast to a recent speech titled “Something’s Got to Give.”  “I am encouraged by what we have learned in the past few weeks — something appears to be giving, and it’s the pace of the economy,” he added.  Waller cited a variety of areas where activity is moderating, from retail sales to the labor market to manufacturing.  He also noted easing in supply chain pressures that were largely responsible for the initial jump in inflation, but he said that factor can't be counted on to help bring inflation down further.  “Monetary policy will have to do the work from here on out to get inflation back down to 2 percent,” he continued.

Fed’s Waller expresses confidence that policy is in the right place to bring down inflation

Treasury yields were slightly higher, as investors awaited the release of economic data that could provide hints about the economic outlook.  The 2-year Treasury yield was up by about 3 basis points at 4.885% & the 10-year Treasury  yield was 2 basis points higher at 4.4%.  Yields & prices have an inverted relationship & 1 basis point equals 0.01%.  Investors weighed the prospects for the economy, as they looked ahead to various economic reports scheduled this week that could signal upcoming monetary policy decisions from the Federal Reserve.  Markets are widely expecting the central bank to have hit the end of the interest rate hiking cycle that it began in early 2022, but questions linger around how long rates will stay elevated & when they will be cut, as recessionary fears persist.  Fed officials have in recent months repeatedly indicated that monetary policy will remain restrictive until policy goals are met & have provided no signs of when rate cuts may be announced.  Recent data has suggested that higher rates are having the desired effect & inflation is easing, although it remains above the Fed's 2% target range.  The latest reading of the consumer price index reflected a year-on-year increase of 3.2% in Oct.  Fresh inflation insights are expected on Thurs by way of the personal consumption expenditure price index, a key data point for the Fed.

Treasury yields inch higher as investors consider economic outlook 

Dow was flattish in the first hour.  Then Waller's comments brought in some buying although it is being done carefully.  The data on Fri's online sales (see above) was encouraging.  More data & comments are coming this week.

Dow Jones Industrials

Markets pause after hitting nearly 4-month highs

Dow declined 56, decliners over advancers 5-4 & NAZ was off 9.  The MLP index remained flat at 254 & the REIT index was up 1+ to the 358s.  Junk bond funds fluctuated & Treasuries had heavy buying which lowered yields.  Oil fell fractionally to 75 & gold rose 10 to 2013 (more on both below).

AMJ (Alerian MLP Index tracking fund)

 

The humanitarian truce deal that has brought a pause to the fighting in the Gaza Strip has been extended by a further 2 days, Qatar's ministry of foreign affairs said.  Spokesperson Majed Al-Ansari did not immediately confirm the details of the deal but said earlier that it could include further hostage releases & aid deliveries.  17 hostages held by Hamas in Gaza were released yesterday, including 4-year-old Israeli-American Abigail Mor Edan.  Israel released 39 Palestinian prisoners in return.  The first limited pause in fighting formally began on Fri & Pres Biden has said he hopes the current truce will be extended to allow more captives to be freed.  Today, Elon Musk was accompanied by Israeli Prime Minister Benjamin Netanyahu on a visit to a kibbutz in southern Israel that had been attacked by Hamas militants on Oct 7.  The Tesla (TSLA) CEO & owner of social media platform X, formerly Twitter, then was taken to individual families' homes to hear more personal experiences of the attacks.

Qatar says agreement reached to extend Israel-Hamas truce for two additional days

The blockbuster diabetes drug Mounjaro is more effective for weight loss than another highly popular diabetes treatment, Ozempic, in overweight or obese adults, according to a large analysis of real-world data published today.  Patients taking Eli Lilly 's (LLY) Mounjaro were significantly more likely to lose 5%, 10% & 15% of their body weight overall & saw larger reductions in body weight after 3 months, 6 months & a year compared with those on Novo Nordisk 's Ozempic in the study by Truveta Research. The firm compiles & analyzes patient data from a collective of health-care systems.  The results come as both drugs & similar treatments approved for weight loss soar in demand in the US for their ability to help patients shed unwanted pounds over time.  Mounjaro & Ozempic are only approved for the treatment of Type 2 diabetes, but many people use the weekly injections off-label to lose weight.  A spokesperson for LLY said the company does not promote or encourage off-label use of any of its medicines & noted that the new study was not sponsored by the drugmaker. Novo Nordisk did not immediately respond to a request for comment on the new study.  Previous head-to-head studies have similarly suggested that Mounjaro is more effective than Ozempic for weight loss & controlling blood sugar in adults with Type 2 diabetes.  But today's study confirms Mounjaro's edge over Ozempic in a real-world setting, specifically among adults who are overweight or obese.  Notably, head-to-head clinical trials in that population are not yet available, according to Truveta Research.   LLY stock fell 9.24 (2%).

Mounjaro is more effective than Ozempic for weight loss, real-world study

Sales of new US single-family homes fell more than expected in Oct as higher mortgage rates squeezed out buyers even as builders cut prices, but the setback is likely temporary amid a persistent shortage of previously owned houses on the market.  The decline in sales reported by the Commerce Dept was in line with a recent deterioration in homebuilder sentiment, which came as the rate on the popular 30-year fixed-mortgage approached 8%, leaving builders anticipating slower buyer traffic.  Mortgage rates have since retreated from 2-decade highs & are at levels last seen in late Sep, which could pave the way for a rebound in sales.  "The market for new homes remains very solid by any historical standard and continues to be boosted by extremely low existing home inventory," said Daniel Vielhaber, an economist at Nationwide in Ohio.  New home sales dropped 5.6% to a seasonally adjusted annual rate of 679K units last month, the Commerce Dept's Census Bureau said.  Sep's sales pace was revised lower to 719K units from the previously reported 759K units.  The forecast for new home sales, which account for 15.2% of US home sales, would fall to a rate of 723K units.  The share is the largest in at least a decade.  New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.  They, however, can be volatile on a month-to-month basis.  Sales increased 17.7% on a year-on-year basis in Oct.  The supply of previously owned houses on the market is nearly 50% below its pre-pandemic level, according to the National Association of Realtors, which last week reported that home resales plunged to more than a 13-year low in Oct.

US new home sales fall more than expected in October

Gold prices hit a more than 6-month high, firming above the $2000 per ounce level, as a weaker $ & expectations of an end to US interest rate hikes lifted demand.  Spot gold was up 0.5% at $2012 per ounce, after reaching its highest since May 16 at $2017.  US gold futures also rose 0.5% to $2013.  The $ eased 0.1% against a basket of major currencies, hovering around a more than 2-month low touched last week & making gold less expensive for holders of other currencies.  Gold is flying and to really explain it, is the fact that it’s finally broken above $2000 in a significant way & the move was purely technical, driven by last week’s US inflation data & jobs report.  Gold prices are well above their 50-, 100- &-200 day moving averages & are around $60 away from Aug 2020's all-time high of $2072.

Gold Hits 6-Month High on Fed Pause Expectation, Softer Dollar

Oil fell for a 4th day as traders looked ahead to this week's delayed OPEC+ meeting & wider financial markets carried a risk-off tone.  Global benchmark Brent dipped near $80 a barrel after falling in each of the last 5 weeks, the longest such run since the end of 2021.  Crude's retreat today mirrored a slight worsening of sentiment across markets with data showing profits at China's industrial companies rose at a much slower pace in Oct, highlighting risks to growth in the world's largest crude importer.  The Organization of Petroleum Exporting Countries had to push back the critical gathering to decide on supply policy by 4 days to Nov 30 amid a dispute over quotas.  Signs of weakness in crude futures have traders & analysts expect the group will take additional measures to tighten the market.  Brent has dropped by almost a 5th from a high in late Sep on increased supply from non-OPEC+ countries & the fading of the Israel-Hamas war risk premium.  The Intl Energy Agency forecast earlier this month that the market would tip back into surplus next year.  Brent for Jan settlement fell 0.65% to $80.06 a barrel % WTI for Jan declined 0.7% to $75.03 a barrel.

Oil Declines for a Fourth Day as Traders Look to OPEC+ Meeting

Stocks meandered looking for direction.  Dow stayed slightly below breakeven all day.  The economy remains less than robust with new home sales, a major part of the economy, still struggling.

Dow Jones Industrials 

Markets edge lower following 4 weeks of advances

Dow was off 69, decliners ahead of advancers 3-2 & NAZ fell 10.  The MLP index stayed in the 254s & the REIT index added 1+ to the 358s.  Junk bond funds hardly budged & Treasuries had some buying which reduced yields (more below).  Oil slid back pennies in the 75s ahead of big oil meeting in Dubai which begins on Thurs & gold gained 7 to 2010.

AMJ (Alerian MLP Index tracking fund)

Treasury yields slipped as markets reopened after Fri's shortened trading day & investors awaited economic data that could affect the Federal Reserve's monetary policy.  The yield on the 10-year Treasury was more than 5 basis points lower at 4.425% & the yield on the 2-year Treasury  was last down by 4 basis points at 4.918%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  The Oct personal consumption expenditures price index, due on Thurs, is the central bank's preferred inflation gauge & could indicate whether pressures from higher prices are easing.  Today new home sales data for Oct & the Dallas Fed manufacturing index are expected.  Investors will be carefully scanning the data for hints about the state of the economy & whether it is cooling as interest rates remain elevated.  That comes as markets are broadly expecting the Fed to be done hiking but are uncertain about when rates may be cut.  Fed policymakers have so far given little indication about how long rates will remain elevated for.  Several central bank officials, including Chair Jerome Powell, are due to make remarks this week.  One Fed policy meeting remains on the schedule this year & investors are hoping to gain some clarity on the outlook for interest rates then.  Minutes from the Fed's last meeting were released last week & suggested possible rate cuts had not been discussed.

Treasury yields slip to start the week as investors assess state of economy

A new Wall Street Journal/NORC survey released found that only 36% of voters believe the American dream is still a reality.  This is a drastic downfall from the 53% who believed in the American Dream in a 2012 edition of the survey & 48% in 2016.  Also in the 2023 poll, ½ of voters said that life in the US is worse than it was 50 years ago, approximately 30% of respondents said life is better.  In response to the assertion that the "economic and political systems in the country are stacked against people like me," 50% of voters agreed.  Approximately 39% of respondents disagreed.  The WSJ/NORC survey polled 1163 registered voters.  The poll was conducted on Oct 19-24 & has a margin of error of plus or minus 4 percentage points.  The poll is far from the only survey that has found precipitously declining faith in the American Dream & upward mobility in the US.  The latest State of the American Family survey released by MassMutual this month found that more than 2 in 5 Americans (42%) believe the American dream is out of reach.  That is a 9-point increase relative to 2018 & similar to the survey's findings in 2013, when the US economy was in the midst of a sluggish recovery from the financial crisis.  Respondents to the MassMutual survey identified a family's financial security as the top factor defining the American dream – a shift from a decade ago when homeownership & not living paycheck to paycheck were the top priority.  US consumer security has been shaken by the ongoing inflation crisis under Pres Biden's administration that began in Jan 2021.  When compared to the beginning of the crisis, prices remain up a stunning 17.6%.

American dream is slipping away, voters say in new poll

The United Arab Emirates (UAE) planned to use its role as the host of the biggest & most important annual climate conference as a platform to lobby foreign gov officials for oil & gas deals, according to a cache of internal documents obtained by a not-for-profit investigative journalism organization.  The leaked records show that Sultan Al-Jaber, who controversially serves as both COP28 pres designate & chief exec of state oil giant ADNOC (the Abu Dhabi National Oil Company), planned to discuss fossil fuel deals with 15 countries during the forthcoming climate conference.  Al-Jaber was the founding CEO of Abu Dhabi state-owned renewable energy firm Masdar.  The documents were published by the Centre for Climate Reporting (CCR), who worked in collaboration with the BBC.  CCR, which has received funding from the likes of Greenpeace & Rockefeller Philanthropy Advisors, said it was able to verify the accuracy of the leaked documents via an unnamed whistleblower.  “The documents referred to in the BBC article are inaccurate and were not used by COP28 in meetings. It is extremely disappointing to see the BBC use unverified documents in their reporting,” a COP28 spokesperson added.  The documents purportedly show briefing notes prepared by the UAE's COP28 team for meetings with almost 30 foreign govs ahead of the summit, which starts Thurs & is scheduled to run thru to Dec 12.  COP28 is the UNs' upcoming round of global climate talks.  The 2-week long summit will be held in Dubai, with scores of world leaders & gov ministers from nearly 200 countries expected to attend, alongside an estimated 70K delegates.  It is regarded as a pivotal opportunity to accelerate action to address the climate crisis at a time when global temperatures are hitting record highs & extreme weather events are affecting people worldwide.

UAE reportedly planned to use COP28 climate summit to lobby for oil deals

There was not much news to inspire investors to buy or sell.  But more earnings reports are being released today.

Dow Jones Industrials

Markets head for a fourth straight winning week

Dow advanced 100, advancers over decliners about 3-1 & NAZ gave back 27.  The MLP index crawled up 1+ to the 254s & the REIT index was steady, holding near 356.  Junk bond funds slid lower & Treasuries saw selling, bringing higher yields (more below).  Oil fell chump change in the 76s & gold was up 6 to 1999 (more on both below).

AMJ (Alerian MLP Index tracking fund)

 

 

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Online spending on Thanksgiving Day jumped 5.5% compared to a year ago, according to Adobe Analytics, a reflection of holiday shoppers who are buying more of their gifts online & responding to discounts.  E-commerce sales totaled $5.6B on the holiday.  That's nearly twice as much as the $2.87B that consumers spent on Thanksgiving in 2017, according to the company's analysis.  For Black Friday, online spending is expected to climb even higher & bring in an expected $9.6B, up 5.7% year over year.  Still, it's too soon to say if the pop will be enough to propel a strong season overall.  Holiday shoppers are expected to spend 3-4% more year over year in Nov & Dec, according to the National Retail Federation’s (NRF) forecast. That would be a significant slowing from the holiday sales growth seen during the pandemic & a return to more typical growth levels prior to the Covid crisis.  Adobe's data covers more than 1T visits to US retail websites, 100M unique items & 18 total product categories.  It does not cover in-store purchases, where the majority of US holiday purchases still take place.  Last year, about 70% of total holiday sales took place in physical retail locations, according to the NRF.

Thanksgiving Day online sales jump as discounts motivate holiday shoppers

Inflation may be decreasing in the US, but Americans expect it to surge again, according to fresh data.  The University of Michigan's latest consumer survey found consumer sentiment fell for the 4th month in a row in Nov, while households' inflation expectations climbed for the 2nd straight reading.  According to the findings, consumers see inflation accelerating to 4.5% over the next year, up from 4.2% in Oct & 3.2% in Sep.  Over a 5-year horizon, consumers now see inflation running at 3.2% on average, up from 3.0% in Oct & 2.8% in Sep.  That is the highest since a matching reading of 3.2% in 2011.  Households' long-term inflation outlook has not been higher than that since 2008, when it reached 3.4% as the financial crisis was beginning to unfold.  "These expectations have risen in spite of the fact that consumers have taken note of the continued slowdown in inflation," Joanne Hsu, director of the survey, said.  "Consumers appear worried that the softening of inflation could reverse in the months and years ahead."  The Labor Dept reported last week that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries & rents, was unchanged in Oct from the previous month.  Prices climbed 3.2% on an annual basis.  But when compared with Jan 2021, shortly before the inflation crisis began, prices remain up a stunning 17.6%.  Inflation has created severe financial pressures for most US households, which are forced to pay more for everyday necessities like food & rent.  The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations.

US consumer sentiment drops again on inflation fears

Treasury yields were broadly higher as markets reopen following the Thanksgiving break.  The benchmark 10-year Treasury yield was 5 basis points higher at 4.466%, pulling away from the 2-month low reached before the holiday & the 2-year note yield rose by 2 basis points to 4.933%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors are continuing to assess the outlook for interest rates & the economy after the Federal Reserve's latest meeting minutes gave no indication of rate cuts in the near future.  Markets are pricing in a 99.5% chance of rates being held in the current 5.25-5.50% range at the final Fed meeting in Dec, according to CME Group's FedWatch tool. Fri, which is a shortened trading day, will provide insight into US business activity across services & manufacturing with the release of S&P Global flash purchasing managers' index figures.

Treasury yields nudge higher after Thanksgiving holiday 

Gold was on track to notch a 2nd weekly gain, supported by $ weakness as markets continued to price in expectations for looser monetary policy in the world's biggest economy next year.  Bullion edged higher to trade just below the key level of $2000 an ounce, with strength buoyed by a sharp drop in the $ this month.  Weakening US economic data & inflation has added to expectations the Federal Reserve will rapidly shift to rate cuts next year.  Lower rates are positive for gold, which doesn't pay interest, while a weaker $ makes bullion less expensive for buyers in foreign currencies.  The shift in the outlook has helped stem outflows from bullion-backed exchange-traded, which has been a persistent headwind to prices for months.  Late investors will look to US purchasing managers indices as a gauge for the health of the economy.  Weaker-than-expected readings could bolster bets on rapid rate cuts by the Fed next year.  Spot gold is up chump change to $1994 an ounce, taking its weekly gain to 0.7%.  The Bloomberg Dollar Spot Index was little changed, & is down 2.7% so far this month.

Gold Heads for Weekly Gain as Markets Bet on Fed Pivot in 2024

Oil held a decline after the OPEC+ alliance was forced to delay a critical meeting amid a dispute over output quotas, casting a pall of uncertainty over the group's production policy for next year.  Global benchmark Brent was steady above $81 a barrel after dropping 1.3% over the previous 2 sessions, while US counterpart West Texas Intermediate was below $77 a barrel following the US Thanksgiving break.  Saudi Arabia, the de facto leader of the OPEC+ members.  The meeting initially planned for this weekend has been pushed back to Nov 30 & it'll be an online session instead of in-person.  Crude is on course for a back-to-back monthly loss, with prices down about 16% from a high in late Sep.  The drop has been driven by signs of increased supplies from non-OPEC+ countries, rising US stockpiles & the fading of the premium generated by the Israel-Hamas war.  Meanwhile, the International Energy Agency sees the market tipping back into surplus next year.  Brent for Jan settlement added pennies to $81.51 a barrel & WTI for Jan delivery was at $76.60 a barrel, 0.7% below the Wed close.

Oil Holds Decline as OPEC+ Dispute Clouds Outlook for Production

Dow is near the close, up 400 in this shortened week, & is up 2200 YTD.  Next week serious trading resumes with a lot going on around the globe.  Enjoy the holding weekend.  😀😀

Dow Jones Industrials