Markets rise in the shortened session for the best month of 2024

Dow rose 263, advancers over decliners about 3-1 & NAZ gained 139.  The MLP index jumped 7 to the 317s & the REIT index added 1 to the 439s.  Junk bond funds went higher & Treasuries had limited buying which reduced yields.  Oil was up fractionally to the 69s & gold gained 19 to 2683.

Dow Jones Industrials

The 10-year Treasury yield retreated to a new low going back to late Oct amid a shortened trading day for US markets following the Thanksgiving holiday.  The yield on the 10-year Treasury slipped just over 2 basis points to 4.219%.  At 1 point, the yield fell as far down as 4.203%, which marked its lowest point since Oct 30.  Meanwhile, the 2-year Treasury shed around 1 basis point, sitting at 4.202%.  1 basis point equals 0.01% & yields & prices move in opposite directions.  Today is a quiet day on the data front, following a flurry of news that came early in the week.  The bond market closes at 2 PM ET after being dark on yesterday for Thanksgiving.  Earlier in the week, the Federal Reserve's preferred inflation measure came in slightly higher on the previous month at 2.3%, in line with the forecast.  Initial claims for unemployment benefits fell more than expected in the latest indication of labor market tightness.  The Fed's Nov meeting minutes, meanwhile, suggested that if price increases & labor data continued to come in roughly as expected, it would be warranted to “gradually” lower interest rates.  However, Pres-elect Trump's threat of quickly passing tariff hikes targeting China, Mexico & Canada are expected by many economists to fuel domestic inflation — & to potentially see the Fed ease policy more cautiously than it otherwise would have.

10-year Treasury yield slides to lowest point since October on holiday-shortened trading day

Markets widely expect the Federal Reserve to cut interest rates for the 3rd time this year at its Dec meeting.  The question is what the central bank will do next year.  Recent sticky inflation data & evidence the US economy is growing at a solid pace have raised doubts that the Fed will bring down rates as quickly as it previously indicated.  In Sep, the Fed's Summary of Economic Projections (SEP) projected 4 interest rate cuts next year.  Markets are currently projecting roughly 2 cuts in 2025 & the Fed is scheduled to release an updated forecast on Dec 18.  While they differ on the specifics, economists generally agree that the central bank's current rapid pace of rate cuts won't continue.  At  4.5% - 4.75%, there's little debate over whether the fed funds rate is restrictive.  This has prompted many economists to believe further easing is likely in the pipeline as the Fed continues to aim for a "soft landing" where inflation falls to its 2% target without a significant downturn in the economy.  With the US economy growing at a solid pace & concerns of a labor market slowdown on the back burner for now, the sticking point in the debate is just how much the Fed will lower rates over the next year without seeing significant improvement in inflation data.

Why Wall Street is betting on slower Fed rate cuts in 2025

The number of Americans filing new applications for unemployment benefits fell again last week, but many laid-off workers are experiencing long bouts of joblessness, keeping the door open to another interest rate cut from the Federal Reserve in Dec.  Initial claims for state unemployment benefits dropped 2K to a seasonally adjusted 213K last week, the Labor Dept reported.  The forecast called for 216K claims.  Claims have retreated from the near 1½-year high seen in early Oct, which was the result of hurricanes & strikes at Boeing (BA), a Dow stock, & another aerospace company.  They are now at levels consistent with low layoffs & a rebound in employment in Nov.  In Oct the storms & recently ended 7-week BA strike reduced the increase in nonfarm payrolls to a paltry 12K jobs.  Despite the anticipated bounce back in payrolls, the unemployment rate is likely to be unchanged or even rise this month.  The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 9K to a seasonally adjusted 1.9M during the latest week.  The elevated continuing claims suggest that many laid off workers are finding it difficult to land new jobs.

US weekly jobless claims decline further

Stocks traded higher to kick off a shortened trading session, with the focus on incoming pres Trump's tariff agenda & the Black Friday shopping rush crucial to retailers.  The last trading day in Nov sees the major gauges on track for monthly wins, despite a pullback in the rally spurred by Trump's decisive election victory. The Trump rally is taking the Dow up a whopping 3700 this month.

Markets slide as tech sinks after key inflation data

Dow dropped 138 (near session lows), advancers over decliners 3-2 & NAZ retreated 115.  The MLP index gained 4 to go over 410 & the REIT index rose 3+ to the 439s.  Junk bond funds were little changed & Treasuries saw more buying which lowered yields.  Oil was even in the high 68s & gold went up 14 to 2660 (more on both below).

Dow Jones Industrials 

Pres-elect Trump's plan to impose a 25% tariff on all goods from Mexico & Canada while hiking the levies on products from China will drive up costs for Americans, Goldman Sachs warned this week.  Economists at the bank wrote that the proposal Trump floated the day before would add a tax on 43% of US imports, & could push inflation higher by nearly 1%.  "Using our rule of thumb that every 1 [percentage point] increase in the effective tariff rate would raise core [personal consumption expenditures] PCE by 0.1%, we estimate that the proposed tariff increases would boost core PCE prices by 0.9% if implemented," the note reads.  The PCE index is the Federal Reserve's favored inflation gauge.  The Commerce Dept reported that it rose 0.2% in Oct from the month before & 2.3% year over year.  Core PCE, which excludes volatile food & energy prices, rose 0.3% for the month & increased 2.8% from a year ago.  The central bank is focusing on the PCE headline figure as it tries to bring back the pace of price increases back to its target of 2%, although policymakers view the core data as a better indicator of inflation.  Trump yesterday said he would issue an exec order upon taking office to charge Mexico & Canada a 25% tariff on all products coming into the US, as well as additional tariff hikes on China over the flow of illegal immigrants and illicit drugs.  In a post, Trump, who takes office on Jan 20, 2025, said thousands of people were "pouring through" Mexico & Canada "at levels never seen before."  "Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border," he wrote.  "On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders."  "This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" he added.  "Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem."  Goldman Sachs' economists noted Trump previously threatened a 25% tariff on Mexico during his first administration, but the announcement on Canada "is somewhat more surprising."

Trump's proposed tariffs on Mexico, Canada, China will increase inflation, Goldman Sachs warns

With Ms of Americans expected to travel for Thanksgiving, the Federal Aviation Administration (FAA) is using military airspace specially opened for civilian use to accommodate smooth travel during the busy holiday, officials said.  The Dept of Transportation (DOT) announced the holiday travel measures on its website last week.  "To lessen inland volume and reduce delays during holiday travel, the FAA will use special airspace off the East Coast and Gulf of Mexico that the military releases to the FAA for commercial planes to use," DOT said.  More than 18M airport screenings are expected during what the Transportation Security Administration (TSA) called "the busiest Thanksgiving travel period on record."  "This holiday season is expected to be one of the busiest travel periods on record, and the vigilant people of the Transportation Security Administration stand ready to ensure the security and ease of travel," Secretary of Homeland Security Alejandro Mayorkas said that also thanked TSA employees for their dedication to working the holiday.  The agency said the projected 18.3M screenings from Tues-Mon represent a 6% increase in volume over the same period last year.  Passenger volumes have hit record highs in 2024, according to the agency, showing a 17% increase since 2022.

FAA opens up military airspace for civilian travel for 'busiest Thanksgiving travel period on record'

The US pharmaceutical industry is pushing to revamp the new law that allows Medicare to negotiate prices for its costliest prescription drugs once pres-elect Trump is back in office, according to lobbyists, execs, analysts & healthcare policy experts.  7 lobbyists & execs who work with top pharmaceutical & biotech companies said they are pushing to delay the timeline under which medications become eligible for price negotiations by 4 years for small molecule drugs, which are primarily pills & account for most medicines.  2 sources said the industry is already speaking directly with members of the Trump transition team.  The ability of Medicare for the first time to directly negotiate prices on selected medicines was part of the Inflation Reduction Act, considered 1 of the key achievements of the administration of outgoing Pres Biden.  Medicare covers 66M Americans, mostly aged 65 & older.  Since the IRA was passed in 2022, drugmakers have complained about the terms of Medicare's negotiating powers, saying it would stifle innovation.  The gov says the drug price negotiations will save nearly $25B by 2031.  In particular, the industry has opposed the time frame for negotiation eligibility for most drugs.  When drugs have no competition, the law allows the gov to negotiate prices for complex biologic, or biotech, drugs after 13 years on the market, but after 9 years for drugs taken as pills & capsules.  Drug companies have said this will dissuade them from developing the medicines that are generally cheaper & easier to produce & more convenient for patients, & instead push them to prioritize researching biologics, which are most often given by infusion rather than taken at home.

Big pharma pushes Trump to ease Medicare drug price rules

Gold rose, rebounding from an over 1-week low hit in the previous session, on a weaker $, but trimmed earlier gains after data showed stalled inflation progress, hinting that the Federal Reserve might be cautious on further rate cuts.  Spot gold was up 0.4% at $2641 per ounce & US gold futures rose 0.7% to $2640.  US consumer spending increased solidly in Oct, but progress lowering inflation appears to have stalled in the past months.  The $ index slipped 0.8%, hitting a 2-week low, boosting gold's appeal for holders of other currencies.  Markets now see a 70% chance of a qtr-point rate cut in Dec.  The non-yielding bullion tends to shine in a lower-interest-rate environment.  Before the release of the PCE figures, bullion climbed up to 1%.  The rebound followed a dramatic $100 plunge yesterday, marking gold's sharpest 1-day drop in over 5 months, as safe-haven demand waned following the announcement of a long-negotiated ceasefire between Israel & Lebanon's Iran-backed Hezbollah.  Prices fell to their lowest level since Nov 18 in the previous session.

Gold trims gains on U.S. inflation data, finds support in softer dollar

Oil edged higher as signs OPEC+ will once again delay restoring output countered easing geopolitical risk in the Middle East.  Brent traded above $73 a barrel, after sliding in the prior 2 sessions on anticipation of a truce between Israel & Hezbollah.  OPEC+ talks to delay a production restart have begun ahead of a meeting this weekend, allaying concerns over a supply glut.  Israel started a cease-fire with the Iran-backed militant group after weeks of talks mediated by the US.  Oil options markets have begun pricing a lower risk of escalation & hundreds of thousands of bullish calls expired worthless yesterday.  Crude has been caught in a tight range since the beginning of last month, buffeted by competing bullish & bearish signals.  There's a number of catalysts that may drive the market's next move — including the policies of a 2nd Trump presidency, geopolitical risks linked to Russian & Iranian supplies next year & OPEC+'s output plans.  On 1 hand OPEC+ appears to be reluctant to unwind given concerns over weak oil demand and market consensus that 2025 looks like a surplus year for oil balances.  On the other hand, deeper cuts also seem unlikely, with prices still above $70 Brent, global observable oil inventories relatively low & some geopolitical risk still in the market.  The American Petroleum Institute reported US crude inventories shrank by 5.9M barrels last week, which would be the biggest drop since Aug if confirmed by gov figures today.  Elsewhere, a Canadian petroleum industry group said that Pres-elect Trump's proposed tariffs, which may include nearly 4M barrels of Canadian crude imports, would result in higher gasoline & energy costs for US consumers.  Brent for Jan rose 0.3% to $73.05 a barrel & WTI for Jan advanced 0.4% to 69.02 a barrel.

Oil Steadies as Traders Await Clues on OPEC+ Production Plans

Stocks dipped as investors digested fresh data that showed inflation made little progress toward the Fed's 2% target in Oct.  The mood is muted ahead of the Thanksgiving holiday, when markets shut tomorrow & close early on Fri.  But the Fed is taking the fore again after being eclipsed somewhat by the debate over the impact of Pres-elect Trump's tariff plans & cabinet choices.  Have a good holiday to all!  😀

Markets tread water in light trading ahead of Thanksgiving holiday

Dow slid back 30, advancers over decliners 2-1 & NAZ dropped 196.  The MLP index was up 3+ to the 309s & the REIT index rose 4+ to 441.  Junk bond funds edged higher & Treasuries had more buying which lowered yields.  Oil crawled higher taking it into the 69s & gold bounced back 23 to 2669.

Dow Jones Industrials

An inflation gauge closely watched by Federal Reserve policymakers ticked higher in Oct, though it remains near the Fed's inflation target.  The Commerce Dept reported that the personal consumption expenditures (PCE) index rose 0.2% in Oct & 2.3% year over year.  Those figures were in line with the estimates.  Core PCE, which excludes volatile food & energy prices, rose 0.3% for the month & increased 2.8% from a year ago, in line with estimates.  The Federal Reserve is focusing on the PCE headline figure as it tries to bring back the pace of price increases back to 2%, although policymakers view the core data as a better indicator of inflation.  Headline PCE was up from 2.1% in Sep & equaled the 2.3% reading from Aug, suggesting that inflation ticked slightly higher, while the core PCE was little changed from last month.  The headline PCE data showed that prices for goods were down 1% from a year ago, while prices for services were up 3.9% in that timeframe.  Food prices were up 1% while energy prices decreased 5.9% compared with last Oct.  Wages & salaries were up 0.5% in Oct compared with last month, a slightly higher growth rate than the 0.4% reading in Sep.  That follows monthly wage & salary growth of 0.5% in Aug & 0.4% in Jul, which were notably higher than the preceding 3 months, which were close to zero.  The personal savings rate as a percentage of disposable income was 4.4% in Oct, up slightly from the 4.1% measurement last month, though it's down from the roughly 5% level it was at this spring.

Fed's favored inflation gauge showed price growth picked up in October

Treasury yields slid as a key inflation reading met expectations.  The yield on the 10-year Treasury fell more than 3 basis points to 4.27% & the 2-year Treasury yield dipped 2 basis points to 4.23%.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  On the data front, initial US jobless claims fell 2K to 213K last week, a sign that the US labor market remains tight.  The forecast expected claims to come in at 215K.  A summary of the Fed's meeting minutes from Nov, with Fed officials expressing confidence that inflation is easing & that further interest rate cuts will happen at a gradual pace.  “In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time,” the minutes said. Traders are pricing in a 66% chance that the Fed will cut rates by a qtr point in its next meeting, in Dec, with 33% expecting no change.

10-year Treasury yield slides as key inflation report is as expected

Mortgage rates dropped last week & homebuyers jumped off the fence.  They drove total mortgage demand up 6.3% compared with the previous week, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766K or less) decreased to 6.86% from 6.90%, with points remaining unchanged at 0.70, including the origination fee, for loans with a 20% down payment.  While the drop in rates wasn't huge, there was a fair amount of pent-up demand among homebuyers.  Some were waiting until after the election, some for lower rates & some for more supply.  All of those are now done.  Applications for a mortgage to purchase a home increased 12% from the previous week & were 52% higher than the same week 1 year ago.  Last year at this time mortgage rates were higher, but falling.  The supply of homes for sale, however, was extremely tight.   It has improved markedly this year.  “With the growth in for-sale inventory and signs that the economy remains strong, buyers have remained in the market even though rates have increased recently. The increase in conventional purchase applications helped push the average purchase loan size to $439,200, its highest level in almost a month,” Joel Kan, an MBA economist, said.  Applications to refinance a home loan dropped 3% for the week but were 119% higher than the same week one year ago.  Those annual comparisons, though, have a glitch.  “The decline in refinance activity was driven by pullbacks in FHA & VA refinances. Applications were significantly higher than a year ago by most measures, but this was compared to the week of Thanksgiving 2023, which was a week earlier than this year’s holiday,” noted Kan.

Homebuyer demand for mortgages jumps 12% after first interest rate drop in over 2 months

Stocks diverged as investors digested fresh data that showed inflation made little progress toward the Fed's 2% target in Oct.  The mood is muted in the wind-down to the Thanksgiving holiday, which will see markets shut tomorrow & close early on Fri.  Not getting a lot of attention, Dow is up a staggering 3K in Nov, i.e. the Trump rally.

Markets struggle while traders shrug off threats to raise tariffs

Dow went up 123, decliners over advancers 2-1 & NAZ added 119.  The MLP index rose 2+ to the 305s & the REIT index crawled up 2+ to the 436s.  Junk bond funds continued in demand & Treasuries were sold, raising yields.  Oil slid lower in the 68s & gold recovered 11 to 2689 (more on both below).

Dow Jones Industrials 

Chicago Federal Reserve Bank Pres Austan Goolsbee said that the Fed's interest rate-cutting campaign has a ways to go before reaching a "neutral" rate & that the central bank should continue to cut to reach that rate so long as the economy does not show signs of overheating.  Goolsbee, who in Jan will become a voting member of the Federal Open Market Committee (FOMC) that makes monetary policy decisions, said that policymakers are likely to continue with rate cuts until the neutral rate is reached, but the path may slow if the economy accelerates. "Barring some sign of actual overheating of the economy, I still feel comfortable saying that if you look at the broad dot plot, rates have a fair way to go down before they get to something like neutral," Goolsbee added.  "If you've got inflation coming toward the 2% target, and you've got unemployment rising, but getting to something like sustainable full employment, you better be careful adding cold water to the bathtub if you've got the temperature about where you want," Goolsbee continued.  His remarks come after Fed Chair Jerome Powell said earlier this month that the central bank is not rushing to cut to reach the neutral rate, which he explained is "a level of interest rates that's neither pushing the economy up and supporting it or dragging it down, which could be tighter, restrictive policy."  Powell added that while there is not a "theoretical or empirical way" to confidently estimate the neutral rate, it "argues for moving carefully."  Goolsbee echoed the chair's sentiment, saying that the neutral rate is known "by its works in the economy."  Goolsbee noted that FOMC policymakers' forecasts for future ranges of interest rates in the "dot plot" all suggest that interest rates are likely to decline over the next year until rates reach a settling point around what may be the neutral rate.  "Whether you're on the higher side or the lower side of where it's going to settle down, almost everybody agrees that it's well below where we are today. So as we get closer to where the disagreement is about what's the settling point, I can see that it makes perfect sense to start slowing the pace of the rate cuts," Goolsbee said.  "Barring some convincing evidence of overheating, I don't see the case for not continuing to decline, to have the Fed funds rate decline, because everybody agrees it's well below where we are today," he added.  "So until we start getting into the range of where people think is the settling, I still feel like this trajectory, that's the way it's leaning." 

Fed's Goolsbee makes case for lower interest rates

Federal Reserve officials expressed confidence that inflation is easing & the labor market is strong, allowing for further interest rate cuts albeit at a gradual pace, according to minutes from the Nov.  The meeting summary contained multiple statements indicating that officials are comfortable with the pace of inflation, even though by most measures it remains above the Fed's 2% goal.  With that in mind, & with conviction that the jobs picture is still fairly solid, Federal Open Market Committee members indicated that further rate cuts likely will happen, though they did not specify when and to what degree.  “In discussing the outlook for monetary policy, participants anticipated that if the data came in about
as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time,” the minutes said.  The FOMC voted unanimously at the meeting to take down its benchmark borrowing rate by a quarter percentage point to a target of 4.5%-4.75%.  Markets expect the Fed could cut again in Dec, though conviction has waned among concerns that Pres-elect Trump's plans for tariffs could stoke inflation higher.  The meeting concluded 2 days after the contentious presidential election campaign resulted in the Rep emerging as the victor & set to begin serving his 2nd term in Jan.  There was no mention of the election in the minutes, save for a staff notation that stock market volatility rose before the Nov 5 results & fell after.  There also was no discussion of the implications of fiscal policy, despite anticipation that Trump's plans, which also include lower taxes & aggressive deregulation, could have substantial economic impacts.  However, members did note a general level of uncertainty about how conditions are evolving.  In addition, they expressed uncertainty over where the rate cuts would need to stop before the Fed hit a “neutral” interest rate that neither boosts nor restrains growth.

Fed officials see interest rate cuts ahead, but only ‘gradually,’ minutes show

Kohl's(KSS) shares fell sharply after the company's earnings missed estimates & following its announcement that CEO Tom Kingsbury will step down in Jan.  The weak forecast underscores an uncertain holiday season for the retail sector, which could lean in favor of competitors as customers turn increasingly bargain-focused.  "Our results did not meet expectations, and we're frankly disappointed sales have been a challenge for us throughout 2024 and weakened further in the quarter," outgoing CEO Tom Kingsbury said.  Michaels CEO Ashley Buchanan will take over the company on Jan 15, though Kingsbury will stay on in an advisory role & retain his position on the board thru his retirement in May 2025.  Buchanan, an industry veteran, has been leading Michaels Companies since 2020.  Kingsbury agreed to stay on as KSS's permanent CEO thru 2025.  In Aug, net sales declined 4.2% & sales at stores open for at least a year fell 5.1% during the 3-month period ending on Jun 30.  At the time, Kingsbury said the company had "taken significant action to reposition KSS's for future growth" but that its "efforts have yet to fully yield the intended outcome due in part to a continued challenging consumer environment and softness in our core business."  In Aug, net sales declined 4.2%, & sales at stores open for at least a year fell 5.1% during the 3-month period ending on Jun 30.  At the time, Kingsbury said the company had "taken significant action to reposition KSS's for future growth" but that its "efforts have yet to fully yield the intended outcome due in part to a continued challenging consumer environment and softness in our core business."  Among the issues the company faced, Kingsbury noted that "customers exhibited more discretion in their spending," further pressuring company sales.  Despite this, Kingsbury said the company's conviction in its "strategy remains strong and our operating discipline, solid cash flow generation & healthy balance sheet will continue to support us as we work to return KSS's to growth."  The stock dropped 3.11 (17%).

Kohl's shares tumble on earnings miss, CEO to step down in January

Gold futures rise, recouping some ground after a 3.7% drop yesterday.  Futures are up 0.4% at $2629 a troy ounce.  The precious metal remains under pressure on renewed risk appetite in financial markets.  Trump's nomination of Scott Bessent, viewed as a balanced choice for US Treasury Secretary, has eased fears that a 2nd Trump administration's tariff-heavy policies could reignite inflation & stifle economic growth.  Reports of a potential ceasefire agreement between Israel & Hezbollah have also reduced safe-haven demand for gold.  The release of Federal Reserve meeting minutes provided additional direction for gold prices

Gold Futures Rise, Reclaiming Some Ground Lost on Easing Safe-Haven Demand

Oil prices rose after falling more than $2 a barrel in the previous session as investors took stock of a potential ceasefire between Israel & Lebanon's Hezbollah, which had weighed on oil's risk premium.  Brent crude futures were up 73¢ (1%) to $73.74 & US West Texas Intermediate crude futures were at $69.62 a barrel, up 68¢, also 1%.  Prices fell sharply yesterday after multiple reports that Israel & Lebanon had agreed to the terms of a deal to end the Israel-Hezbollah conflict.  A senior Israeli official said Israel looks set to approve a US plan for a ceasefire today.  Market reaction to the ceasefire news was over the top as the broader Middle East conflict has never actually disrupted supplies significantly to induce war premiums this year.  A ceasefire in Lebanon would reduce odds of the incoming US administration imposing more sanctions on Iranian crude.  Iran supports Hezbollah & is an OPEC member, producing around 3.2M barrels per day.  In Europe, Kyiv was under a sustained Russian drone attack today, the city's mayor said.  Elsewhere, OPEC+ may consider leaving its current oil output cuts in place from Jan 1 at its next meeting on Sun.  The producer group is already postponing hikes amid global demand worries. 

Oil Rises After Selloff on Possible Middle East Ceasefire

Stocks seemed to shrug off Pres-elect Trump's threat to impose fresh tariffs on China, Canada & Mexico.  His comments fired up trade war fears and dented hopes that Treasury Secretary nominee Scott Bessent would rein in any extreme moves by the new administration.  The Oct reading of the Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation gauge, will be released tomorrow.

Markets slide following Trump's tariff plans

Dow was off 219, decliners over advancers better than 2-1 & NAZ gained 107.  The MLP index added 2 to 305 & the REIT index was off 1 to the 433s.  Junk bond funds crawled higher & Treasuries has some selling which increased yields after they plunged yesterday.  Oil rose fractionally to the high 69s tied to Israel-Hezbollah cease-fire hopes & gold recovered 11 to 2629.

Dow Jones Industrials

Pres-elect Trump said he would issue an exec order upon taking office to charge Mexico & Canada a 25% tariff on all products coming into the US, as well as additional tariff hikes on China over the flow of illegal immigrants & illicit drugs.   In a post, Trump, who takes office on Jan 20 2025, said thousands of people were "pouring through" Mexico & Canada "at levels never seen before."  "Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border," he wrote.  "On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders."  "This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" he added.  "Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem."  Dating back to his first administration, Trump has long pushed Mexico to be more proactive in preventing the flow of illegal immigrants & illicit drugs into the US.  "And until such time that they do, it is time for them to pay a very big price!" he added.  In a joint statement, Canada's Deputy Prime Minister, Chrystia Freeland, & Public Safety Minister Dominic LeBlanc said Canada & the US have "one of the strongest and closest relationships–particularly when it comes to trade and border security."  "Canada places the highest priority on border security and the integrity of our shared border. Our relationship today is balanced and mutually beneficial, particularly for American workers," they said.  "Today, Canada buys more from the United States than China, Japan, France, and the UK combined. Canada is essential to US domestic energy supply, and last year 60 percent of US crude oil imports originated in Canada."

Trump says he will issue executive order to charge Canada, Mexico 25% tariff on goods upon taking office

Abercrombie & Fitch (ANF) isn't giving up its crown anytime soon.  The apparel company issued strong holiday guidance after posting its 6th straight qtr of double-digit sales growth & another quarter of results that topped expectations.  The recent arrest of the company’s former CEO, Mike Jeffries, on charges of sex trafficking did not appear to affect results.  EPS was $2.50 compared with $1.83 a year earlier.  Sales rose to $1.2B, up 14% from $1.06B a year earlier.  For the all-important holiday shopping qtr, ANF is expecting sales growth of 5-7%, ahead of the 4.8% growth that had expected.  For the full year, the company is expecting sales to rise 14-15%, higher than the 12-13% range it previously anticipated.  That new outlook is higher than the 12.1% growth expected.  In a news release, CEO Fran Horowitz struck a positive note, leaving out the concerns she'd mentioned in the previous qtr about the “increasingly uncertain environment.”   “With broad-based growth across regions and brands, we continue to execute at a high level, leveraging our regional playbooks and operating model. Each of our regions grew double-digits in the quarter, with the Americas growing 14%, EMEA growing 15% and APAC growing 32%,” said Horowitz.  The Abercrombie & Hollister brands posted comparable sales growth of 11% & 21%, respectively.  She noted the strong performances lapped growth of 26% for Abercrombie & 7% for Hollister last year.  The stock dropped 6.99 (5%).

Abercrombie expects a strong holiday quarter as growth run continues

Best Buy (BBY) cut its full-year sales forecast & missed quarterly revenue expectations, as early holiday shopping & a fresh batch of iPhones & AI-enabled laptops weren’t enough to drive higher sales.  The consumer electronics retailer said it now expects full-year revenue of $41.1 - $41.5B, compared to prior guidance of $41.3 - 41.9B.  It expects full-year comparable sales to decline 2.5-3.5%, compared to its prior expectations of a 1.5-3% drop.  Comparable sales includes sales online & at stores open for at least 14 months.  CEO Corie Barry said the retailer saw “softer than expected sales,” particularly in Sep & Oct.  “We attribute this to a combination of overall ongoing macro uncertainty, customers waiting for deals and sales and distraction during the run up to the election, particularly in non-essential categories, [and] expected lower demand between sales events,” she said.  “But the impact was even steeper than we estimated.”  Barrie added that in recent weeks demand has picked up again as holiday sales gain momentum & election concerns ease.  For the holiday qtr, BBY has muted expectations.  The company expects comparable sales to be flat to a decline of 3% in its fiscal 4th qtr.  Barry said BBY is contending with a few challenging dynamics, including a holiday season that's 5 days shorter.  She said shoppers are responding to big deals & sales events.  Yet she expects the peak in sales during times like Black Friday & Cyber Monday to be higher, but the valleys before & after those to be lower.  In the 3-month period, EPS was $1.26 compared to $1.21, a year earlier.   Net sales fell to $9.45B from $9.76B in the year-ago qtr.  The stock fell 6.92 (7%).

Best Buy cuts full-year sales forecast due to softer demand for electronics

Stocks slid as investors weighed Pres-elect Trump's threat to impose fresh tariffs on China, Canada, & Mexico.  Markets were initially caught off guard by Trump's pledge to slap big tariffs on the US's biggest trading partners from his first day in office.  His comments fired up trade war fears & dented hopes that Treasury secretary nominee Scott Bessent could rein in any extreme moves by the new administration.

Markets soar after Trump’s Treasury pick

Dow soared 418, advancers over decliners 3-1 & NAZ went up a modest 46.  The MLP index was off 2+ to the 302s & the REIT index jumped 4+ to the 434s on lower interest rates.  Junk bond funds continued to be in demand & Treasuries saw unusually high demand which resulting in yields plunging (more below).  Oil sank 2+ to the high 68s & gold plunged 86 to 2625.

Dow Jones Industrials 

The stock market appeared to cheer Pres-elect Donald Trump's presumptive nominee for Treasury secretary, who said earlier in Nov that he sees an era of strong growth & lower inflation ahead.  Stock market futures rose & Treasury yields tumbled following the announcement late Fri that Trump would pick Scott Bessent, a familiar figure, to take on his administration's most important economic role.  The move sent a message that Trump wants someone with strong market credentials as well as a similar philosophy for the role.  “This pick should please markets given Bessent’s in-depth understanding of financial markets and the economy – in particular the bond market the Trump administration will need to keep on [its] side if it is to advance its agenda successfully,” Sarah Bianchi, Evercore ISI’s chief strategist of intl political affairs & public policy, & colleagues wrote in a note.  Bianchi added that markets “couldn’t have done much better” than Bessent.  Since Trump's victory earlier this month, in which he also carried a red wave that flipped the Senate to Reps & retained GOP control of the House, markets have been mostly positive, albeit volatile.  In particular, bond yields have scaled higher, with some interpreting the move as anticipating another leg up for inflation while others see it as traders pricing in stronger growth.  Bessent said he expected the new pres's agenda to help bring down inflation while simultaneously stimulating growth.  “The one thing he doesn’t want is a replay of what we’ve just got under Biden-Harris,” Bessent added.  “President Trump has some very good ideas, but I guarantee you, the last thing he wants is to cause inflation,” he continued.  “I don’t think the bond market is worried about Trump 2.0 inflation. I think what you’re seeing is a healthy move geared toward a growth impetus.”

U.S. stock and bond markets love Trump’s pick of Bessent for Treasury — here’s why

Treasury yields retreated as investors weighed Pres-elect Donald Trump's Treasury secretary pick & eyed a key inflation reading due later in the week.  The 10-year Treasury yield slid more than 14 basis points at 4.267% & the 2-year Treasury lost nearly 9 basis points, sitting at 4.281%.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  Trump's choice of hedge fund exec Scott Bessent as Treasury secretary has calmed investors' nerves about the future of the US economy.  Bessent, the founder of Key Square Group, is expected to back the incoming pres's economic goals including gradual tariffs and pro-business policies.  However, as an old stock market expert & a fiscal conservative, investors believe Bessent will prioritize stability in the US economy& markets.  “The nomination of Scott Bessent to be U.S. Treasury Secretary has been a catalyst for lower bond yields, higher equity indices and a weaker dollar this morning,” Kit Juckes, chief FX strategist at Societe Generale, wrote.  “His nomination was greeted positively by markets worried about the size of the U.S. budget deficit and the inflationary impact of tariffs,” he added.  “Whether he can help get the U.S. to 3% GDP growth and a 3% budget deficit time will tell, but for now, he has changed the market mood, if nothing else.”  “I guarantee you, the last thing [Trump] wants is to cause inflation,” Bessent said before he was picked.  “I would recommend that tariffs be layered in gradually.”

Treasury yields fall as investors endorse Trump’s Treasury secretary pick, await inflation data

Chipmaker Intel (INTC), a Dow stock, & the CHIPS & Science Act office are close to finalizing a deal which would award the company a roughly $8B grant, according to a person familiar with the matter, as the Biden administration moves to dole out funds before Pres-elect Donald Trump's inauguration.  That $8B will go toward INTC's factory-building efforts.  The Commerce Dept is expected to finalize the award in the coming weeks.  INTC is also in line for a $3B contract to manufacture chips for the Dept of Defense, a deal announced in Sep 8 a rare bright spot in the company’s struggling efforts to grow its fab business.  INTC's struggles have intensified since the grant was initially announced.  4 people familiar with the matter, reported that the gov had decided to decrease the grant by roughly $500M due to uncertainties about INTC's ability to execute on its investment commitment & because of INTC's shifting technology road map & customer demand.  The US awarded Taiwan Semiconductor Manufacturing.  a $6.6B grant earlier this month, raising investor expectations that cash funding for INTC would come soon.  INTC has benefited from CHIPS tax breaks but has not yet received cash awards, something which CEO Pat Gelsinger has expressed dissatisfaction with.  “We’re frustrated that hasn’t moved faster,” Gelsinger said, referring to the CHIPS grants.  “They’ve been too bureaucratic in that process. We’re anxious to see those finished.”  The stock rose 65¢.

Intel, Commerce close to finalizing roughly $8 billion CHIPS Act grant: Source

Israel is potentially days away from a cease-fire agreement with Lebanon's Hezbollah, the Israeli ambassador to the US said.  Prices extended losses after Axios reported that Israel & Lebanon have accepted the terms of a ceasefire agreement,  But the parties haven't yet announced an agreement, it said.  Bullion tumbled as much as 3% as traders unwound positions built last week amid rising geopolitical tensions, which helped the metal register the biggest weekly rally in 20 months.  Traders were also digesting Pres-elect Trump's pick of Scott Bessent for Treasury Secretary.  It is seen as a measured choice that would inject more stability into the US economy & financial markets.  The hedge fund manager's nomination has eased concerns over the incoming pres's inflationary agenda, which could reduce gold's allure as a hedge against price rises.  Investors are now focused on the outlook for monetary policy, after a report showed US business activity expanding at the fastest pace since Apr 2022.  Swaps traders see a less-than-even chance the Fed will cuts rates next month.  Higher borrowing costs tend to weigh on gold, as it doesn't pay interest.  A slew of data this week may yield clues on the Fed's likely rate path.  These include minutes of the central bank's Nov meeting, consumer confidence & personal consumption expenditure data, the monetary authority's preferred gauge of inflation.  Gold has still climbed roughly 30% this year, supported by central bank purchases & the Fed's pivot to rate cuts.  Haven buying has also been a feature on an escalation in the Russia-Ukraine war.  Spot gold fell 3.4% to $2619 per ounce, its biggest daily percentage decline since Jun & US gold futures settled 3.5% lower to $2618.

Gold Tumbles After Report Says Israel and Hezbollah Reach Deal

Oil dipped as Treasury Secretary nominee Scott Bessent pushed for increased US production & Israel said it's potentially days away from a cease-fire deal with Lebanon's Hezbollah.  Brent crude fell below $75 a barrel after jumping almost 6% last week on increased geopolitical risks in Ukraine & Iran.  Bessent advised Pres-elect Trump to push for Ms of barrels a day more of oil production or its equivalent.  That push comes at the same time OPEC is set to decide on whether to add extra barrels to the market & the Intl Energy Agency forecasts a sizable supply surplus next year.  Today, the Israeli ambassador to the US said that his nation is "close to a deal" with Hezbollah.  Although it remains unclear if the Iran-backed group will accept an accord, the move reduced concerns about production from the Middle East, which supplies about a 3rd of the world's oil.  Last week, oil was pushed higher as Russia's war in Ukraine escalated with the use of longer-range missiles by both sides, raising concern that crude flows could be affected.  Cold weather & surging gas prices have also raised the prospect of higher diesel demand in Europe.  Crude has traded in a range of about $6 a barrel since the middle of Oct, alternating between weekly gains and losses, as the threat to supply from geopolitical tensions & some improvements in physical markets is weighed against the prospects of oversupply.  Banks expect the Organization of the Petroleum Exporting Countries to delay a planned increase for a 3rd time when they meet this weekend.  Brent for Jan settlement fell 0.8% to $74.78 a barrel & WTI for Jan declined 0.9% to $70.81 a barrel.

Oil Falls as Bessent Seeks More US Output, Israel Nears Truce

Stocks rose as small caps rallied & the Dow touched intraday record highs amid optimism over Pres-elect Trump's choice of Scott Bessent for Treasury secretary.  Investors also looked ahead for a price check in the form of a Federal Reserve-favored inflation report.  Bessent's nomination has seemed to at least temporarily calm nerves over the pres-elect's inflationary agenda, with the benchmark 10-year Treasury yield dipping back under 4.3%.  Even though this is a shortened week for trading, it has the makings of a very exciting time.

Markets climbed ahead of shortened trading week

Dow jumped 383 with more of the upbeat mood, advancers over decliners a solid 4-1 & NAZ gained 101.  The MLP index wobbled in the 304s & the REIT index advanced 5+ to the 534s on lower interest rates.  Junk bond funds were higher & Treasuries had heavy buying in bonds which caused yields to tumble.  Oil fell back 2 as prices consolidated to the 69s & gold plunged 78 to 2634.

Dow Jones Industrials

As Pres-elect Donald Trump prepares to retake the White House in Jan, the National Association of Business Economics (NABE) is more optimistic on the outlook for the US economy.  "NABE panelists’ forecasts for economic growth in 2024 and 2025 are higher than their previous projections," said NABE Pres Emily Kolinski Morris, global chief economist at Ford (F), in the group's Nov outlook, which was surveyed from Oct 29 - Nov 8.  Ford is part of the 38 professional forecasters from companies that see GDP rising by 2.7% this year, a jump from Sep expectations of 2.6%.  For 2025, growth estimates rose to 2.0% from the initial 1.8% Sep estimate.  A combination of moderating inflation, more balanced risks & a Federal Reserve in easing mode are driving the improved economic sentiment.  "Panelists look for the Committee to gradually but consistently lower its target for the federal funds interest rate, cutting the target by a quarter-percentage point in December, followed by a full percentage point in 2025," they noted.  Policymakers expect interest rates to end the year around 4.4%, falling to 3.4% by 2025, according to the Federal Reserve's Sep projections.  As for GDP, their estimate is for 2% growth for this year & next.  Another momentum driver is the Tax Cuts & Jobs Act (TCJA), implemented by Trump during his first term & set to expire in 2025.  78% expect an extension while none expect an expiration.  Many corps & business leaders see Trump's tax cuts as pro-growth & pro-business, including Scott Bessent, who the pres-elect nominated for Treasury secretary.  He said these are critical to revive the US economy & should become permanent.

US economists more upbeat, see Trump tax cuts extended: NABE

Stubbornly high inflation is continuing to strain the budgets of American households this Thanksgiving, as a new report by LendingTree finds that the costs are up 19% from a year ago.  LendingTree's survey found that on average, Thanksgiving dinner hosts plan to spend $431 on food, drinks & decor for the celebration.  That includes an average of $265 for food & drinks, plus an additional $166 on Thanksgiving decor for the festivities.  Those Thanksgiving hosts expect an average of 11 guests to attend the holiday party, the same number as last year.  Inflation was on the minds of 60% of respondents, who said it has impacted their plans for celebrating the holiday – with 27% saying they'll change food choices, 26% turning to coupons more & 9% declining to host due to costs.  Over one-third said they may reconsider opening their homes next year because of the cost.  "What we found is that inflation is still having a really big impact on peoples' budgets when it comes to their Thanksgiving plans," LendingTree chief credit analyst Matt Schulz said about the 19% increase from a year ago.  "Prices aren't rising as much as they have in the last couple of years, but it's still around and it's clearly still an issue that people are wrestling with this Thanksgiving."  About 36% of potential hosts said that the amount they're planning to spend on Thanksgiving festivities will create a financial strain, while 14% said they regret their decision to host & 34% say they'll use credit cards to pay Thanksgiving costs.  With inflation squeezing household budgets, there is an expectation that guests will help shoulder some of the burden either thru chipping in with cash or bringing an item to contribute to the feast.  About 6 in 10 potential Thanksgiving hosts said they expect guests to help offset expenses in that way & 25% say they may reconsider extending an invitation next year if a guest arrives empty-handed.

Americans hosting Thanksgiving to spend 19% more than last year

The power needs of artificial intelligence & cloud computing are growing so large that individual data center campuses could soon use more electricity than some cities, & even entire US states, according to companies developing the facilities.  The electricity consumption of data centers has exploded along with their increasingly critical role in the economy in the past 10 years, housing servers that power the applications businesses & consumers rely on for daily tasks.  Now, with the advent of artificial intelligence, data centers are growing so large that finding enough power to drive them & enough suitable land to house them will become increasingly difficult, the developers say.  The facilities could increasingly demand a gigawatt or more of power, 1B watts, or about twice the residential electricity consumption of the Pittsburgh area last year.  Technology companies are in a “race of a lifetime to global dominance” in artificial intelligence, said Ali Fenn, pres of Lancium, a company that secures land & power for data centers in Texas.  “It’s frankly about national security and economic security,” she said.  “They’re going to keep spending” because there’s no more profitable place to deploy capital.  Renewable energy alone won’t be sufficient to meet their power needs.  Natural gas will have to play a role, developers say, which will slow progress toward meeting carbon dioxide emissions targets.  Regardless of where the power comes from, data centers are now at a scale where they have started “tapping out against the existing utility infrastructure,” said Nat Sahlstrom, chief energy officer at Tract, a Denver-based company that secures land, infrastructure & power resources for such facilities.  And “the funnel of available of land in this country that’s industrial zone land that can fit the data center use case — it’s becoming more and more constrained,” said Sahlstrom, who previously led Amazon's (AMZN) energy, water & sustainability teams.

Artificial intelligence data centers may use more electricity than entire cities

Stocks jumped after optimism when Trump picked Scott Bessent for Treasury.  Investors also looked ahead to Federal Reserve-favored inflation data.  Markets will shut on Thurs for the Thanksgiving holiday & close early on Fri.

Markets finished higher although Nasdaq was weak

Dow jumped 426, advancers over decliners about 3-1 & NAZ went up 31.  The MLP index gained 3+ to the 305s & the REIT index was up 2+ to the 428s.  Junk bond funds crawled higher & Treasuries saw modest buying which lifted yields.  Oil gained 1+ to the 71s & gold rebounded 35 to 2710, as a preferred' hedge to global risks (more on both below).

Dow Jones Industrials 

Pres-elect Trump is considering naming Kevin Warsh as Treasury secretary then ultimately sending him off to serve as Federal Reserve chair, according to a current report.  A former Fed governor, Warsh would move over to the central bank after current Chair Jerome Powell's term expires in 2026, which cited sources familiar with Trump's thinking.  The speculation comes with Treasury being the last major Cabinet position for which Trump has yet to state his intention.  Various reports have put Warsh as 1 of the finalists with Apollo Global Management CEO Marc Rowan & hedge fund manager Scott Bessent.  Among the potential scenarios would be 1 where Bessent would lead the National Economic Council initially then go to Treasury after Warsh takes over at the Fed.  However, Trump is known for the propensity to change his mind & the report noted that nothing has been finalized.  “President-Elect Trump is making decisions on who will serve in his second Administration,” Trump transition spokeswoman Karoline Leavitt said.  “Those decisions will continue to be announced by him when they are made.”

Trump might name Kevin Warsh as Treasury chief then Fed chair later, report says

US consumer sentiment ticked up for a 4th straight month in Nov, led by a big upswing in sentiment among Reps following Donald Trump's victory in the presidential election.  The number of Americans filing new applications for unemployment benefits fell to a 7-month low last week, suggesting that job growth likely rebounded in Nov after abruptly slowing last month amid hurricanes & strikes.  It is, however, taking longer for laid-off workers to find new jobs, posing an upside risk to the unemployment rate.  The report from the Labor Dept also showed unemployment rolls swelling to levels last seen in late 2021.  US  consumer sentiment ticked up for a 4th straight month in Nov, led by a big upswing in sentiment among Reps following Donald Trump's victory in the presidential election.  The University of Michigan's Consumer Sentiment Index climbed to 71.8 this month, the highest since Apr, from 70.5 in Oct.  The result was shy of the median estimate for a reading of 73.7 & was lower than the preliminary reading of 73.0, a pulse-taking that was completed before the Nov 5 election.  "Overall, the stability of national sentiment this month obscures discordant partisan patterns," Surveys of Consumers Director Joanne Hsu said.  "In a mirror image of November 2020, the expectations index surged for Republicans and fell for Democrats this month, a reflection of the two groups’ incongruous views of how Trump’s policies will influence the economy."  Meanwhile, households continued to see muted inflation pressures in the year ahead but do see greater price-rise risk over Trump's coming 4-year term.  The survey showed 1-year inflation expectations at 2.6%, the lowest since Dec  2020, but 5-year expectations rose to 3.2%, the highest in a year, from 3.0% in Oct.  Many economists see a risk of rekindled inflation arising from Trump's economic agenda of tax cuts, higher tariffs & restricted immigration.  Overall sentiment among Reps surged by 15.5 points, the largest increase since Trump won the 2016 election.  It plunged 10.1 points among Dems in the wake of the loss by VP Kamala Harris, their party's nominee.  It also ticked down among political independents, whom exit poll data from Edison Research showed narrowly favored Harris over Trump.

US consumer sentiment ticks up, shows post-election partisan flip

The number of Americans filing new applications for unemployment benefits fell to a 7-month low last week, suggesting that job growth likely rebounded in Nov after abruptly slowing last month amid hurricanes & strikes.  It is, however, taking longer for laid-off workers to find new jobs, posing an upside risk to the unemployment rate.  The report from the Labor Dept on also showed unemployment rolls swelling to levels last seen in late 2021.  Labor market slack keeps the door open to a 3rd interest rate cut from the Federal Reserve next month, despite a recent lack of its 2% target.  Initial claims for state unemployment benefits dropped 6K to a seasonally adjusted 213K for last week, the lowest reading since Apr.  The forecast called for 220K.  The data included the Veterans Day holiday, which could have injected some volatility.  Unadjusted claims decreased 18K to 213K last week.  Filings had surged in New Jersey & Texas in the prior week, were blamed on layoffs in the educational services industry as well as the healthcare & social assistance sector.  Though overall claims soared in early Oct amid disruptions caused by Hurricanes Helene & Milton as well as strikes by factory workers at Boeing (BA), a Dow stock, & another aerospace company, layoffs have remained low.  That is softening the hit on the labor market from sluggish hiring and another aerospace company, layoffs have remained low.  That is softening the hit on the labor market from sluggish hiring.

US weekly jobless claims at seven-month low

Gold was higher for a 5th-straight session, continuing a recovery from post-election losses even as the $ rose to the highest level in 2 years.  Gold for Feb was last seen up $39 to $2738 per ounce.  The rise comes on safe-haven demand after Ukraine made its first attack on Russia using foreign missiles & Russia retaliated by firing a newly developed hypersonic ballistic missile at the city of Dnipro amid further nuclear threats from the country.  The threats prompted safe-haven buying of the precious metal as it recovers from a 6.5% drop over 8 sessions following the US presidential election.  The initial reaction to Trump's win has unwound a bit, with gold clawing back some losses.  The reminder that risks abound has helped pull gold prices back up to more reasonable levels.  The $ rose to the highest since Nov 2022, usually a bearish indicator for commodities priced in the currency.  The ICE dollar index was last seen up 0.53 points to 107.5.  Treasury yields were mixed, with the US 2-year note last seen paying 4.375%, up 1.8 basis points, while the yield on the 10-year note was down 1.7 points to 4.408%.

Gold Rises for Fifth Day on Safe-Haven Demand

Oil prices climbed about 1% to a 2-week high as the intensifying war in Ukraine this week boosted the market's geopolitical risk premium.  Brent futures rose 94¢ (1.3%) to settle at $75.17 a barrel & US West Texas Intermediate (WTI) crude rose $1.14 (1.6%) to settle at $71.24.  Both crude benchmarks were up about 6% for the week, their highest settlements since Nov 7 as Moscow stepped up its Ukraine offensive after Britain & the US allowed Kyiv to strike deeper into Russia with their missiles.  The Russia-Ukraine escalation has raised geopolitical tensions beyond levels seen during the year-long conflict between Israel & Iran-backed militants.  Pres Vladimir Putin said Russia would keep testing its new Oreshnik hypersonic missile in combat & had a stock ready for use.  Russia fired the missile into Ukraine, prompted by Ukraine's use of US ballistic missiles & British cruise missiles to hit Russia.

Oil prices settle up 1% at 2-week high as Ukraine war intensifies

Trading was choppy this week, but the finished with a significant recovery from recent selling.  Dow rose 852 for the week.  Next week the NYSE will have a shortened week, closed on Thurs & ½ day on Fri.  That may bring less volatility, although forecasting is always difficult.

Markets advance and head for a weekly gain

Dow rose 218, advancers over decliners 3-1 & NAZ was off 8.  The MLP index added 1+ to the 303s & the REIT index gained 2+ to the 428s.  Junk bond funds were mixed & Treasuries had limited buying & yields eased lower (more below).  Oil went up almost 1 to  about 71 & gold jumped 30 to 2705.

Dow Jones Industrials

Nvidia (NVDA) founder, CEO & Pres Huang expanded on "the big idea" behind the artificial intelligence (AI) boom, what it means for human jobs & the company’s plan to ramp up its chip production.  "The idea that AI would somehow do 100% of somebody’s job is very, very unlikely and, quite frankly, impractical for any time in the horizon," he continued.  "What is very likely is that AI will do 20, 30, 40% of 100% of the jobs in the world."  It's been a year of wins for the tech-based "Magnificent 7" stock as their market cap currently sits at $3.5T, the largest of any US company.  NVDA shares have tripled this year.  Its rapid growth has also powered exchange traded funds that focus on the chipmaker.  "The idea that AI would somehow do 100% of somebody’s job is very, very unlikely and, quite frankly, impractical for any time in the horizon," he continued.  "What is very likely is that AI will do 20, 30, 40% of 100% of the jobs in the world."  "AI is going to revolutionize and transform everybody's jobs. And it's really important that everybody should learn how to use AI. They're not going to lose their jobs to AI," Huang clarified.  The stock fell 4.12.

Nvidia CEO talks AI boom, addresses concerns about technology replacing workers

Amazon (AMZN) announced it would invest an additional $4B in Anthropic, the artificial intelligence startup founded by ex-OpenAI research execs.  The new funding brings the tech giant's total investment to $8B, though AMZN will retain its position as a minority investor, according to Anthropic behind the Claude chatbot & AI model.  Amazon Web Services will also become Anthropic's “primary cloud & training partner,” according to a blog post.  From now on, Anthropic will use AWS Trainium & Inferentia chips to train & deploy its largest AI models.  Anthropic is the company behind Claude, one of the chatbots that, like OpenAI's ChatGPT & Google's Gemini (GOOG), has exploded in popularity.  Startups like Anthropic & OpenAI, alongside tech giants are all part of a generative AI arms race to ensure they don't fall behind in a market predicted to top $1T in revenue within a decade.  In Mar, AMZN's $2.75B investment in Anthropic was the company’'s largest outside investment in its 3-decade history.  The companies announced an initial $1.25B investment in Sep 2023.  AMZN stock was off 69¢.

Amazon to invest another $4 billion in Anthropic, OpenAI’s biggest rival

The 10-year Treasury yield was little changed as investors weighed mixed economic data & assessed the state of the economy.  The yield on the 10-year Treasury sat at 4.428%, down by less than 1 basis point & the 2-year Treasury yield was last trading at 4.375% after rising by more than 2 basis points.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Investors considered the current state & outlook for the US economy in recent reorts brought a series of mixed data points.  The latest weekly initial jobless claims came in at 213K, below the previous week's figure & expectations.  The data suggests that the labor market is holding steady, or even strengthening.  However, other figures that were also released yesterday indicated weakness in the economy.  Continuing claims for jobless insurance rose to 1.9M & came in ahead of forecasts, while the Philadelphia Federal Reserve manufacturing index of activity in the region slowed to -5.5 in Nov,  against the estimate of +6.9.  PMI surveys released today ticked higher from Oct to Nov.  However, the University of Michigan's consumer confidence gauge came in below where economists expected.

10-year Treasury yield wavers as investors weigh state of U.S. economy

Stocks rose as investors surveyed Pres-elect Trump's efforts to build his team.  Markets are regrouping after NVDA's earnings fell short of definitively settling the question of whether AI would keep boosting stocks.  Still, the major gauges were on track to close the week with wins of over 1%, despite getting off to a lackluster start as the post-election rally stalled.

Markets rise as investors rotate out of tech stocks

Dow soared 469. advancers over decliners about 4-1 & NAZ crawled up 16.  The MLP index surged 5 to over 301 & the REIT index added 3+ to the 426s.  Junk bond funds continued to be in demand & Treasuries had some selling which lifted yields.  Oil remained 1+ higher, above 70 on Russia - Ukraine tensions, & gold advanced 20 to 2672 (more on both below).

Dow Jones Industrials 

Walmart CFO John David Rainey warned that Pres-elect Trump's proposed tariffs could lead to higher prices for its shoppers.  "Tariffs are going to be inflationary. There's no disputing that," Rainey said.  "Likely consumers are going to pay more for the items that they pay and that these tariffs are applied to."  Under the proposals, a universal 10%-20% tariff would be imposed on imports from all foreign countries & an additional 60%-100% tariff would be imposed on imports specifically from China.  While Rainey said 2/3 of the items the company sells are made, grown or assembled in the US, he said it's "in no way immune to this."  The company has suppliers from all over the world, including China & other countries throughout Asia.  "We're going to work with our suppliers as well as our own private brand assortment to continue to try to bring down prices for customers," Rainey said.  A WMT spokesperson said in a statements that the company remains "concerned that significantly increased tariffs could lead to increased costs for our customers at a time when they are still feeling the remnants of inflation." WMT, a Dow stock & Dividend Aristocrat ended up 1.19.

Walmart warns of higher prices if President-elect Trump implements proposed tariff agenda

Mortgage rates climbed closer to 7% this week while sales of existing homes saw a revival from a dip in rates 2 months ago.  Freddie Mac's latest Primary Mortgage Market Survey, showed that the average rate on the benchmark 30-year fixed mortgage rose to 6.84% from last week's reading of 6.78%.  The average rate on a 30-year loan was 7.29% a year ago.  Meanwhile, the National Association of Realtors reported that existing home sales jumped 3.4% in Oct from the month before to 3.96M, lifting off a 14-year low in Sep.  "Home sales surged in October because mortgage rates plunged below 6.25% in September," said Holden Lewis, home & mortgage expert at NerdWallet.  "When rates dropped, buyers acted quickly – making successful offers in September and closing in October."  Many would-be buyers & sellers are holding out to see if rates fall further.  Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey.  The average rate on the 15-year fixed mortgage also fell slightly to 6.02% from 5.99% last week.  1 year ago, the rate on the 15-year fixed note averaged 6.67%.

Mortgage rates rise after home sales jump in October

Alphabet (GOOG) shares slid, following news that the Dept of Justice (DOJ) is calling for GOOG to divest its Chrome browser to put an end to its search monopoly.  The proposed break-up would, according to the DOJ in its filing, “permanently stop Google’s control of this critical search access point and allow rival search engines the ability to access the browser that for many users is a gateway to the internet.”  This development is the latest in a years-long, bipartisan antitrust case that found in an Aug ruling that the search giant held an illegal monopoly in both search & text advertising, violating Section 2 of the Sherman Act.  The potential break-up would include preventing GOOG from entering into exclusionary agreements with competitors like Apple (AAPL), a Dow stock, & Samsung, part of a set of remedies that would last 10 years.  GOOG stock dropped 8.08 (5%).

Alphabet shares slide 6% following DOJ push for Google to divest Chrome

Spot gold rose for a 4th consecutive session, hitting an over 1-week high as safe-haven demand soared following AI bellwether NVDA's lackluster revenue forecast & intensifying Russia-Ukraine tensions.  Spot gold was up 0.6% at $2666 per ounce, while US gold futures rose 0.6% to $2668.  Investors flock to safe-haven assets during global crises, & gold has soared to multiple record highs since the Middle East conflict erupted in Oct last year.  With the US vetoing a UN ceasefire resolution in Gaza & renewed Russia-Ukraine tensions, geopolitical risk premiums remain elevated, ensuring gold's enduring appeal.  The move to the downside in equities after NVDA earnings has supported precious metals from a safe-haven perspective.  Global stocks eased after AI bellwether NVDA revenue growth forecast failed to excite investors.  Spot gold prices are up 4% so far this week, their best performance since Apr, recovering from last week's sharpest weekly drop in over 3 years.  The decline in bullion was driven by a soaring $, boosted by "Trump Trade" euphoria.  Brokerages expect Pres-elect Trump's proposed tariffs to spur global market volatility & inflation, limiting central banks' ability to ease monetary policy.  Meanwhile, a new poll shows most economists anticipate a Federal Reserve rate cut in Dec, with smaller reductions projected for 2025.

Gold climbs to over 1-week high on safe-haven demand

Oil rose on signs that the Russia-Ukraine conflict is escalating further.  Brent climbed toward $74 a barrel after Ukraine said Russia launched an intercontinental ballistic missile at the central city of Dnipro, following the expanded use of Western-provided long-range weapons by Kyiv's forces.  The Russian strike, if confirmed, appears to be the first use of such a weapon since its development at the inception of the Cold War.  There have also been some bullish signs for prices in recent days, with premiums of refined products over crude climbing to multi-month highs.  In the US, a proxy of the margins obtained from turning crude into gasoline & diesel hit the highest level since Aug as Gulf Coast fuel makers step up production to meet rising exports.  Oil has swung between gains & losses since mid-Oct, buffeted by a range of factors including concerns over Chinese demand & a stronger $ that makes commodities priced in the greenback less appealing.  The market is facing a supply glut next year & investors are watching for a decision from OPEC+ on plans to start reviving idled supply.  That has kept a lid on any rally fueled by geopolitical concerns.  Brent for Jan was 1.4% higher at $73.83 a barrel & WTI for Jan rose 1.5% to $69.79 a barrel.

Oil Advance on Signs of Further Escalation in Russia-Ukraine War

Investors gravitated toward industrials & financials while rotating out of Big Tech.  NVDA was in focus for the entire session & finished up 78¢.

Markets climb higher but Nasdaq slides after Nvidia earnings

Dow rebounded 370, advancers over decliners an impressive 4-1 but NAZ lost 77.  The MLP index gained 3+ to 300 & the REIT index was up 2+ to the 245s.  Junk bond funds edged higher & Treasuries saw very limited buying & rates eased lower.  Oil went up 1+ to 70 & gold jumped 19 to 2671.

Dow Jones Industrials

Nvidia (NVDA) shares whipsawed as investors reacted to the chipmaker's 3rd-qtr earnings.  Investors were reacting to its latest quarterly results, which beat on both the top & bottom lines.  Revenue came in at $35.08B, up 94% year-on-year & exceeding the $33.16B forecast.  EPS was 81¢ adjusted, also above analyst expectations.  The broader semiconductor space got a bump higher.  NVDA has largely cornered the market for the high-powered chips powering the world's most advanced artificial intelligence models, such as OpenAI’s ChatGPT.  Despite nearly doubling sales year-on-year, its 3rd-qtr results showed a slowdown from previous qtrs.  NVDA previously reported growth of 122% in the 2nd qtr, 262% in the first qtr & 265% in the 4th qtr of 2023.  William de Gale, lead portfolio manager of BlueBox Asset Management’s global technology fund, said the problem for NVDA as a stock is that “insane” GPU demand has become the “bare minimum” expected of the company.  There is a risk here … that Nvidia’s current overearning will begin to come to an end,” he said.  “There’s considerable risk in this name at the moment. But it’s exciting,” he said.  Analysts are looking ahead to the much-anticipated launch of iss next-generation chip called Blackwell. CEO Jensen Huang said that demand for the chip is exceeding supply.  The stock fell 1.64.

Nvidia shares fluctu.64.ates as investors digest third-quarter earnings

A sharp drop in mortgage rates brought homebuyers off the fence in Oct after a slow summer.  Sales of previously owned homes last month rose 3.4% from Sep to a seasonally adjusted, annualized rate of 3.96M units, according to the National Association of Realtors (NAR).  Sales were 2.9% higher than Oct of last year, marking the first annual increase in more than 3 years.  This count is based on signed contracts, meaning most of the deals were made in Aug & Sep.  During that time, the average rate on the popular 30-year fixed mortgage was falling.  It started Aug around 6.6% & dropped to a low of 6.11% by mid-Sep, according to Mortgage News Daily.  “The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, NAR's chief economist, in a release.  “Additional job gains and continued economic growth appear assured, resulting in growing housing demand. However, for most first-time homebuyers, mortgage financing is critically important. While mortgage rates remain elevated, they are expected to stabilize.”  Tight supply continues to put upward pressure on prices.  The median price of an existing home sold in Oct was $407,200, an increase of 4% from the year before.  By price category, the higher end of the market is seeing more activity than the lower end.  “We still need another 30% in inventory just to get us back to the pre-Covid conditions,” Yun added.

Home sales surged in October, just before mortgage rates jumped

Pres-elect Trump & Federal Reserve Chair Jerome Powell could be on a policy collision course in 2025 depending on how economic circumstances play out.  Should the economy run hot and inflation flare up again, Powell and his colleagues could decide to tap the brakes on their efforts to lower interest rates.  That in turn could infuriate Trump, who lashed Fed officials including Powell during his first term in office for not relaxing monetary policy quickly enough.  “Without question,” said Joseph LaVorgna, former chief economist at the National Economic Council during Trump's first term, when asked about the potential for a conflict.  “When they don’t know what to do, oftentimes they don’t do anything. That may be a problem.  If the pres feels like rates should be lowered, does the Fed, just for public optics, dig its feet in?”  Though Powell became Fed chair in 2018, after Trump nominated him for the position, the 2 clashed often about the direction of interest rates.  Trump publicly & aggressively berated the chair, who in turn responded by asserting how important it is for the Fed to be independent & apart from political pressures, even if they’re coming from the pres.  When Trump takes office in Jan, the 2 will be operating against a different backdrop.  During the first term, there was little inflation, meaning that even Fed rate hikes kept benchmark rates well below where they are now.  Trump is planning both expansionary & protectionist fiscal policy, even more so than during his previous run, that will include an even tougher round of tariffs, lower taxes & big spending.  Should the results start to show up in the data, the Powell Fed may be tempted to hold tougher on monetary policy against inflation. 

Trump and Fed Chair Powell could be set on a collision course over interest rates

US stocks whipsawed as investors digested NVDA''s earnings.  Those earnings suggests a revenue boost is just being pushed down the road until the issues ease, some analysts suggested, given the shortage of sizable competitors in AI chipmaking.