Markets edge higher before Powell's speech later today

Dow went up 196, decliners slightly ahead of advancers & NAZ gainedn188.  The MLP index dropped 4+ to the 308s & the REIT index was off 2+ to 426.  Junk bond funds were mixed & Treasuries hardly budged, keeping yields flattish.  Oil was about even in the high 69s as investors await OPEC+ decision & gold  added 12 to 2680.

Dow Jones Industrials

As the US economy's future takes the forefront with 2024 soon coming to an end, the Federal Reserve Bank of San Francisco's pres detailed what Trump's tariffs & rate decisions could mean for markets.  Mary Daly directly answered what may happen if a 10% tariff on goods imported thru the Port of Los Angeles is implemented.  "It really depends," Daly said.  "This is why we don't, the Fed, does not think in hypotheticals, because the economy is a complex and large thing."  "It depends on what's tariffed, how it is, have firms in the US adjust[ed] it? What are the other players in the global economy who might substitute their goods for goods that come in from another country?" Daly further posited.  "So we've had trade issues and tariffs before, and the economy adjusts, and it doesn't usually derail growth."  Last week, 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 subsequent post, Trump added that he would institute an additional 10% tariff on all Chinese goods being imported into the US over the "massive amounts" of drugs, in particular fentanyl, being smuggled into the country.  Daly clarified that the Fed does not have a tariff forecast model in place, as it falls under the category of "hypothetical."  "We know historically how tariffs impact the economy. There's a lot of work there. So we're very prepared to assess things. But, the president-elect hasn't even come into office yet," the San Fran president added.  "And I think it's only the right thing to give him and his team a chance to put the policies forward before we react."  When it comes to the macroeconomy, Daly expressed the central bank's belief that it’s "in a really good place," although a Dec rate cut is not completely off the table.  "In order to keep the economy in a good place, we have to continue to recalibrate policy," Daly noted.  "Now, whether it'll be in December or sometime later, that's a question we'll have a chance to debate and discuss in our next meeting. But the point is, we have to keep policy moving down to accommodate the economy because we want a durable expansion with low inflation."

San Francisco Fed president on Trump tariffs: 'Very prepared' to assess impact

Private payrolls growth was less than expected in Nov, reflecting a slowing labor market, according to a report from ADP.  Companies added 146K jobs on the month, below the downwardly revised 184K in Oct & less than the estimate for 163K.  Education & health services led job creation, adding 50K positions on the month.  That was followed by construction with 30K new jobs, trade, transportation & utilities with 28K additions, & the other services category, which contributed 20K jobs.  Manufacturing lost 26K positions on the month.  Businesses with fewer than 50 employees also reported a drop of 17K.  Wage growth accelerated, by 4.8%, a faster gain than Oct, the first time that has happened in 25 months.  "While overall growth for the month was healthy, industry performance was mixed," ADP's chief economist, Nela Richardson, said.  "Manufacturing was the weakest we've seen since spring. Financial services and leisure and hospitality were also soft."  Even with the lower-than-expected total & downward Oct revision, ADP's count was still well ahead of the Bureau of Labor Statistics' more closely watched nonfarm payrolls count, which showed an increase of just 12K jobs in Oct.

Private payrolls grew by 146,000 in November, less than expected, ADP says

General Motors (GM) expects a restructuring of its joint venture operations with SAIC Motor in China to cost more than $5B in noncash charges & write-downs, the Detroit automaker disclosed.  It expects to write down the value of its joint-venture operations in China by $2.6-2.9B.  It also anticipates another $2.7B in charges to restructure the business, including “plant closures and portfolio optimization.”  GM, which previously announced plans to restructure the operations in China, did not disclose any additional details about the expected closures.  “As we have consistently said, we are focused on capital efficiency and cost discipline and have been working with SGM to turn around the business in China in order to be sustainable and profitable in the market. We are close to finalizing our restructuring plan with our partner, and we expect our results in China in 2025 to show year-over-year improvement,” GM said.  GM believes the joint venture “has the ability to restructure without new cash investments” from the American automaker.  A majority of the restructuring costs is expected to be recognized as noncash, special item charges during the 4th qtr.  That means they will impact net income, but not its adjusted earnings before interest & taxes – a key metric.  The stock fell 36¢.

GM expects more than $5 billion impact from China restructuring

Stocks rose as techs helped set the stage for fresh record highs & investors waited to hear from Federal Reserve Chair Jerome Powell for clues on what's next for interest rates.  Anticipation is building for Powell's appearance to find out whether growing confidence in a Dec rate cut is justified.  Fed officials have signaled support for more easing as they prepare for their final meeting of the year.  The central bank is widely expected to lower rates at its Dec 18 meeting.  Traders see near 74% odds of a 25 basis point cut, compared with around 66% a week ago.