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.
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