Dow slid back 76, decliners over advancers 4-3 & NAZ added 76. The MLP index hovered in the 312s & the REIT index was off 1+ to the 428s. Junk bond funds remained slightly higher & Treasuries had limited selling which brought slightly higher yields. Oil was up almost 2 to 70 & gold gained 5 to 2664 (more on both below).
Dow Jones Industrials
Consumers collectively spent a record $13.3B online during Cyber Monday, surpassing previous expectations. According to the latest Adobe Analytics data, spending climbed 7.3% compared with the same period a year ago & surpassed its expectation of $13.2B. In the final hours of the shopping day, consumers spent $15.8M every minute as they capitalized on larger-than-expected discounts. Usage of buy now, pay later services has also hit a record on Cyber Monday, accounting for $991M in total spending, up 5.5% compared with the same time a year ago. The Mon after Thanksgiving remains the biggest online shopping day of all time. The strong holiday sales so far this season have demonstrated households' capacity to spend even with inflation slightly higher than the Federal Reserve's 2% target. National Retail Federation chief economist Jack Kleinhenz said in Nov that falling energy prices were "likely provided extra dollars for household spending on retail merchandise." So far this holiday season, from Nov 1 to Dec 2, consumers have collectively spent $131B online, a 9% jump compared with the same period a year ago. More than ½ of all spending online has notably been driven by 3 categories, including electronics, apparel & furniture. Online spending on electronics has already surpassed $30B, while spending on apparel & furniture totaled over $24B & $16B, respectively. This demonstrates how the steep discounts from companies have driven consumers to spend more on higher-ticket items. Over the past month, the "share-of-units-sold" for the most expensive goods increased by 28%. Adobe's figures are not adjusted for inflation. If online deflation was factored into its data, then growth in spending would be stronger.
Cyber Monday spending hits record amount
China banned exports to the US of the critical minerals gallium, germanium & antimony that have widespread military applications, escalating trade tensions the day after DC's latest crackdown on China's chip sector. The curbs strengthen enforcement of existing limits on critical minerals exports that Beijing began rolling out last year, but apply only to the US market, in the latest escalation of trade tensions between the world's 2 largest economies ahead of Pres-elect Donald Trump taking office next month. A Chinese Commerce Ministry directive on dual-use items with both military & civilian applications cited national security concerns. The order, which takes immediate effect, also requires stricter review of end-usage for graphite items shipped to the US. "In principle, the export of gallium, germanium, antimony, & superhard materials to the United States shall not be permitted," the ministry said. Gallium & germanium are used in semiconductors, while germanium is also used in infrared technology, fibre optic cables & solar cells. Antimony is used in bullets & other weaponry, while graphite is the largest component by volume of electric vehicle batteries. The move has sparked fresh concern that Beijing could next target other critical minerals, including those with even broader usage such as nickel or cobalt. "China has been signalling for some time that it's willing to take these steps, so when is the U.S. going to learn its lesson?" said Todd Malan of Talon Metals, which is trying to develop a nickel mine in Minnesota & is exploring for the metal in Michigan. The only US nickel mine will be depleted by 2028.
China bans exports of gallium, germanium, antimony to US
2 Federal Reserve policymakers said they believe inflation is heading down to the central bank's 2% target & the job market is "solid," even as neither gave any clear steer on whether they'll support another interest rate cut later this month. "I view the economy as being in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices," Fed Governor Adriana Kugler said. "The labor market remains solid, and inflation appears to be on a sustainable path to our 2% goal." And while she said the Fed is in the process of removing policy restraint, she did not indicate if she favors another qtr-percentage-point rate cut at the central bank's Dec 17-18 policy meeting, as anticipated by investors. Fed Pres Mary Daly gave a similar read, & said that while a rate cut this month is "absolutely" not off the table, neither is it a sure thing. "We have to continue to recalibrate policy - now, whether it will be in December or sometime later, that's a question we'll have a chance to debate and discuss in our next meeting," she said. "I think we need to have an open mind here." Kugler & Daly said they will be looking closely at the release on Fri of the US employment report for Nov to inform their decision & both said they would be watching inflation data. Yesterday, Fed Governor Christopher Waller said he was leaning towards another rate cut this month. Fed Chair Jerome Powell on Wed will give what are expected to his last public remarks before the meeting. Fed officials are trying to avoid giving too much guidance about how policy is likely to evolve, particularly since Pres-elect Trump's victory in last month's US election. Trump's promises of import tariffs, tax cuts & an immigration crackdown could change the economic outlook in the coming months. Both Kugler & Daly said it was too early to make any judgments about how those policies will affect the economy. Kugler used the bulk of her speech to make 1 point relevant to the coming policy debate, arguing that a jump in immigration in recent years was a positive supply shock which, along with a rise in productivity, allowed the economy to grow faster than expected while inflation continued to decline.
Fed's Kugler says inflation on path to 2% target, job market is solid
Gold edged higher to trade around $2630 after comments from a Federal Reserve (Fed) speaker raised the possibility of the Fed cutting interest rates at its Dec policy meeting. Lower interest rates are positive for Gold as they reduce the opportunity cost of holding non-interest-paying assets. Rising geopolitical risks can also support gold amid ongoing conflicts in the Middle East, now exacerbated by the outbreak of civil war in Syria, the Russia-Ukraine conflict & political risks in France. During times of crisis, investors turn to gold for safety. Gold edged higher after comments from several Fed members appeared to favor the central bank cutting US interest rates at its Dec meeting. Atlanta Fed Pres Raphael Bostic said yesterday that he was "keeping his options open" regarding a Dec cut. However, he also appeared to lean toward such a move, adding that because the risks to the labor market and inflation are "roughly balanced, we should also start shifting monetary policy toward a stance that is neither stimulating nor restraining economic activity."
Gold Edges Higher as Fed Speaker Supports Christmas Rate Cut
Oil prices rose, as traders awaited the outcome of the OPEC+ meeting later this week. Brent crude was up 66¢ (0.9%) at $72.49 a barrel, while US West Texas Intermediate crude was up 63¢ (0.9%) at $68.73. OPEC+ is likely to extend its latest round of production cuts until the end of the first qtr at its meeting on Dec 5. Given the improved compliance with production cuts from Russia, Kazakhstan & Iraq, the decline in Brent prices & indications in press reports, OPEC+ production cuts are expected into Apr. OPEC+, which accounts for about ½ of the world's oil output, has been pushing to gradually phase out output cuts by 2025. However, the prospect of an oil market surplus has put downward pressure on prices, with Brent trading nearly 6% below its Dec 2023 average. The outlook for global oil demand remains weak, with China's crude imports likely to peak as early as next year as demand for transportation fuels begins to decline, researchers & analysts say. Saudi Arabia, the world's top exporter, is expected to cut its crude prices for Asian buyers to the lowest in at least 4 years. Concerns that the Federal Reserve may not cut interest rates at its Dec meeting have also capped oil prices. In the Middle East, cracks continued to appear in a US-brokered ceasefire between Israel & the militant group Hezbollah, with 9 people killed in attacks on 2 southern Lebanese towns shortly after Hezbollah fired missiles at Israeli military positions in the disputed Shebaa Farms region yesterday.
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