Markets waver while Nasdaq stocks shine

Dow was up 66, decliners over advancers almost 5-4 & NAZ gained 192.  The MLP index crawled up 1+ to the 291s & the REIT index stayed in the 396s.  Junk bond funds inched higher & Treasuries saw more selling which raised yields.  Oil barely budged in the mid 69s & gold remained weak, down 17 to 2627 (more on both below).

Dow Jones Industrials 

American consumers are feeling less confident in Dec, a business research group says.  The Conference Board said that its consumer confidence index fell back in Dec to 104.7 from 112.8 in Nov.  The forecast called for a rise to 113.8.  Consumers had been feeling increasingly confident in recent months, spending more in the run-up to the all-important holiday shopping season.  The consumer confidence index measures both Americans' assessment of current economic conditions & their outlook for the next 6 months.  The measure of Americans' short-term expectations for income, business & the job market tumbled more than a dozen points to 81.1.  The Conference Board says a reading under 80 can signal a potential recession in the near future.  The proportion of consumers expecting a recession over the next 12 months remained stable.  The board reported that consumers' view of current conditions ticked down just more than a point to a reading of 140.2.  Consumers stepped up their spending at retail stores last month, contributing to a 0.7% rise in retail sales in Nov.

American consumers feeling less confident in December

Durable goods orders in the US fell back again last month, reversing some of the gains made the previous month.  Total orders for goods made to last at least 3 years were 1.1% lower than a month earlier in Nov, figures from the Commerce Dept showed.  That was a steeper decline than the 0.3% drop expected.  It marks a 3rd decrease in the last 4 months, following a 0.8% increase in Oct.  Orders for transportation equipment, which often sway the headline figure, were lower on month, with marked drops in orders for both civilian & military aircraft & parts, the figures showed.

U.S. Durable-Goods Orders Dropped More Than Expected

Honda & Nissan are reportedly looking at the possibility of merging, sparking speculation about what the potential move could mean, but experts say the rumors of a partnership are not a surprise.  News of the merger talks comes as both Japanese auto giants struggle to compete with the largest global electric vehicle (EV) makers, including Tesla (TSLA) & Chinese automaker BYD.  While neither Honda nor Nissan has confirmed the merger discussions, Brian Moody, exec editor at Autotrader & Kelley Blue Book, predicted roughly a year ago that there would be more of these types of partnerships, because companies can pool resources & defray costs.  Moody said that if a small brand says it is going to go all-electric that is 1 thing, but for a large company to do so is a huge undertaking that takes vast amounts of research & development.  Honda & Nissan are the 2nd- & 3rd-largest auto manufacturers in Japan, respectively, with Toyota (TM) leading them both.  The respective market capitalizations of Honda and Nissan are roughly ¥6T ($39B) & ¥1.2T ($7.6B).  "A company like Honda might not be able to do that on their own, but at the same time, Honda has some pretty compelling products, so I feel like they both bring something important to the table," Moody said.  "But the big thing is pooling resources so that [they] don't make a bad business decision for a technology, electric cars, that's growing — but not growing as rapidly as people had maybe thought or hoped," it added.  So what could a merger potentially mean for the consumer?  Moody says he could see the value in smaller, less expensive electric cars coming from such a deal.  "I could even see a merger or a partnership like this resulting in a low-cost sub brand," he said.  "Because that's what we're hearing, is that a lot of people, a lot of consumers, are saying, 'You know, new cars are just too expensive. I can't buy a new car.'"

What a Honda-Nissan merger could mean for the auto industry and consumers

Gold eases as $ yields rise in thin holiday trading.  Gold prices edged lower in a subdued holiday-season, weighed down by a robust $ & high Treasury yields as investors awaited clearer signals on the Federal Reserve's monetary policy for 2025.  Spot gold was down 0.3% at $2612 per ounce & US gold futures eased 0.7% to $2627.  The dollar index was up 0.6% against its rivals, hovering around an over 2-year high, reducing gold' appeal for holders of other currencies, while the benchmark US 10-year yield also gained.  The market continues to digest the results of the Federal Open Market Committee (FOMC) meeting last week.  A shallower rate path for 2025 is now getting factored in.  Despite the Fed's 25-basis-point rate cut last week, its signal of fewer rate reductions in 2025 sent gold to its lowest levels since mid-Nov last week.  While non-yielding gold benefits in low-interest-rate environments, investors are recalibrating expectations for next year.  Gold has set multiple record highs this year, rising 27% so far to mark its best annual performance since 2010, driven by robust central bank buying, geopolitical tensions & monetary policy easing by major banks.

Gold eases as U.S. dollar, yields rise in thin holiday trading

Oil prices rose as weaker-than-expected US inflation data revived hopes for further policy easing, although the prospect of a supply surplus next year weighed on the market.  Brent crude was up 36¢ at $73.30 a barrel.  US West Texas Intermediate crude was up 39¢ at $69.85 a barrel.  Risk assets, including US equities & crude, have started the week on a firmer footing & that cooler inflation data helped ease concerns after the Federal Reserve's aggressive interest rate cuts.  The Senate passing legislation to end the short-lived shutdown over the weekend has helped.  Both oil benchmarks fell more than 2% last week on concerns about global economic growth & oil demand after the central bank signaled caution over further monetary policy easing.  Research from Asia's top oil refiner Sinopec showed that China's oil consumption will peak in 2027, which also weighed on prices.

Oil Rises as Lower U.S. Inflation Points to Possible Easing

The history of the stock market shows that in most years, there is a "Santa Claus" rally that leaves investors on the right side of the “naughty or nice” list.  In 2024, the AI boom helped power stocks to 1 of their best years in the new millennium but, last week, the Federal Reserve put a damper on the party by drawing a hard line on interest rates, causing indices to tumble.  This has left many investors wondering if some Santa magic can erase the sell-off & put a bow on a great year.

Markets slip at the start of a holiday-shortened week

Dow dropped 259, decliners over advancers 5-2 & NAZ went up 65.  The MLP index was lower in the 289s & the REIT index dipped to the 385s.  Junk bond funds hardly budged & Treasuries saw a little selling which took yields a little higher (more below).  Oil slid down to the high 68s & gold retreated 20 to 2624.

Dow Jones Industrials

Shoppers are ready to drop some cash this holiday season as total spending this year is expected to be at least $24B higher than last year, according to the National Retail Federation (NRF).  Online shopping is still the biggest hit, but in-person shopping is making a comeback & the NRF predicts nearly ½ of all shoppers will head to department & discount stores to knock out their shopping lists.  Store owners at the Galleria at Sunset in Henderson, Nevada, said it just gets busier each year.  "Black Friday was great. We hit goal. We actually passed goal, so that was good. It's better than last year. So that was good for us. Everybody always likes to try on stuff, too. So I think that's what keeps the malls open," said Bring it Back owner Brandon Nova.  Some spots at the Galleria at Sunset are seeing a flood of visitors, especially during the holiday season.  Store owners & employees said the customers want that in-person experience.  "Most of the families have the reason to come here and make their kids come here. This is the big reason for them, you know, to come to the mall," said Crazy Bungee owner Duygu Beg.  The mall's general manager said it hasn't been this busy since the pandemic.  "I would say since COVID, it's been the first holiday season where … we're feeling the holiday spirit. The customers, you can just feel that they're happy to be out shopping, happy to be out, you know, experiencing the holiday season," said Galleria at Sunset general manager Heather Cox.  There has been a huge rebound in in-person shopping over the last 4 years as consumers start to enjoy the social aspect of going to the mall again, according to the NRF.  "We, as consumers, don't shop just because we need something," said Mark Mathews, NRF's exec director of research.  "One of the main reasons that people go out is for deals, but it's also to be with family and friends and be engaged and a fun activity. And for a lot of people, shopping is a fun activity. So, you know, I don't think we're going to ever see an end of in-store shopping?"  Gift cards are the most popular item on people's wish lists this year, followed by clothes & accessories, then books & other media, according to the NRF.

In-person shopping makes a comeback amid record-spending holiday season

Nordstrom (JWN) announced it will become a private company after it agreed to a buyout deal valued at roughly $6.25B from the founding family & Mexican department store El Puerto de Liverpool.  The company's board of directors unanimously approved of the transaction, which is expected to close in the first ½ of 2025.  As part of the deal, the Nordstrom family will have majority ownership in the company, with 50.1%, & Liverpool will own 49.9%.  Common shareholders will receive $24.25 in cash for each share of Nordstrom common stock they hold.  “For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best,” CEO Erik Nordstrom said.  “Today marks an exciting new chapter for the business. On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future.”  JWN stock fell 34¢ to 24.19.

Nordstrom to go private in $6.25 billion deal with founding family, Mexican retailer

Treasury yields inched higher as the holiday-shortened trading week began.  The yield on the 10-year Treasury was 2 basis points higher at 4.546%, while the 2-year Treasury was up 1 basis point at 4.330%.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  Orders for durable goods — generally big-ticket items such as aircraft, appliances & computers — fell 1.1% in Nov, the largest month over month drop since Jun, according to preliminary data from the Dept of Commerce.  This followed a 0.8% increase in Oct.  Also on the data front, the Conference Board's consumer confidence index for Dec fell to 104.7, compared to the estimate of 113.0.  The 10-year yield jumped 13 basis points last week after the Federal Reserve pared down rate-cut projections, indicating only 2 more interest rate cuts lie ahead in 2025, down from 4 potential cuts that had been signaled in Sep.  Yields cooled a bit Fri after the Nov personal consumption expenditures price index, the Fed's preferred measure of inflation, came in slightly below expectations.  Markets close early tomorrow & are shuttered Wed for the Christmas holiday.

Treasury yields trade slightly higher to start holiday week

Stocks were mixed as investors considered the path of interest rates next year after the Fed hinted they would stay higher for longer.  The  stock market is coming off an upbeat Fri but a downbeat, & volatile, week with all 3 major averages up above 1% Fri but down around 2% for the week.  The Fed is playing the part of the Grinch, signaling that it will step back its pace of cutting next year, leading stocks to 2 of the worst days of the year on Wed.  Investors are betting on the Fed holding rates steady next month & for its subsequent meeting in Mar, bets are about 50-50 on a cut vs. a hold.

Markets bounce on encouraging inflation data after a rough week

Dow bounced back 497, advanced over decliners better than 3-1 & NAZ rose 199.  The MLP index climbed jumped 4 to about 291 & the REIT index finished up 6+ to the 312s.  Junk bond funds continued higher & Treasuries remained in demand which reduced yields.  Oil was up pennies above $69 & gold recovered 40 to 2648 (more on both below).

Dow Jones Industrials 

Starbucks (SBUX) baristas in some locations are planning to strike thru Christmas Eve, starting with cafes in Los Angeles, Chicago & Seattle.  The strikes will escalate each day, covering new markets, as Starbucks Workers United pushes for better pay for baristas.  SBUX is “backtracking on our promised path forward,” the union said.  The stoppage could mean longer waits for holiday drinks & popular merchandise in the days leading up to Christmas, when many Americans will be off work & school or buying last-minute gifts.  Relations between the company & the union have turned frosty again, after a thaw earlier this year. In late Feb, both sides agreed to work together on a “foundational framework” that would include a process to achieve collective bargaining agreements for individual stores.  Since then, they've conducted more than nine bargaining sessions over 20 days.  Earlier this week, SBUX & the union met for the last scheduled bargaining session of the year.  But ahead of the meeting, Starbucks Workers United baristas voted to authorize a strike if the coffee giant didn't propose a comprehensive package that would address pay & other benefits.  In the bargaining session, SBUX proposed no immediate pay increase & only guaranteed annual pay hikes of 1.5% going forward, the union said.  SBUX said that Workers United prematurely ended the bargaining session this week.  “We are ready to continue negotiations to reach agreements. We need the union to return to the table,” the company added.  The union asked for a 64% increase to hourly wages immediately & a 77% pay hike over the life of a 3-year contract. “This is not sustainable,” the company said.  SBUX fell 79¢.

Starbucks baristas strike in three U.S. cities during pre-Christmas rush

The smooth economy that Donald Trump was poised to inherit suddenly looks a bit rockier, with critics saying the pres-elect is contributing to the uncertainty.  The Dow essentially ended yesterday flat after having posted 10 days of losses.  The Federal Reserve now sees inflation as staying stubbornly elevated as it has become cautious about further interest rate cuts planned for next year.  On Wed, Trump blew up a bipartisan budget deal, which means the gov could shut down after midnight tomorrow.  He then promoted a deal reached with Reps yesterday that Dem lawmakers & Pres Biden see as unacceptable.  It failed to get the two-thirds threshold needed for House passage.  This comes on top of a spate of tariff threats by Trump that the Congressional Budget Office said would raise prices & hurt growth without raising enough revenues to cover the rest of his planned tax cuts.  As Trump prepares for a 2nd term in the White House, his actions to undo a deal & replace it in under 24 hours test the proposition that markets, a favored Trump barometer of success, will accept his mix of uncertainty & reality TV drama.  But from the vantage of Trump world, the economy was already a mess.  That's because of inflation, which is currently 2.7% & public dissatisfaction with Biden.  The past few days are a reminder that the economic growth in the Rep's first term was often accompanied by turmoil.  It remains to be seen if voters already exhausted by inflation are ready for another round of blame games & uncertainty that the past few days have foreshadowed.  Trump vowed on social media  to “fight ’till the end” unless Dems agreed to lift the debt ceiling as a condition for the short-term funding to keep the federal gov open.  He & his billionaire friend & adviser Elon Musk also promised to fund challengers in the 2026 primary elections to any Rep lawmaker who opposed the pres-elect.

Trump was poised to inherit a strong economy. Things changed

The US gov could be headed for a shutdown this weekend after 2 failed attempts by House Reps in recent days to avert a stoppage.  First, Speaker Mike Johnson & his colleagues saw 1 bipartisan deal fall apart amid opposition from Elon Musk & Pres-elect Trump.  Then a 2nd GOP-negotiated deal collapsed due to 38 House Republicans joining nearly all Dems to vote no & tank that effort.  Johnson & his colleagues are still working feverishly to resolve a complex series of disputes on issues from the debt ceiling to various funding priorities but now have only hours to act to head off an array of impacts that could be felt across the country, as well as economic impacts that could grow with each passing day.  "We will regroup and we will come up with another solution, so stay tuned," was all Johnson was able to offer reporters after the latest failed vote.  For now, experts are downplaying the immediate economic effects & noting that lawmakers have intense motivation to find a deal & then get home for the holidays.  "Nobody wants the optics of shutting down the government," Stifel chief Washington policy strategist Brian Gardner noted, adding that a shutdown would include things like temporarily unpaid military personnel.  But with few options left, what could be a growing economic question for the coming days is the length of any stoppage, especially in the middle of the holiday travel season.

The US government faces shutdown. Here's what to expect

Gold is trading with a moderate positive tone following the sharp sell-off earlier this week.  Cooler-than-expected US Personal Consumption Expenditures (PCE) Price Index data has increased selling pressure on the $, although the precious metal is struggling to put a significant distance from the 1-month lows hit this week.  PCE Inflation has increased 0.1% in Nov, against expectations of a 0.2% increment.  The yearly rate accelerated to 2.4% from the previous month's 2.3% reading, still below the 2.5% anticipated by the market consensus.  Likewise, the Core PCE eased to 0.1% from 0.3% in Oct while the yearly inflation remained steady at 2,8% against market expectations of an uptick to 2.9%.  Yesterday, an upward revision to the 3rd qtr's GDP & the lower-than-expected jobless claims have endorsed the Federal Reserve's (Fed) hawkish stance for 2025.  

Gold maintains a moderate positive tone after soft US inflation

Oil prices edged higher as the $ eased from 2-year highs & as a slowdown in the inflation report bolstered expectations of 2 more rate cuts next year.  Brent crude futures edged up 16¢ to $73.04 a barrel & West Texas Intermediate (WTI) crude futures gained 21¢ to $69.59 per barrel.  The Brent benchmark was on track to end the week down about 2.5%, while WTI eased about 3%.  While the $ retreated from a 2-year high, it was heading for its 3rd consecutive week of gains, with data showing a cooling inflation 2 days after the Federal Reserve cut interest rates.  A weaker $ makes oil cheaper for holders of other currencies, while rate cuts could spur economic growth & boost oil demand.  Monthly inflation slowed in Nov after showing little improvement in recent months, pushing the main stock indices higher in volatile trading.  Chinese state-owned refiner Sinopec said in its annual energy outlook that China's crude imports could peak as soon as 2025 & the country's oil consumption would peak by 2027, as demand for diesel & gasoline weakens.  The Organization of the Petroleum Exporting Countries & allies (OPEC+) recently cut its growth forecast for 2024 global oil demand for a 5th straight month.

Oil edges higher as dollar eases, Fed rate cut fears soften

Stocks bounced back as investors digested key inflation data that showed a deceleration in price increases during Nov.  The latest reading of the Federal Reserve's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, showed price increases decelerated in Nov on a monthly basis & came in below estimates.  But they still remained sticky as the central bank fights to bring inflation back down to its 2% target.  Trump is already making significant news.  "I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas," Trump said in a post on Truth Social.  "Otherwise, it is TARIFFS all the way!!!"  This has been an unusually volatile week with the Dow finishing down 885.  Hopefully next week will bring some calm.

Markets rebound as inflation data improves

Dow advanced 564, advancers over decliners better than 5-1 & NAZ shot up 240.  The MLP index went up 3+ to 290 & the REIT index recovered 9+ to 400.  Junk bond funds were a little higher & Treasuries saw buying which lowered the relatively highs yields (more below).  Oil was off pennies in the 69s & gold bounced back a very big 41 to 2649.

Dow Jones Industrials

Prices barely moved in Nov but still held higher than the Federal Reserve's target when looked at from a year ago, according to a Commerce Dept measure.  The personal consumption expenditures price index, the Fed's preferred inflation gauge, showed an increase of just 0.1% from Oct.  The measure indicated a 2.4% inflation rate on an annual basis, still ahead of the Fed's 2% goal, but lower than the 2.5% estimate.  The monthly reading also was 0.1 percentage point below the forecast.  Excluding food & energy, core PCE also increased 0.1% monthly & was 2.8% higher from a year ago, with both readings also being 0.1 percentage point below the forecast.  Fed officials generally consider the core reading to be a better gauge of long-run inflation trends when it excludes the volatile gas & groceries category.  The annual core inflation reading was the same as in Oct while the headline rate rose 0.1 percentage point.  The readings reflected little increase in goods prices & a 0.2% rise in services prices.  Food & energy prices both posted 0.2% gains as well.  On a 12-month basis, goods prices have fallen 0.4%, but services have risen 3.8%.  Food prices were up 1.4% while energy fell 4%.  Housing inflation, 1 of the stickier components of inflation during his economic cycle, showed signs of cooling in Nov, rising just 0.2%.  Income & spending numbers in the release also were a bit light compared with expectations.  Personal income rose 0.3% after having jumped 0.7% in Oct, falling short of the 0.4% estimate.  On spending, personal expenditures increased 0.4%, one-tenth of a percentage point below the forecast.  The personal saving rate edged lower to 4.4%.

Key Fed inflation measure shows 2.4% rate in November, lower than expected

The 10-year Treasury yield retreated as a key inflation gauge showed cooler-than-expected price pressures.  The yield on the 10-year Treasury fell by 6 basis points to 4.50% after topping 4.57% in the previous session & the 2-year Treasury yield dipped 6 basis points to 4.25%.  The benchmark 10-year yield is still about 0.10% higher than the 4.40% level where it ended last week.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  Treasury yields surged on Wed after Fed policymakers increased their inflation forecast for the coming year & pointed to only 2 potential rate cuts in 2025, down from 4 potential cuts that had been signaled in Sep.  Fed Chair Jerome Powell flagged at a press conference after the central bank meeting that the 12-month inflation rate will top the central bank's 2% goal, estimating 2.5% for headline inflation & 2.8% for the core level, which excludes food & energy prices.  Powell nevertheless said the monthly move will be “much lower” than in previous months.  The US gov is currently on the brink of a shutdown as dozens of Reps voted against a spending bill backed by Pres-elect Trump.  The House Rep deal would have funded the gov for 3 months & suspended the debt ceiling for 2 years.  Without an agreement, a partial gov shutdown is expected to begin tonight.

Spike in 10-year Treasury yield this week eases a bit after lighter-than-expected inflation reading

Tesla (TSLA) reversed losses from earlier in the day to trade higher, putting the electric vehicle maker's stock on track to post a weekly gain.  On Wed, TSLA shares slumped 8% to post their worst day since before Donald Trump's presidential election victory in Nov.  For the week, TSLA shares are now up 0.2%.  Trump's win prompted a sharp rally in its shares, as investors increased their bets that the electric vehicle firm would benefit thanks to its CEO Elon Musk's close ties to the pres-elect.  The stock is still up 72% since Nov 5's market close, the night of the presidential vote.  Musk was appointed by Trump to co-lead the newly created Dept of Gov Efficiency, also referred to as “DOGE.”  The proposed presidential advisory commission's acronym shares the same name as the internet meme that inspired so-called “memecoin” cryptocurrency, dogecoin.  Last month, there was a report that Trump's transition team was planning to pursue a federal framework for regulating self-driving vehicles.  The move would offer a major boost to Musk's EV firm.  TSLA is staking its future on the idea of rolling out mass fleets of autonomous vehicles, known as “robotaxi” services.  At the firm’s “We Robot” event in Oct, Musk unveiled the firm's Cybercab self-driving concept car.  TSLA has yet to deliver on Musk's promise of offering truly autonomous vehicles.  Tesla's Autopilot & paid “Full Self-Driving” services still require a human behind the wheel to supervise the system's actions & take over if needed.  TSLA stock rose 4.20.

Tesla shares drop 1%, continuing decline as post-election rally loses steam

Stocks bounced back as investors digested key inflation data that showed a deceleration in price increases during the month of Nov.  The latest reading of the Fed's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, showed price increases decelerated in Nov on a monthly basis & came in below estimates.  But they still remained sticky as the central bank fights to bring inflation back down to its 2% target.  A Fed-induced sell-off earlier in the week left the major averages reeling as the central bank projected fewer rate cuts for 2025 than it had previously forecast.  Although stocks mostly stabilized yesterday, the threat of a gov shutdown, coupled with more Trump tariff threats on Europe, pressured global markets across the board.

Markets struggle to advance while Treasury yields continue to rise

Dow recovered a meager 15 (session lows), decliners over advancers less than 3-2 & NAZ lost another 19.  The MLP index added 1+ to 288 & the REIT index was off another 3+ to the 392s.  Junk bond funds continued mixed & Treasuries saw more selling which brought higher yields.  Oil slid to just under 70 & gold dropped 40 to 2612 (more on both below).

Dow Jones Industrials 

House Rep leaders are running out of time to avoid a partial gov shutdown tomorrow night, after Pres-elect Trump & his allies sunk a compromise bill to fund the gov thru Mar.  The continuing resolution unveiled last night appeared early on as though it would need Dem votes to pass the narrowly divided House, after hard-line conservatives balked at the price tag & several provisions of the bill, which included a pay bump for members of Congress.  But Trump's formal opposition to the bill late yesterday came only after billionaire GOP megadonor Elon Musk spent the day railing against the bill, gradually making it politically impossible for much of the House Rep conference to support it.  The very public collapse of the massive, negotiated bill has also put House Speaker Mike Johnson's standing among his conference in jeopardy.  The Louisiana Rep insisted on including several major spending initiatives in the bill, designed in part to win the necessary Dem support in the Senate the bill will need to become law.  Rather than simply demanding a lower price tag, Trump surprised many Reps yesterday by demanding that any bill to fund the gov must also raise the debt ceiling.  The debt ceiling has become a recurring, bitter debate every few years & 1 that Trump is eager to avoid during the start of his 2nd term.  “Increasing the debt ceiling is not great but we’d rather do it on Biden’s watch,” Trump said announcing his opposition to Johnson's continuing resolution.  “If Democrats won’t cooperate on the debt ceiling now, what makes anyone think they would do it in June during our administration? Let’s have this debate now. And we should pass a streamlined spending bill that doesn’t give Chuck Schumer and the Democrats everything they want.”

House Republicans race to find a Trump-backed path to avoid government shutdow

Mortgage rates climbed this week, sending overall demand lower as more Americans balked at refinancing.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage jumped to 6.72%, up from last week's reading of 6.6%.  The average rate on a 30-year loan was 6.67% a year ago.  "This week, mortgage rates crept up to a similar average as this time in 2023," said Sam Khater, Freddie Mac's chief economist.  "For the most part, mortgage rates have moved between 6 and 7 percent over the last 12 months. Homebuyers are slowly digesting these higher rates and are gradually willing to move forward with buying a home, resulting in additional purchase activity."  The average rate on the 15-year fixed mortgage climbed to 5.92% from 5.84% last week.  1 year ago, the rate on the 15-year fixed note averaged 5.95%.  The Mortgage Bankers Association (MBA) yesterday reported that mortgage applications fell 0.7% overall on a seasonally adjusted basis from a week earlier thanks to the increase in rates, which caused a 3% drop in refinancing applications.

Mortgage rates rise, hitting demand

VIX, the fear gauge, spiked by the 2nd biggest percentage in its history yesterday, after the Federal Reserve jolted the stock market by saying it would dial back its rate-cutting campaign.  The CBOE Volatility Index surged 74% to close at 27.62, up from around 15 earlier in the day.  That surge is the 2nd-greatest in history, behind a 115% leap to above the 37 handle back in Feb 2018 when there was a blow-up in funds tracking the volatility index.  Yesterday's move comes after the central bank said it will likely lower interest rates just twice next year, down from the 4 cuts it projected back in Sep, alarming investors who wanted low rates to keep fueling the bull market.  The Dow tumbled by 1100 points to its 10th straight loss.  Typically, a value greater than 20 in the VIX indicates a higher level of fear in the market.  However, for most of this year, the VIX had been suppressed below that level, worrying investors who believed the market had gotten overly complacent.  The VIX is calculated based on the prices of put & call options on the S&P 500.  A spike could indicate a rush by investors to purchase put options for protection in a decline.  Still, there has been 1 other significant surge in the VIX in 2024.  The 3rd-biggest surge in the VIX in history occurred in Aug 5, 2024, when fears of a US recession & a major unwind in the ¥ carry trade, spurred a roughly 65% increase in the VIX to close above 38. On an intraday basis, the VIX briefly topped 65 that day.  Today, the VIX was last floating just above the 20 handle, down more than 25% from the prior day.

Wall Street’s fear gauge, the VIX, saw second-biggest spike ever Wednesday

Gold prices traded around flat, erasing earlier gains after US data reinforced market expectations the Federal Reserve will take a cautious approach to policy easing in the year ahead.  Spot gold edged up 0.1% at $2589 per ounce & US gold futures fell 1.9% to $2603.  Data earlier showed the US economy growing faster than expected in the 3rd qtr, while jobless claims also fell more than anticipated.  The GDP information & the jobless claims are showing that the data is fairly firm.  A solid economy & inflationary risks, including tariffs & spending cuts, reaffirm the Fed has little reason to be aggressive, which historically has not been good for non-yielding gold.  Gold slipped more than 2% to a 1-month low earlier in the session after Fed officials dialed back projections for future easing given stubborn inflation.  The drop attracted investors to buy, sending prices as much as 1.5% higher earlier in the session.  Pres-elect Trump's pre-inauguration push to sway Congress threatens to complicate efforts to avoid a gov shutdown, potentially disrupting services such as air travel & law enforcement ahead of the holidays.  Gold is considered a safe investment option during economic & geopolitical turmoil, & tends to thrive in a low-interest-rate environment.

Gold erases gains after U.S. data cements Fed's hawkish stance

Oil futures held on to the previous day's gains with attempts at a move lower held back by increased geopolitical risk premium on reports that Ukraine fired US-supplied long-range missiles into Russia days after the US authorized their use, raising concerns of an escalation in the conflict.  Bearish views of the global supply & demand situation continue to cap rallies.  With China finding it difficult to get back on a growth trajectory north of 5% & the US & Europe undergoing a cyclical slowdown, crude oil demand in 2024 & 2025 is set to grow at barely ½ of the 2M b/d pace seen over the 2022-2023 post-pandemic period.  WTI settled up 0.3% at $69.39 a barrel & Brent is flat at $70.31 a barrel.

Oil Futures Hold Gains in Volatile Session

Stocks rebounded from the previous day's sell-off that was fueled by a hawkish outlook from the Federal Reserve on its path for interest rates.  Markets are bouncing back after that harsh reaction, which was prompted by the Fed scaling back the number of rate cuts it expects next year & Chair Jerome Powell saying the decision, cutting rates by a qtr point, was a "closer call."  That was interpreted the Fed's moves as a "hawkish cut" & reacted accordingly, sending stocks to the worst day in years.  Today's recovery was very weak while the advance decline measure was negative.  Yields are rising & that is troubling for investors.

Markets bounce back from Fed-fueled rout

Dow rose 215 in an unimpressive recovery, decliners over advancers 3-2 & NAZ snapped back 118.  The MLP index edged up 1 to the 287s & the REIT index was fractionally higher to the 395s.  Junk bond funds were mixed & Treasuries had more selling, raising yields again (more below).  Oil slid lower but held above 70 & gold dropped another 48 to 2605.

Dow Jones Industrials 

Sales of previously owned homes rose 4.8% in Nov compared with Oct, according to the National Association of Realtors (NAR).  That put them at a seasonally adjusted, annualized rate of 4.15M units.  Sales were 6.1% higher than Nov 2023.  This is the 3rd-highest pace of the year & the largest annual gain in 3 years.  This count is based on closings, so contracts were likely signed in Sep & Oct.  Mortgage rates had fallen to an 18-month low in Sep but then shot higher in Oct.  “Home sales momentum is building,” said Lawrence Yun, chief economist for the NAR.  “More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%.”  The supply of homes for sale at the end of Oct was 1.33M units, up 17.7% from Nov of last year.  At the current sales pace, that represents a 3.8-month supply.  A 6-month supply is considered balanced between buyer & seller.  That tight supply continued to put pressure on prices.  The median price in Nov was $406K, up 4.7% year-over-year.  That annual comparison is gaining again.  Prices were up 4% annually in Oct.  Price gains were strongest in the Northeast & Midwest, at 9.9% & 7.3% respectively.  Roughly 18% of homes were sold above list price.  First-time homebuyers gained some ground, representing 30% of Nov sales, up from 27% in Oct but slightly lower than a year ago.  Cash is still king at 25% of sales.  Investors, however, pulled back at just 13% of sales, down from 18% in Nov of last year.  “Is this an indication where investors or more number-crunching people think that home prices are at the top? Or is another reason that rents are no longer rising?” Yun queried.

November home sales surged more than expected, boosted by lower mortgage rates

The 10-year Treasury yield continued higher a day after crossing above the key 4.5% level as firm economic data today suggested that the Federal Reserve is making the right move in planning to dial back rate cuts in 2025.  The yield on the 10-year Treasury rose over 3 basis points to 4.536%, after surpassing 4.5% in the previous session, a perceived marker of increased volatility & the 2-year Treasury yield slipped more than 3 basis points to 4.321%.  Yields & prices move inversely to 1 another.  1 basis point is equivalent to 0.01%.  Investors parsed fresh jobless claims data & US gross domestic product growth.  Jobless claims pulled back to 220K last week.  The forecast called for 230K.  Meanwhile, US GDP grew at a 3.1% clip in the 3rd-qtr, above forecast & 0.3 percentage point higher than the previous estimates.  Traders could view both readings as indicative that the economy remains steady, which supports fewer interest cuts moving forward from the Federal Reserve.  Chair Jerome Powell struck a hawkish tone on the outlook for next year, however, raising its inflation forecast & pointing to just 2 possible rate cuts in the horizon, down from the 4 posted in Sep.  The chances of another rate cut at the Fed's first policy meeting of the year in Jan slipped to under 10%, according to fed funds futures trading.

10-year Treasury yield hovers above 4.5% after Fed signals slower rate cutting cycle

Thousands of Amazon (AMZN) workers organized under the Teamsters union went on strike today after the company's "repeated refusal to follow the law and bargain."  AMZN Teamsters at 7 facilities in Skokie, Illinois; New York City, Atlanta, San Francisco & Southern California are participating in the "largest strike" against the T-$ company in American history, the union said.  Workers at other facilities are prepared to join them.  Though Teamsters says it represents about 10K people across 10 AMZN facilities in the US, the company doesn't recognize workers' affiliation with the union.  AMZN says the Teamsters union is "intentionally [misleading] the public" because they don't represent AMZN employees & drivers, company spokesperson Kelly Nantel said.  "For more than a year now, the Teamsters have continued to intentionally mislead the public – claiming that they represent ‘thousands of Amazon employees and drivers’. They don’t, and this is another attempt to push a false narrative," Nantel added.  "The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union."  Nantel also said the company "does not expect any impact on our operations."  Teamsters spokesperson Kara Deniz responded to AMZN's statement, saying the company is "gaslighting the American public with their false narratives."  "The truth is, over 20 bargaining units, representing nearly 9,000 employees have successfully organized because for many years the company has exploited and abused workers, and these workers are fed up and fighting back," Deniz said.  "No matter how massive Amazon’s corporate PR machine is, they cannot fool the American public into believing drivers delivering Amazon packages in Amazon-branded vans don’t actually work for Amazon," Deniz continued.  "No one believes this nonsense. Amazon needs to stop avoiding their legal obligation to these workers and get to the bargaining table now."  The stock rose 4.63.

Amazon workers across the country walk off the job days before Christmas

Stocks rebounded from the previous day's sell-off that was fueled by a hawkish outlook from the Federal Reserve on its path for interest rates.  Markets are bouncing back after a harsh reaction the day before, prompted by the Fed scaling back the number of rate cuts it expects next year or 2.  Chair Jerome Powell said even yesterday's decision, cutting rates by a qtr point, was a "closer call."  Markets interpreted the Fed's moves as a "hawkish cut" & reacted accordingly, sending stock averages to their worst days in months.  Meanwhile, the blue-chip Dow is in the midst of its longest losing streak in 50 years & looking to break out of that funk today.  However the Dow is still up over 12% this year.

Dow extended its losing streak after Fed signals fewer rate cuts

Dow dropped an enormous 1123, only 210 stocks on Dow were higher & NAZ sank 716.  The MLP index was off 2 to 292 & the REIT index tumbled 14+ to the 398s.  Junk bond funds were sold & Treasuries saw selling which brought higher yields.  Oil was fractionally higher above 70 & gold tumbled 24 to 2637 (more on both below).

Dow Jones Industrials 

The Federal Reserve announced its 3rd straight interest rate cut, lowering the benchmark rate by 25 basis points amid economic data showing that inflation remains above the central bank's target rate.  With the 25-basis-point cut, the benchmark federal funds rate will sit at 4.25 - 4.50%.  The Fed's move follows a 25-basis-point cut in Nov & a larger-than-normal cut of 50 basis points at its Sep meeting, which was the first reduction in rates since Mar 2020 & brought them down from 5.25% - 5.50%, the highest level since 2001. The Federal Open Market Committee (FOMC), the group within the Fed responsible for setting monetary policy, said that "labor market conditions have generally eased, and the unemployment rate has moved up but remains low" & while inflation has made progress towards the 2% objective, it "remains somewhat elevated."  "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate," the FOMC added.  One member of the FOMC, Cleveland Fed Pres Beth Hammack, dissented from the decision to cut rates & preferred to hold the benchmark rate at 4.50% - 4.75%.  The FOMC also released a summary of economic projections, which reflected 2 rate cuts in 2025, 2 cuts in 2026 & 1 cut in 2027.  The summary shows the median of the federal funds rate at 4.4% at the end of 2024, before declining to 3.9% in 2025, 3.4% in 2026 & 3.1% in 2027.  Those forward-looking projections are higher than the Fed's Sep projections, with the 2025 & 2026 medians each a ½-point higher & the 2027 figure 0.2 percentage points higher.  It also projects that the personal consumption expenditures (PCE) index, which is the Fed's favored inflation gauge, will finish this year at 2.4% & will be 2.5% in 2025, up from 2.1% in the previous projection released in Sep.  PCE would then decline to 2.1% in 2026 before reaching 2% in 2027 & over the longer run.

Federal Reserve cuts interest rates by quarter-point in December

Vultr, a startup that rents out graphics processing units & other cloud infrastructure to businesses, has raised $333M in a transaction that values the company at $3.5M.  AMD's (AMD) venture arm & hedge fund LuminArx Capital Management led the round.  Founded in 2014 & known as a low-cost virtual server provider, Vultr offers GPUs from AMD & rival Nvidia (NVDA), which are in high demand due to the boom in generative artificial intelligence.  NVDA, the biggest beneficiary thus far of the AI wave, has invested in specialist cloud providers CoreWeave.  AMD's central processing units are also available thru Vultr, alongside Intel's (INTC).  Unlike some top cloud providers, Vultr doesn’t have its own AI chip that competes with AMD or NVDA.  “We will never seek to build GPUs and compete with that layer,” Vultr CEO J.J. Kardwell said.  AMD offers very good prices based on performance for the inference stage of working with AI models, which tends to be critical for organizations deploying AI at scale, Kardwell said.  Companies generally train AI models with large quantities of data & vast fleets of GPUs before moving on to the inference stage, when the models respond to, or make inferences about, new information.  The fresh infusion of capital will go toward intl expansion, Vultr said.  The company currently has 32 data center locations, mostly outside North America.  AMD stock fell 3.61.

AMD invests in GPU cloud provider Vultr at $3.5 billion valuation

Stellantis (STLA) said it will further delay an all-electric Ram pickup from 2025 until 2026, as the automaker confronts slower-than-expected adoption of EVs & competitors struggle to make profits on electric trucks.  The decision to delay the full battery-electric model, which had already been postponed from this year, will help in prioritizing an electric range-extended version of the truck called the Ramcharger that features a gas engine combined with EV technologies.  “The decision to launch Ramcharger first was driven by overwhelming consumer interest, maintaining a competitive advantage in the technology and slowing industry demand for half-ton BEV pickups,” Ram added.  Ramcharger will be open for customer orders in the first ½ of 2025, followed by the Ram 1500 REV launch in 2026.  The change in priorities is the first major announced shift since Ram CEO Tim Kuniskis returned earlier this month, following a management shake-up that included STLA CEO Carlos Tavares leaving the company.  Kuniskis had retired from STLA in May before coming back to the automaker.  He said earlier this month to expect changes for the embattled brand, which reported a 24% sales decline thr the 3rd qtr of this year.  Kuniskis attributed current problems with the brand's sales to a slower-than-expected rollout of its redesigned Ram 1500 model as well as delays to its upcoming heavy-duty trucks.  “It’s getting better every day, but we got a lot of work to do,” said Kuniskis, who referred to the Ramcharger pickup as the brand's “Goldilocks truck” — equating to the right mix of power, range & capabilities.  The stock lost 54¢.

Stellantis further delays electric Ram pickup to prioritize plug-in ‘EREV’ model

Gold prices dropped after the Federal Reserve decided to lower borrowing costs as expected & upward revised the fed funds rate to 3.87%, for 2025.  Currently, volatile gold is around $2,610-$2,630.  The Federal Reserve cut rates by 25 basis points to 4.25%-4.50%, yet the decision was not unanimous, as Cleveland Fed Pres Beth Hammack opted to keep rates unchanged.  When comparing the statement to the past meeting, there was little change, though traders were focused on the Summary of Economic Projections (SEP).  According to the SEP, the dot plot suggests that Fed officials see just 2 cuts for 2025 & 2  more for 2026.  Officials estimate the Fed funds rate to end at 3.9% in 2025 & 3.4% in 2026.  Other projections suggest that the Fed's favorite inflation gauge, the Core PCE, is expected to end at 2.8% in 2024, 2.5 % in 2025 & 2.2% in 2026. Regarding growth, the economy is foreseen to end at 2.5% in 2024, 2.1% in 2025 & 2% in 2026.  The Unemployment Rate is expected to end the current year at 4.4% & remain unchanged at 4.3% in 2025 & 2026.  After the data, Gold prices plunged sharply as traders assessed the cut as hawkish, with just 100 basis points of easing for the next 2 years.

Gold price plummets on Fed hawkish cut, traders eye Powell

Oil futures posted a gain for the session after back-to-back losses, with prices getting a lift from official US data showing a 4th consecutive weekly decline in domestic crude inventories.  Traders also looked to a decision by the Federal Reserve on interest rates for hints on prospects for energy demand.  West Texas Intermediate crude for Jan rose $1 (1.4%) to $71.08 a barrel, ahead of the contract's expiration at the end of tomorrow's session.  The more actively traded Feb contract was up 90¢ (1.3%) at $70.55 a barrel.  Feb Brent crude, the global benchmark, gained 74¢ (1%) to $73.93 a barrel on ICE Futures Europe.  Oil futures extended their early gains today after the Energy Information Administration reported a 4th weekly decline in a row for domestic, commercial crude inventories, which edged down 900K barrels for last week.  The report was expected to show a fall of 1.8M barrels.  Late yesterday, the American Petroleum Institute reported a crude inventory drop of 4.7M barrels, according to a source citing the data.

Crude Oil Prices Rise Ahead of EIA Figures This Week

The Dow & other indices declined after the FOMC announced a qtr percentage point reduction in interest rates & just 2 more interest rate cuts in 2025, which is lower than previously projected.  In its final interest rate decision of the year, the Fed implemented its 3rd consecutive cut, bringing the interest rate down to 4.25% - 4.50%.  The central bank indicated that it could carry out just 2 more reductions to the federal funds rate in 2025, given qtr-point cuts, according to its updated Summary of Economic Projections.  Fed Chair Jerome Powell similarly signaled that the Fed will take a “more cautious” approach to monetary policy next year.  “As for additional cuts, we’re going to be looking for further progress on inflation as well as continued strength in the labor market,” Powell said.  “And as long as the economy in the labor market are solid, we can be cautious as we consider further cuts.”  Powell said that the decision to cut rates was a “closer call” than previous reductions, but that the FOMC ultimately decided it was “the right call” to balance inflation & labor market goals.  Following the announcement of the FOMC, the Dow plunged about  700.  One dreary day which will not be forgotten!

Markets are slightly higher with the Fed decision on deck

Dow went up 189, advancers over decliners 4-3 & NAZ gained 58.  The MLP index was steady in the 293s & the REIT index fell 1 to the 411s.  Junk bond funds were mixed & Treasuries had a little selling, allowing yields to inch higher (more below).  Oil rose 1 to the low 71s with US crude supplies down a 4th straight week & gold pulled back 8 to 2653.

Dow Jones Industrials

US new vehicle sales are expected to rise next year to their highest level since 2019, led by lower interest rates & improving affordability, according to industry analysts.  Cox Automotive expects new light-duty vehicle sales to hit 16.3M in 2025, slightly higher than forecasts by S&P Global Mobility & Edmunds of roughly 16.2M sales next year.  Such sales would be up from expectations of 15.9 - 16M this year & mark the highest results since roughly 17M in 2019.  That would equate to a forecasted sales gain in new cars & trucks of 2.5% or less.  The increase is expected to be driven by a continuing “normalization” of vehicle inventories, incentives/discounts from automakers, & easing financing & loan rates.  “Consumers are still feeling the pinch, but the market has become a slightly friendlier place for car shoppers than it was at the start of the year,” Jessica Caldwell, Edmunds' head of insights, said.  One of the largest growth markets is expected to be entry-level & less expensive vehicles.  The industry has been dealing with years of elevated prices & lower inventories since the coronavirus pandemic.  Edmunds reports the average transaction price for new vehicles was $47K in 2024, a 0.8% decrease compared with $48K in 2023 & a 27.2% increase compared with $37K in 2019.  Another expected growth area remains electrified vehicles, including hybrids, plug-in hybrid & all-electric models.  All-electric vehicle sales in the US are forecast to set another record in 2024, with a total sales volume near 1.3M, according to Cox.  That would mark a roughly 8% market share, up from 7.6% compared with last year but lower than expectations of 10% earlier this year.  That’s despite a forecasted year-over-year decline in US EV leader Tesla's (TSLA) sales for the first time since 2014.

U.S. auto sales next year expected to be best since 2019

Mortgage rates moved markedly higher last week, causing overall mortgage demand to drop.  Total application volume fell 0.7% compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index (MBA), the first decline in 5 weeks.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766K or less) increased to 6.75% from 6.67%, with points remaining unchanged at 0.66 (including the origination fee) for loans with a 20% down payment.  That rate was just 8 basis points higher the same week 1 year ago.  The driver of the drop was refinance demand.  It fell 3% for the week but was still 41% higher than the same week one year ago.  While mortgage rates aren’t that much lower now than they were a year ago, it may be that refinance volume is so low in general that any slight move makes for a large comparison.  Applications for a mortgage to purchase a home increased 1% for the week & were 6% higher than the same week 1 year ago.  “Conventional and VA purchase applications drove this week’s increase in purchase activity on a weekly and annual basis. Buyers remained active in the purchase market, helped by gradually improving inventory conditions and a more positive outlook on the economy and job market,” wrote Joel Kan, VP & deputy chief economist at the MBA.  Mortgage rates have been essentially flat to start this week, according to a separate survey from Mortgage News Daily, as the market awaits the Federal Reserve meeting today.  A rate cut is expected, but some analysts say it may be the last 1 for awhile.  “Markets know the Fed will cut and that the dot plot (aka rate outlook survey that’s updated 4 times per year and closely watched by bonds) will show a higher rate trajectory than September,” wrote Matthew Graham, COO at Mortgage News Daily.  “What we don’t know is how gloomy of a dot plot or how hawkish of a Powell the market is willing to accept.”

Mortgage demand drops for the first time in 5 weeks, after interest rates rise

Treasury yields were little changed, as investors awaited the Federal Reserve's latest interest rate decision & guidance on the outlook for the American economy & monetary policy from the central bank.  The yield on the 10-year Treasury was up by less than 1 basis points to 4.389% & the 2-year Treasury  yield was last roughly 3 basis points lower at 4.213%.  Yields & prices have an inverted relationship & 1 basis point is equivalent to 0.01%.  Investors are focusing on the next monetary policy move from the Federal Reserve, at 2 PM. ET.  Markets are widely anticipating the Fed to cut rates by a qtr point, in what would be its 3rd consecutive trim.  So far, the Fed has lowered rates by a combined 75 basis points after kicking the easing cycle off with a 50-basis-point cut in Sep & following up with a 25-basis-point reduction in Nov.  The Fed’s latest economic & interest rate projections are also set to be released & will give investors further hints about what could lie ahead in areas such as inflation, unemployment & the gross domestic product.  Traders are anticipating that the central bank will raise its inflation expectations & lower its projections for rate cuts next year.

Treasury yields are flat ahead of Fed rate decision

Stocks eyed a rebound, with the blue-chip Dow looking to snap its longest losing streak since 1978.  The Federal Reserve will take focus later with its latest interest rate decision.  The Dow's losing streak is its longest in nearly a ½-century (shown in the chart above), spoiling the mood of what has been a near-universal rip-roaring rally in 2024.  The blue-chip index has been left behind in a tech-focused bump lately.

Markets slide ahead of Fed decision tomorrow

Dow sank 267 (off session lows), decliners over advancers 3-1 & NAZ was off 64.  The MLP index fell 1+ to the 294s & the REIT index retreated 1+ to the 413s.  Junk bond funds continued to be weak & Treasuries had a little buying which lifted yields slightly.  Oil slid back fractionally but held above 70 & gold fell 9 to 2660 (more on both below).

Dow Jones Industrials 

Peter Navarro, who is set to become the top trade advisor to Pres-elect Trump, contended that Trump's plans for broad tariffs & steep tax cuts will not spur inflation or raise deficits, despite warnings from some experts.  Navarro said Trump's first term in the White House proved his point.  “We put on significant tariffs on China, steel, aluminum, dishwashers, solar, a lot of increased countervailing duties to stop the dumping,” Navarro said.  “We had zero inflation from any of that,” he added.  Trump imposed tariffs on China during his first term.  Pres Biden's administration kept many of them in place.  “So I would say that just go back and play all the interviews that were done on CNBC of people back in the first term with their hair on fire, worrying about inflation,” said Navarro.  “It never happened, and it’s the same movie this time,” the 75-year-old China hawk added.  Navarro, whom Trump picked earlier in Dec to be his senior counselor for trade & manufacturing, argued that the inflation that hung over Biden's term & Biden's administration kept many of them in place.  During his recent campaign, Trump said he wanted to enact much larger& broader tariffs, plus additional targeted duties on imports from China.  Since winning the election, he has issued additional tariff threats on Mexico & Canada.  Trump also has suggested a laundry list of proposed tax cuts, including further lowering the corp tax rate, as well as eliminating taxes on tips for service workers & on Social Security benefits for seniors.  He has also vowed to extend tax cuts implemented during his first term, some of which are set to expire at the end of 2025.

Trump trade counselor Peter Navarro says planned tariffs won’t spur inflation

Nov retail sales grew at a faster pace than had been expected, reflecting continued resilience in the American consumer & indicating that the holiday shopping season in the US is off to a strong start.  Retail sales rose 0.7% in Nov.  The forecast had expected a 0.6% rise in spending.  Meanwhile, retail sales in Oct were revised up to a 0.5% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data.  A 2.4% month-over-month increase in motor vehicle & auto parts sales, as well as a 1.8% increase in online sales, drove the gains.  Nov sales, excluding auto & gas, rose 0.2%, below estimates for a 0.4% increase.  The control group in today's release, which excludes several volatile categories & factors into the gross domestic product reading for the qtr, increased by 0.4%, in line with estimates.  Capital Economics North America economist Bradley Saunders wrote that the report reflects "consumer resilience."  "The solid rise in retail sales in November was led by vehicle sales but still showed signs of broad-based strength, with control group sales increasing at a healthy pace too," Saunders added.

Retail sales jump in strong start to holiday season

A report released by the National Association of Home Builders showed homebuilder confidence has held steady in the month of Dec.  The report said the NAHB/Wells Fargo Housing Market Index came in at 46 in Dec, unchanged from Nov.  The forecast expected the index to inch up to 47.  With the unchanged reading, the housing market index remained at its highest level since reaching 51 in Apr.  "While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election," said NAHB Chair Carl Harris.  He added, "This is reflected in the fact that future sales expectations have increased to a nearly three-year high."  The report said the HMI component measuring sales expectations in the next 6 months jumped to 66 in Dec from 63 in Nov, reaching the highest level since Apr 2022.  Meanwhile, the gauge charting traffic of prospective buyers edged down to 31 in Dec from 32 in Nov, while the index gauging current sales conditions held steady at 48.  The NAHB said the latest HMI survey also revealed that 31% of homebuilders cut prices in Dec, unchanged from Nov.  The average price reduction was 5% in Dec, the same as in Nov.

U.S. Homebuilder Confidence Holds Steady In December

Gold prices slid ahead of the Federal Reserve's policy meeting, with traders cautiously waiting for cues on the central bank's outlook for 2025.  Futures traded 0.4% lower at $2652 a troy ounce.  A widely anticipated 25-basis-point rate cut is already fully priced into markets, according to analysts, but further cuts are less certain.  Meanwhile, US PMI data showed the services sector rose at a faster-than-expected pace.  The resilience of the US economy supports the view that the Fed's 2025 rate cutting cycle is likely to be shallow. 

Gold Down Ahead of Fed Policy Meeting

Oil prices fell as Chinese economic data renewed demand concerns, while investors remained cautious ahead of the Federal Reserve's interest rate decision.  Brent crude futures were down 32¢ at $73.59 a barrel, while US West Texas Intermediate crude futures were down 44¢ at $70.27 a barrel.  Prices were weighed down by profit-taking after last week's 6% rally & a batch of disappointing Chinese economic data yesterday.  Prices fell from multi-week highs yesterday on unexpectedly weak consumer spending data from China, despite strength in industrial output & as investors shifted into a holding pattern ahead of the Fed meeting.  The Fed holds its final policy meeting of the year on today & tomorrow, when it is widely expected to cut interest rates by a qtr of a percentage point.  The meeting will also reveal how far officials think they will cut interest rates in 2025 & 2026, & whether the central bank will scale back easing in anticipation of higher inflation under the incoming Trump administration.  The 25 basis point cut has been priced in by the market, so any surprises from the Fed meeting could move the market.  Lower interest rates could boost economic growth & oil demand.

Oil prices fall on demand concerns, focus on Fed meeting

US stocks fell, with the Dow logging its biggest losing streak in decades.  The other major indices dropped in tandem.  Fed policymakers kicked off their final gathering of the year earlier, amid almost total conviction that a 0.25% rate cut is coming tomorrow.  Some traders suspect it could be the last cut for some time, as inflation proves persistent.  Given that, the focus is on clues to the path of rates next year — & in Jan, in particular.

Markets are prepared for first 9-day losing streak in 50 years

Dow dropped 235, decliners over advancers 5-2 & NAZ pulled back 76.  The MLP index slid 1+ to 294 & the REIT index was steady at 415.  Junk bond funds drifted lower & Treasuries had some buying which took yields a little lower (more below).  Oil fell 1+ to thee 69s & gold retreated 16 to 2653.

Dow Jones Industrials

Respondents to the CNBC Fed Survey for Dec are sure the Federal Reserve will cut rates tomorrow but they are less sure whether it should.  Amid forecasts for somewhat higher inflation & lower unemployment than in the prior survey, 93% see a qtr-point cut coming.  But only 63% believe it's what the Fed ought to do.  The outlook for 2025 is for just 2 more qtr-point cuts, down from 3 in the last survey, bringing the funds rate down to 3.8% by this time next year & 3.4%, or just above the average neutral rate, by the end of 2026.  One big unknown is the incoming administration's fiscal policies.  Respondents expressed a range of opinions: from concern about higher inflation to bullishness for growth.  The survey of 27 respondents, including economists, strategists & fund managers, showed that the outlook for Pres-elect Trump's tariffs & threatened deportations dampened the upside for some forecasters.  “I can’t remember being this uncertain about the inflation outlook,” said economist Robert Fry.  “President-elect Trump is offering us a mix of inflationary (tariffs, individual tax cuts) and disinflationary (deregulation, spending cuts) policies. Who knows what combination we’re going to end up with?” 56% of respondents see the effects of policies from the incoming administration that are likely to be enacted as “somewhat inflationary” & a further 11% see them as “extremely inflationary.”  They are divided on the growth effects, with 41% seeing the policies as “somewhat positive” for growth & 41% viewing them as “somewhat negative.”  The biggest risks to the expansion are high inflation & global economic weakness, with a tie for 3rd between the incoming administration's fiscal policies & the size of the US deficit.  Several survey participants wrote in “tariffs” specifically as a top threat.  There's uncertainty over the purpose of the tariffs & whether they are just negotiating tactics.  Overall, 37% say tariffs are a negotiating tactic that are likely to be temporary, 19% see them as revenue measures that are likely to be more permanent & 41% believe it will be a combination of the 2.  2/3 say the threatened 25% tariffs on Mexico & Canada will depend on negotiations, but 70% expect Pres-elect Trump to carry thru on 10% additional tariffs on China.  Respondents raised their outlook for the S&P 500 next year but increasingly see equities as overextended.  From current levels, the S&P 500 is forecast to rise just 3% next year & 7% by 2026.  But 69% of participants sees stocks as overpriced for a soft-landing scenario, the most in the 17 months CNBC has asked the question.

The Fed is likely to cut rates, but some worry it may not be the right move, CNBC survey found

Pfizer (PFE) forecast 2025 profits roughly in line with expectations, offering some relief to investors after a tumultuous year during which it attracted criticism from activist hedge fund Starboard Value.  Shares rose after the drugmaker also said it was expecting 2025 sales of its Covid-19 vaccine & drug to be consistent with 2024 levels.  The company expects adjusted EPS of $2.80 - $3, compared with the estimate of $2.88.  PFE has been reining in costs & shedding non-core businesses to pay down debt as it rebuilds itself after a sharp slump in sales of Covid-19 products.  Shares trade at less than ½ their value during the peak of the Covid-19 pandemic.  That has left it open to investor criticism, with Starboard in Oct saying that management has over-spent on big acquisitions & failed to produce profitable new drugs from those deals or from its internal research & development.  PFE forecast 2025 revenue of $61 - $64B, compared with the estimates of $63.2B.  The company also estimated a roughly $1B hit to its revenue from changes to Medicare's Part D prescription program under Pres Biden's Inflation Reduction Act.  The stock rose 94¢.

Pfizer forecasts 2025 profit in line with expectations as it seeks turnaround

Treasury yields moved slightly lower, as investors parsed economic data due ahead of the Federal Reserve's next interest rate decision.  The yield on the 10-year Treasury was down by 1.8 basis points at 4.381% & the 2-year Treasury yield was last more 1.1 basis points lower at 4.238%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  US retail sales figures for Nov showed an increase of 0.7% on the month, surpassing expectations.  The report will be followed by the latest building permit & housing starts data tomorrow, before the Fed announces its interest rate decision that same day.  Investors will also be closely following the post-meeting press conference with Fed Chairman Jerome Powell, as well as keeping an eye on any guidance issued by the central bank alongside.  This will include the Fed's economic & interest rate projections, which are published 4 times a year.

Treasury yields rise as traders await Federal Reserve interest rate decision

Stocks fell despite upbeat retail sales data as the Federal Reserve kicked off its 2-day policy meeting expected to usher in an interest-rate cut.  Markets are waiting for Fed policymakers to kick off their final gathering of the year, amid almost total conviction that a 0.25% rate cut is coming tomorrow.  Some suspect it could be the last cut for some time, as inflation proves persistent.

Markets struggle while Nasdaq rises 1% to a record

Dow finished down 110, decliners over advancers about 5-4 & NAZ jumped 247.  The MLP index dropped 4+ to the 297s & the REIT index was off 1+ to 415.  Junk bond funds hardly budged & Treasuries were mixed with little change in yields.  Oil slid fractionally taking it below 71 on weak Chinese retail-sales data & gold lost 6 to 2669 (more on both below).

Dow Jones Industrials 

US manufacturers are optimistic that the sector will emerge from a prolonged recession next year, though capital expenditure growth was likely to fall short of 2024's pace.  The Institute for Supply Management (ISM) survey also found purchasing & supply execs at factories predicted higher employment levels in 2025.  The ISM's manufacturing Purchasing Managers Index (PMI) has mostly been in contraction territory since Nov 2022, only rising once above the 50 threshold in Mar this year.  Manufacturing, which accounts for 10.3% of the economy, was battered by the Federal Reserve's aggressive monetary policy tightening in  Mar 2022 - Jul 2023 to tame inflation.  Though the central bank started cutting interest rates in Sep, the factory PMI has remained depressed.  "Manufacturing's purchasing and supply executives expect to see overall growth in 2025," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.  "They are optimistic about overall business prospects for the first half of 2025 and more excited about faster growth in the second half."  Purchasing & supply execs expected a 4.2% increase in overall revenues compared to a 0.8 percentage point rise reported for 2024.  16 of the 18 manufacturing industries anticipated revenue improvement.  "They are optimistic about the first half of 2025 and expect growth to continue in the second half, with a projected increase in capital investment," said Steve Miller, chair of the ISM Services Business Survey Committee.

US manufacturers predict growth in 2025 after prolonged slump

US economic output hit its highest level in nearly 3 years to close out 2024, according to the latest data from S&P Global.  S&P Global's flash US composite PMI, which captures activity in both the services & manufacturing sectors, came in at 56.6 in Dec, up from 54.9 in Aug.  The forecast had expected the index to tick up to 55.1.  Increased activity in the services sector drove the gains, with the services PMI business activity index hitting a reading of 58.5, its highest level in 38 months.  Meanwhile, the manufacturing PMI declined to 48.3 in Dec, down from 47.9 & marking a 3-month low for the index.  Chris Williamson, chief business economist at S&P Global Market Intelligence, said the US economy grew at its fastest pace in nearly 3 years this month, "consistent with GDP rising at an annualized rate of just over 3% in December."  “Business is booming in the US services economy, where output is growing at the sharpest rate since the reopening of the economy from COVID lockdowns in 2021," Williamson added.  His bullish outlook on GDP growth for the 4th qtr falls in line with other projections.  The Atlanta Fed's GDP Now tool, which incorporates real-time data throughout the qtr to project economic growth, currently projects the US economy grew at a 3.3% annualized pace in the final qtr of 2024.  Meanwhile, economists at Goldman Sachs project GDP is pacing at 2.4% for the qtr.  Still, Williamson noted the growth in the US economy remains heavily skewed to activity in the services sector.

US economic output just grew at its fastest pace in nearly 3 years

As the new year approaches, more Americans have a brighter outlook for the state of their personal finances in 2025, a recent survey indicated.  Bankrate said its survey found that 44% of American adults expect to see their financial situation become either "somewhat" or "significantly better" next year, a 7 percentage-point increase from the roughly same time last year.  The survey, conducted on the personal finance site's behalf by YouGov, took place Nov 6, the day after the 2024 election, through Nov 8 & involved nearly 2500 American adults.  Less inflation was the most common driver behind the rosy outlooks, with 36% of Americans pointing to that.  The US saw inflation measured by the Consumer Price Index increase 0.3% month-over-month & 2.7% year-over-year in Nov, the gov reported.  Other factors played into positive financial expectations for 2025.  For instance, over one-3rd of Americans that anticipate they will see better personal finances in 2025 reported "rising income" as helping guide their positive outlook.  A slightly lower share (30%) pointed to "having less debt," while "work done by elected representatives"& "better spending habits" also factored into optimism for 25%.  A separate Jul survey from Discover Personal Loans had reported 80% of Americans were experiencing "some level" of anxiety stemming from finances.  Meanwhile, Bankrate found that 33% of Americans foresee the state of their finances remaining as they currently are next year.  Just shy of a qtr of Americans held gloomier expectations for their financial situations, reporting they anticipated things would become "somewhat" or "significantly worse."  As of the 3rd qtr, American households collectively owed $17.9T worth of debt, including things like mortgages, auto loans, credit cards & student loans, according to the Federal Reserve Bank of New York.  Americans had $12.6T in mortgage balances in the 3rd qtr, for instance.  Student loans amounted to $1.6T, while auto loans totaled $1.64T, the New York Fed found.

More Americans have brighter outlook on state of finances for next year: survey

Spot gold prices gained, supported by ongoing geopolitical concerns & a softer $, as markets awaited the Federal Reserve's policy meeting, where a 3rd rate cut & clues on the 2025 outlook are expected.  Spot gold was up 0.2% at $2654 per ounce & gold futures settled 0.2% lower at $2670.  China has resumed gold buying.  Gold is reacting to a multitude of these things, adding that top consumer China was likely to ramp up policy stimulus to revive its economy, which would further support gold.  On the geo-political front, Israel agreed yesterday to double its population in the Golan Heights, citing Syrian threats despite the moderate tone of rebel leaders who ousted Pres Bashar al-Assad a week ago.

Gold gains as US dollar ease ahead of Fed policy meeting

Oil slipped as economic data from China reinforced concerns about weakening demand in the world's biggest crude importer.  West Texas Intermediate edged 0.8% lower to trade below $71 a barrel, while Brent hovered near $74.  China's crude refining dipped to the lowest in 5 months in Nov, while apparent oil demand fell 2.1% year-on-year.  China's retail sales growth was well below estimates.  Crude has traded in a roughly $6 range since mid-Oct, with an OPEC+ decision to extend supply curbs countering the dour outlook from China.  Also today, Brazil's IBP oil industry group forecast domestic output rising to 3.6M barrels a day, keeping alive concerns that robust non-OPEC supply will help create a glut next year.

Oil Slips as Lackluster Chinese Data Weakens Outlook for Demand

Stocks struggled, although bitcoin hit new highs & Big Tech gained ahead of the Federal Reserve's final policy decision meeting for 2024 this week.  Investors now await the final Federal Reserve meeting of the year which begins tomorrow.