Dow was up 167, advancers over decliners 3-2 & NAZ rose 190. The MLP index advanced 4+ to the 324s & the REIT index was steady in the 406s. Junk bond funds crawled higher & Treasuries hardly budged keeping yields flattish. Oil was up 1+ to the 72s & gold surged 27 to 2935 for another record (more on both below).
Dow Jones Industrials
Billionaire Elon Musk suggested in a series of social media posts this past weekend that the Federal Reserve should undergo closer scrutiny, making the comments just days before Fed Chair Jerome Powell is scheduled to testify on Capitol Hill. Musk said yesterday that "All aspects of the government must be fully transparent and accountable to the people. No exceptions, including, if not especially, the Federal Reserve." It came in reaction to a post from another X user who argued that the Fed has never had a full audit or a full disclosure of monetary policy decisions. The Fed is required by law to have its financial statements audited annually by an independent, outside public accounting firm. To ensure auditor independence, the Fed requires that the external auditor be independent in all matters relating to the audit. In addition, the Gov Accountability Office, as well as the Federal Reserve Board's Office of Inspector General, frequently audit many Fed activities.
Pres Trump likely won't do away with a landmark process that allows Medicare to negotiate drug prices with manufacturers, even as he moves to erase Joe Biden's other historic policy accomplishments. But Trump will likely make some changes to those price talks, & it may not require help from Congress. “Trump is looking to nibble around the edges of the law,” said Matthew Kupferberg, a partner in Frier Levitt's life sciences group, adding the pres is “not looking to completely abandon the drug negotiation process at this point.” It's still unclear which way Trump will lean, however. While some lawmakers & health policy experts said Trump could weaken the negotiations in a way that helps the pharmaceutical industry, other experts said he could double down & try to save patients & the federal gov even more money to outdo his predecessor. The path he takes could have huge stakes for the prices 68M Medicare beneficiaries in the US pay for their medications. It will also have big implications for pharmaceutical companies whose drugs were included in the first 2 rounds of talks. The negotiations are a key provision of Biden's Inflation Reduction Act (IRA) that aims to lower prescription medicine costs for seniors & save the gov nearly $100B in Medicare spending over the next decade. The pharmaceutical industry fiercely opposes the price talks, arguing in a flurry of lawsuits that they threaten profits & discourage drug innovation.
Trump is unlikely to end Medicare drug price talks — here’s what that means for patients and pharma
The US public's near-term inflation expectations
were largely stable in Jan, a Federal Reserve Bank of New York
report found, as respondents to the survey also predicted a notable
softening in future spending plans. The
expected level of inflation at both the 1-year & 3-year ahead
horizons was unchanged at 3% last month, the bank said in its latest
Survey of Consumer Expectations, while the expected
level of inflation 5 years from now moved to 3% from 2.7% in
Dec. Jan also saw the public predict bigger future price rises
for food, gasoline, rent, college & medical costs, while home price
expectations increased to 3.2% from Dec's 3.1%. The report's relatively benign view
on the future path of inflation comes just after a report on Fri from
the University of Michigan that found a very sharp rise in year-ahead
expected inflation, which rose from 3.3% in Jan to 4.3% in Feb,
amid a broader drop in overall consumer sentiment levels for the month. The
New York Fed survey data was collected thru the month of Jan
whereas the Michigan survey period moved into early Feb. Overall
rates of inflation have been slowly coming down for some time amid
relatively stable inflation expectations, but there is considerable
uncertainty about what lies ahead. Pres Trump's economic
agenda features a call for strong trade tariffs & deportation of
undocumented workers, a combination that most economists believe will
cause higher inflation over time, although they are not sure how much. Fed
officials believe the expected level of inflation has a strong
influence on actual price pressures & have flagged stable expectations
as part of their confidence inflation will ultimately return to the 2%
target.
NY Fed finds mostly stable inflation expectations in January
Pres Trump's latest tariff threats have ignited another gold rush, propelling the safe-haven metal to new heights & bringing the glittering $3K milestone into view. Spot gold climbed to a record $2911 a troy ounce, its 7th record peak to date in 2025. Prices are already up nearly 11% so far this year after a staggering 27% gain in 2024. Trump said yesterday he will introduce new 25% tariffs on all steel & aluminum imports into the US, adding that he will announce reciprocal tariffs, applying them to all countries & matching the tariff rates levied by each country. The tariff plans are broadly viewed as inflationary & capable of sparking trade wars, thereby increasing the demand for safe-haven assets like bullion, traditionally regarded as a hedge against inflation & geopolitical instability.
Gold bulls lock in on glittering milestone; $3,000/oz in sight
Oil prices rose, bouncing after 3 consecutive weekly declines despite Pres Trump's new tariff announcement on all steel & aluminum imports. Brent Oil Futures rose 1.4% to $75.69 a barrel, while Crude Oil WTI Futures expiring in Mar gained 1.5% to $72.05 a barrel. Both contracts lost nearly 2% last week after a sharp jump in US crude stockpiles, fears about a global trade war & Donald Trump's pledge to boost production. Today Trump signals levies on steel & aluminum imports. The imposition of a 10% tariff on Chinese imports by the US has led to retaliatory measures from China, including tariffs on US oil, liquefied natural gas & coal. In addition to tariffs on Chinese goods, the US has imposed a 25% tariff on all steel & aluminum imports, Trump said yesterday.
Oil prices rise despite new Trump tariffs; China inflation underwhelms
Stocks bounced back today as investors looked beyond Pres Trump's latest tariff threats, including new levies on steel & aluminum imports. Markets this week expect Trump to announce reciprocal tariffs on all trading partners that could match the duties levied on US products by each country. But today's gains for stocks suggest that investors are getting used to Trump's trade salvos, although some traders say many they see the announcements as only a negotiation tactic.
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