Markets slide ahead of Fed decision tomorrow

Dow sank 267 (off session lows), decliners over advancers 3-1 & NAZ was off 64.  The MLP index fell 1+ to the 294s & the REIT index retreated 1+ to the 413s.  Junk bond funds continued to be weak & Treasuries had a little buying which lifted yields slightly.  Oil slid back fractionally but held above 70 & gold fell 9 to 2660 (more on both below).

Dow Jones Industrials 

Peter Navarro, who is set to become the top trade advisor to Pres-elect Trump, contended that Trump's plans for broad tariffs & steep tax cuts will not spur inflation or raise deficits, despite warnings from some experts.  Navarro said Trump's first term in the White House proved his point.  “We put on significant tariffs on China, steel, aluminum, dishwashers, solar, a lot of increased countervailing duties to stop the dumping,” Navarro said.  “We had zero inflation from any of that,” he added.  Trump imposed tariffs on China during his first term.  Pres Biden's administration kept many of them in place.  “So I would say that just go back and play all the interviews that were done on CNBC of people back in the first term with their hair on fire, worrying about inflation,” said Navarro.  “It never happened, and it’s the same movie this time,” the 75-year-old China hawk added.  Navarro, whom Trump picked earlier in Dec to be his senior counselor for trade & manufacturing, argued that the inflation that hung over Biden's term & Biden's administration kept many of them in place.  During his recent campaign, Trump said he wanted to enact much larger& broader tariffs, plus additional targeted duties on imports from China.  Since winning the election, he has issued additional tariff threats on Mexico & Canada.  Trump also has suggested a laundry list of proposed tax cuts, including further lowering the corp tax rate, as well as eliminating taxes on tips for service workers & on Social Security benefits for seniors.  He has also vowed to extend tax cuts implemented during his first term, some of which are set to expire at the end of 2025.

Trump trade counselor Peter Navarro says planned tariffs won’t spur inflation

Nov retail sales grew at a faster pace than had been expected, reflecting continued resilience in the American consumer & indicating that the holiday shopping season in the US is off to a strong start.  Retail sales rose 0.7% in Nov.  The forecast had expected a 0.6% rise in spending.  Meanwhile, retail sales in Oct were revised up to a 0.5% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data.  A 2.4% month-over-month increase in motor vehicle & auto parts sales, as well as a 1.8% increase in online sales, drove the gains.  Nov sales, excluding auto & gas, rose 0.2%, below estimates for a 0.4% increase.  The control group in today's release, which excludes several volatile categories & factors into the gross domestic product reading for the qtr, increased by 0.4%, in line with estimates.  Capital Economics North America economist Bradley Saunders wrote that the report reflects "consumer resilience."  "The solid rise in retail sales in November was led by vehicle sales but still showed signs of broad-based strength, with control group sales increasing at a healthy pace too," Saunders added.

Retail sales jump in strong start to holiday season

A report released by the National Association of Home Builders showed homebuilder confidence has held steady in the month of Dec.  The report said the NAHB/Wells Fargo Housing Market Index came in at 46 in Dec, unchanged from Nov.  The forecast expected the index to inch up to 47.  With the unchanged reading, the housing market index remained at its highest level since reaching 51 in Apr.  "While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election," said NAHB Chair Carl Harris.  He added, "This is reflected in the fact that future sales expectations have increased to a nearly three-year high."  The report said the HMI component measuring sales expectations in the next 6 months jumped to 66 in Dec from 63 in Nov, reaching the highest level since Apr 2022.  Meanwhile, the gauge charting traffic of prospective buyers edged down to 31 in Dec from 32 in Nov, while the index gauging current sales conditions held steady at 48.  The NAHB said the latest HMI survey also revealed that 31% of homebuilders cut prices in Dec, unchanged from Nov.  The average price reduction was 5% in Dec, the same as in Nov.

U.S. Homebuilder Confidence Holds Steady In December

Gold prices slid ahead of the Federal Reserve's policy meeting, with traders cautiously waiting for cues on the central bank's outlook for 2025.  Futures traded 0.4% lower at $2652 a troy ounce.  A widely anticipated 25-basis-point rate cut is already fully priced into markets, according to analysts, but further cuts are less certain.  Meanwhile, US PMI data showed the services sector rose at a faster-than-expected pace.  The resilience of the US economy supports the view that the Fed's 2025 rate cutting cycle is likely to be shallow. 

Gold Down Ahead of Fed Policy Meeting

Oil prices fell as Chinese economic data renewed demand concerns, while investors remained cautious ahead of the Federal Reserve's interest rate decision.  Brent crude futures were down 32¢ at $73.59 a barrel, while US West Texas Intermediate crude futures were down 44¢ at $70.27 a barrel.  Prices were weighed down by profit-taking after last week's 6% rally & a batch of disappointing Chinese economic data yesterday.  Prices fell from multi-week highs yesterday on unexpectedly weak consumer spending data from China, despite strength in industrial output & as investors shifted into a holding pattern ahead of the Fed meeting.  The Fed holds its final policy meeting of the year on today & tomorrow, when it is widely expected to cut interest rates by a qtr of a percentage point.  The meeting will also reveal how far officials think they will cut interest rates in 2025 & 2026, & whether the central bank will scale back easing in anticipation of higher inflation under the incoming Trump administration.  The 25 basis point cut has been priced in by the market, so any surprises from the Fed meeting could move the market.  Lower interest rates could boost economic growth & oil demand.

Oil prices fall on demand concerns, focus on Fed meeting

US stocks fell, with the Dow logging its biggest losing streak in decades.  The other major indices dropped in tandem.  Fed policymakers kicked off their final gathering of the year earlier, amid almost total conviction that a 0.25% rate cut is coming tomorrow.  Some traders suspect it could be the last cut for some time, as inflation proves persistent.  Given that, the focus is on clues to the path of rates next year — & in Jan, in particular.

Markets are prepared for first 9-day losing streak in 50 years

Dow dropped 235, decliners over advancers 5-2 & NAZ pulled back 76.  The MLP index slid 1+ to 294 & the REIT index was steady at 415.  Junk bond funds drifted lower & Treasuries had some buying which took yields a little lower (more below).  Oil fell 1+ to thee 69s & gold retreated 16 to 2653.

Dow Jones Industrials

Respondents to the CNBC Fed Survey for Dec are sure the Federal Reserve will cut rates tomorrow but they are less sure whether it should.  Amid forecasts for somewhat higher inflation & lower unemployment than in the prior survey, 93% see a qtr-point cut coming.  But only 63% believe it's what the Fed ought to do.  The outlook for 2025 is for just 2 more qtr-point cuts, down from 3 in the last survey, bringing the funds rate down to 3.8% by this time next year & 3.4%, or just above the average neutral rate, by the end of 2026.  One big unknown is the incoming administration's fiscal policies.  Respondents expressed a range of opinions: from concern about higher inflation to bullishness for growth.  The survey of 27 respondents, including economists, strategists & fund managers, showed that the outlook for Pres-elect Trump's tariffs & threatened deportations dampened the upside for some forecasters.  “I can’t remember being this uncertain about the inflation outlook,” said economist Robert Fry.  “President-elect Trump is offering us a mix of inflationary (tariffs, individual tax cuts) and disinflationary (deregulation, spending cuts) policies. Who knows what combination we’re going to end up with?” 56% of respondents see the effects of policies from the incoming administration that are likely to be enacted as “somewhat inflationary” & a further 11% see them as “extremely inflationary.”  They are divided on the growth effects, with 41% seeing the policies as “somewhat positive” for growth & 41% viewing them as “somewhat negative.”  The biggest risks to the expansion are high inflation & global economic weakness, with a tie for 3rd between the incoming administration's fiscal policies & the size of the US deficit.  Several survey participants wrote in “tariffs” specifically as a top threat.  There's uncertainty over the purpose of the tariffs & whether they are just negotiating tactics.  Overall, 37% say tariffs are a negotiating tactic that are likely to be temporary, 19% see them as revenue measures that are likely to be more permanent & 41% believe it will be a combination of the 2.  2/3 say the threatened 25% tariffs on Mexico & Canada will depend on negotiations, but 70% expect Pres-elect Trump to carry thru on 10% additional tariffs on China.  Respondents raised their outlook for the S&P 500 next year but increasingly see equities as overextended.  From current levels, the S&P 500 is forecast to rise just 3% next year & 7% by 2026.  But 69% of participants sees stocks as overpriced for a soft-landing scenario, the most in the 17 months CNBC has asked the question.

The Fed is likely to cut rates, but some worry it may not be the right move, CNBC survey found

Pfizer (PFE) forecast 2025 profits roughly in line with expectations, offering some relief to investors after a tumultuous year during which it attracted criticism from activist hedge fund Starboard Value.  Shares rose after the drugmaker also said it was expecting 2025 sales of its Covid-19 vaccine & drug to be consistent with 2024 levels.  The company expects adjusted EPS of $2.80 - $3, compared with the estimate of $2.88.  PFE has been reining in costs & shedding non-core businesses to pay down debt as it rebuilds itself after a sharp slump in sales of Covid-19 products.  Shares trade at less than ½ their value during the peak of the Covid-19 pandemic.  That has left it open to investor criticism, with Starboard in Oct saying that management has over-spent on big acquisitions & failed to produce profitable new drugs from those deals or from its internal research & development.  PFE forecast 2025 revenue of $61 - $64B, compared with the estimates of $63.2B.  The company also estimated a roughly $1B hit to its revenue from changes to Medicare's Part D prescription program under Pres Biden's Inflation Reduction Act.  The stock rose 94¢.

Pfizer forecasts 2025 profit in line with expectations as it seeks turnaround

Treasury yields moved slightly lower, as investors parsed economic data due ahead of the Federal Reserve's next interest rate decision.  The yield on the 10-year Treasury was down by 1.8 basis points at 4.381% & the 2-year Treasury yield was last more 1.1 basis points lower at 4.238%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  US retail sales figures for Nov showed an increase of 0.7% on the month, surpassing expectations.  The report will be followed by the latest building permit & housing starts data tomorrow, before the Fed announces its interest rate decision that same day.  Investors will also be closely following the post-meeting press conference with Fed Chairman Jerome Powell, as well as keeping an eye on any guidance issued by the central bank alongside.  This will include the Fed's economic & interest rate projections, which are published 4 times a year.

Treasury yields rise as traders await Federal Reserve interest rate decision

Stocks fell despite upbeat retail sales data as the Federal Reserve kicked off its 2-day policy meeting expected to usher in an interest-rate cut.  Markets are waiting for Fed policymakers to kick off their final gathering of the year, amid almost total conviction that a 0.25% rate cut is coming tomorrow.  Some suspect it could be the last cut for some time, as inflation proves persistent.

Markets struggle while Nasdaq rises 1% to a record

Dow finished down 110, decliners over advancers about 5-4 & NAZ jumped 247.  The MLP index dropped 4+ to the 297s & the REIT index was off 1+ to 415.  Junk bond funds hardly budged & Treasuries were mixed with little change in yields.  Oil slid fractionally taking it below 71 on weak Chinese retail-sales data & gold lost 6 to 2669 (more on both below).

Dow Jones Industrials 

US manufacturers are optimistic that the sector will emerge from a prolonged recession next year, though capital expenditure growth was likely to fall short of 2024's pace.  The Institute for Supply Management (ISM) survey also found purchasing & supply execs at factories predicted higher employment levels in 2025.  The ISM's manufacturing Purchasing Managers Index (PMI) has mostly been in contraction territory since Nov 2022, only rising once above the 50 threshold in Mar this year.  Manufacturing, which accounts for 10.3% of the economy, was battered by the Federal Reserve's aggressive monetary policy tightening in  Mar 2022 - Jul 2023 to tame inflation.  Though the central bank started cutting interest rates in Sep, the factory PMI has remained depressed.  "Manufacturing's purchasing and supply executives expect to see overall growth in 2025," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.  "They are optimistic about overall business prospects for the first half of 2025 and more excited about faster growth in the second half."  Purchasing & supply execs expected a 4.2% increase in overall revenues compared to a 0.8 percentage point rise reported for 2024.  16 of the 18 manufacturing industries anticipated revenue improvement.  "They are optimistic about the first half of 2025 and expect growth to continue in the second half, with a projected increase in capital investment," said Steve Miller, chair of the ISM Services Business Survey Committee.

US manufacturers predict growth in 2025 after prolonged slump

US economic output hit its highest level in nearly 3 years to close out 2024, according to the latest data from S&P Global.  S&P Global's flash US composite PMI, which captures activity in both the services & manufacturing sectors, came in at 56.6 in Dec, up from 54.9 in Aug.  The forecast had expected the index to tick up to 55.1.  Increased activity in the services sector drove the gains, with the services PMI business activity index hitting a reading of 58.5, its highest level in 38 months.  Meanwhile, the manufacturing PMI declined to 48.3 in Dec, down from 47.9 & marking a 3-month low for the index.  Chris Williamson, chief business economist at S&P Global Market Intelligence, said the US economy grew at its fastest pace in nearly 3 years this month, "consistent with GDP rising at an annualized rate of just over 3% in December."  “Business is booming in the US services economy, where output is growing at the sharpest rate since the reopening of the economy from COVID lockdowns in 2021," Williamson added.  His bullish outlook on GDP growth for the 4th qtr falls in line with other projections.  The Atlanta Fed's GDP Now tool, which incorporates real-time data throughout the qtr to project economic growth, currently projects the US economy grew at a 3.3% annualized pace in the final qtr of 2024.  Meanwhile, economists at Goldman Sachs project GDP is pacing at 2.4% for the qtr.  Still, Williamson noted the growth in the US economy remains heavily skewed to activity in the services sector.

US economic output just grew at its fastest pace in nearly 3 years

As the new year approaches, more Americans have a brighter outlook for the state of their personal finances in 2025, a recent survey indicated.  Bankrate said its survey found that 44% of American adults expect to see their financial situation become either "somewhat" or "significantly better" next year, a 7 percentage-point increase from the roughly same time last year.  The survey, conducted on the personal finance site's behalf by YouGov, took place Nov 6, the day after the 2024 election, through Nov 8 & involved nearly 2500 American adults.  Less inflation was the most common driver behind the rosy outlooks, with 36% of Americans pointing to that.  The US saw inflation measured by the Consumer Price Index increase 0.3% month-over-month & 2.7% year-over-year in Nov, the gov reported.  Other factors played into positive financial expectations for 2025.  For instance, over one-3rd of Americans that anticipate they will see better personal finances in 2025 reported "rising income" as helping guide their positive outlook.  A slightly lower share (30%) pointed to "having less debt," while "work done by elected representatives"& "better spending habits" also factored into optimism for 25%.  A separate Jul survey from Discover Personal Loans had reported 80% of Americans were experiencing "some level" of anxiety stemming from finances.  Meanwhile, Bankrate found that 33% of Americans foresee the state of their finances remaining as they currently are next year.  Just shy of a qtr of Americans held gloomier expectations for their financial situations, reporting they anticipated things would become "somewhat" or "significantly worse."  As of the 3rd qtr, American households collectively owed $17.9T worth of debt, including things like mortgages, auto loans, credit cards & student loans, according to the Federal Reserve Bank of New York.  Americans had $12.6T in mortgage balances in the 3rd qtr, for instance.  Student loans amounted to $1.6T, while auto loans totaled $1.64T, the New York Fed found.

More Americans have brighter outlook on state of finances for next year: survey

Spot gold prices gained, supported by ongoing geopolitical concerns & a softer $, as markets awaited the Federal Reserve's policy meeting, where a 3rd rate cut & clues on the 2025 outlook are expected.  Spot gold was up 0.2% at $2654 per ounce & gold futures settled 0.2% lower at $2670.  China has resumed gold buying.  Gold is reacting to a multitude of these things, adding that top consumer China was likely to ramp up policy stimulus to revive its economy, which would further support gold.  On the geo-political front, Israel agreed yesterday to double its population in the Golan Heights, citing Syrian threats despite the moderate tone of rebel leaders who ousted Pres Bashar al-Assad a week ago.

Gold gains as US dollar ease ahead of Fed policy meeting

Oil slipped as economic data from China reinforced concerns about weakening demand in the world's biggest crude importer.  West Texas Intermediate edged 0.8% lower to trade below $71 a barrel, while Brent hovered near $74.  China's crude refining dipped to the lowest in 5 months in Nov, while apparent oil demand fell 2.1% year-on-year.  China's retail sales growth was well below estimates.  Crude has traded in a roughly $6 range since mid-Oct, with an OPEC+ decision to extend supply curbs countering the dour outlook from China.  Also today, Brazil's IBP oil industry group forecast domestic output rising to 3.6M barrels a day, keeping alive concerns that robust non-OPEC supply will help create a glut next year.

Oil Slips as Lackluster Chinese Data Weakens Outlook for Demand

Stocks struggled, although bitcoin hit new highs & Big Tech gained ahead of the Federal Reserve's final policy decision meeting for 2024 this week.  Investors now await the final Federal Reserve meeting of the year which begins tomorrow.

Markets edge higher as traders get ready for Fed meeting this week

Dow went up 65, advancers over decliners 4-3 & NAZ gained 150.  The MLP index declined 1+ to 300 & the REIT index added 2 to 419.  Junk bond funds fluctuated & Treasuries had  very limited buying, allowing yields to ease lower (more below).  Oil slid back pennies in the low 71s & gold was off 1 to 2674.

Dow Jones Industrials

Americans say they are ready to support Pres-elect Trump in his 2nd term & majorities give a green light to some of his controversial promises on the campaign trial.  Yet the CNBC All-America Economic Survey also finds the public is flashing yellow & red warning lights on some parts of the Trump agenda.  Overall, the survey finds that 54% of the public are “comfortable and prepared to support” Trump as pres.  That's down 2 points from when he took office in 2016.  Some 41% are not comfortable, up 5 points from 2016.  Despite having won the popular vote in this election compared to 2016, Trump takes office for the 2nd time with somewhat less net support in the poll.  “In 2016, there were a few more people, who said, ‘I’m not sure,’ and took a kind of a wait-and-see approach,” said Jay Campbell, partner at Hart Research, the Dem pollster for the survey.  “Those numbers have dropped by half or more ... People know what to expect with Donald Trump now.”  The survey of 1000 people nationwide was taken Dec 5-8 with a margin of error of +/- 3.1%.  The survey finds 60% say deploying the military to the border to stop illegal drugs & human trafficking should be a 2025 priority for the new administration with an additional 13% saying it should still be done but later in the term.  The proposal is only opposed outright by 24%, including 51% of Dems, 12% of independents & 3% of Reps.  Majorities of Americans also support cutting individual taxes, increasing deportation of undocumented immigrants, reducing the size of gov, drilling for more oil on federal lands & cutting taxes & regulation for business.  Where the potential agenda gets more contentious is most obviously in Pres-elect Trump's plans to pardon those convicted of crimes from the Jan 6 protest.  Just 43% support the move, with 50% opposing it, including 87% of Dems, 46% of independents & 18% of Reps.  It's the issue with the single largest Rep opposition.  Support for tariffs is also more lukewarm with 27% backing them outright & 24% saying it can be done later in the term.  It's opposed by 42% of respondents.  Americans overall are more upbeat about the economic outlook for the 2nd Trump presidency than they were the first.  More than ½ (51%) say they expect their personal financial situation to improve, 10 points higher than when he was elected in 2016; the same percentage, 51%, also say they expect the US economy to improve, up 5 points from 2016.

Majority of Americans are ready to support Trump and large parts of his agenda, says CNBC survey

China’s retail sales disappointed in Nov as sentiment in the real estate market weakened further, in another sign that Beijing's efforts to boost the economy have failed to revive sluggish demand.  Retail sales rose by 3% in Nov from a year ago, according to National Bureau of Statistics data, missing the forecast of 4.6%.  That marked a sharp slowdown from 4.8% growth in the previous month.  Retail sales in Oct had recorded the quickest growth since Feb, helped by the annual Singles' Day shopping festival that kicked off more than a week earlier than the event in 2023.  The slump in real estate investment for the Jan - Nov period deepened, shrinking by 10.4% from a year ago, following a 10.3% decline reported in the Jan - Oct period.  The world's 2nd-largest economy has been contending with pressure from multiple fronts this year.  Consumer & business confidence has been hit by a prolonged property downturn, local gov debt risks & high unemployment.  “The stimulus effect has been short-lived,” My Bui, economist at investment management firm AMP said.  While the “recent fragile but upward momentum in Chinese economic data will translate into a real GDP growth rate of 5% this year,” they are unlikely to turn around weak consumption sentiment due to falling home prices, Bui added.  Nov industrial production rose by 5.4% from a year ago, above the expectations of 5.3% growth among economists, accelerating from a climb of 5.3% in the prior month.  Fixed asset investment, reported on a year-to-date basis, rose by 3.3% this year thru Nov on an annual basis, missing the forecast of 3.4%.  The figure had risen by 3.4% in the period from Jan - Oct.  “Signs of improvement in the economy have accumulated in November thanks to the stimulus policies,” the National statistics bureau said, adding that “domestic demand has remained insufficient and businesses are confronted with operating difficulties.”  A few days after the broader jobless rate release, Chinese authorities typically publish a separate set of unemployment rate for 16-24 year olds which excludes students.  The youth jobless rate has remained elevated, coming in at 17.1% in Oct & 17.6% in Sep a notch above the record high of 18.8% in Aug.

China’s November retail sales miss expectations as real estate slump deepens

Treasury yields were little changed as investors looked ahead to the Federal Reserve's final meeting of the year this week.  The 10-year Treasury yield was down 2.6 basis points at 4.375% after topping 4.4% on Fri & the 2-year Treasury yield was down 1.5 basis points at 4.226%.  One basis point equals 0.01%.  Yields & prices move in opposite directions.  The Federal Open Market Committee's meeting on Tues & Wed is front & center for investors who are keenly awaiting the final US interest rate decision of the year.  Currently, investors were pricing in a 97% chance of a 25-basis-point interest rate cut.  Markets will focus on the Fed's updated policy statement & will follow Fed Chair Jerome Powell's press conference on Wed for hints about future interest rate decisions.  The S&P Global Composite PMI flash, which measures US business activity across the manufacturing & services sector, is due to be released today.  A reading above 50 indicates expansion, while a number below that threshold signals a contraction.  Other economic data is also set to be published throughout the week, including retail sales for Nov tomorrow, as well as weekly initial jobless claims & the GDP growth rate for the 3rd qtr on Thurs.

Treasury yields are little changed as investors prepare for potential rate cut

Stocks crept higher today after bitcoin rose to a fresh record, as investors geared up for the Federal Reserve's final policy decision of the year later in the week.  Markets are taking their foot off the gas as the final Federal Reserve meeting of the year approaches.  The interest-rate decision on Wed is already in high focus as investors watch for a catalyst to revive this year's stellar stock rally.  Investors see a final 2024 rate cut as a sure thing, with 97% of traders currently pricing in a 25 basis point move.

Markets tread water ahead of next week's Fed meeting

Dow fell 86, decliners over advancers 5-2 & NAZ edged up 23.  The MLP index remained down 1 to the 303s & the REIT index was off 1+ to the 416s.  Junk bond funds slipped lower & Treasuries saw significant selling to which raised yields.  Oil added 1+ to the 71s & gold dropped 37 to 2671 (more on both below).

Dow Jones Industrials 

Coca-Cola Brasil invested 550M reais ($91M) to expand a concentrate beverage plant in the Brazilian state of Amazonas, the company said.  The new plant was inaugurated today in the presence of Brazil's VP Geraldo Alckmin & other official authorities, Coca-Cola (KO), a Dow stock & Dividend Aristocrat, said.  The stock fell 44¢.

Coca-Cola invests some $90 million to expand production in Brazil's Amazonas

The past year has been a strong one for North American import trade demand & that should continue for both ocean & air cargo into 2025, according to shipping giant Maersk, but so will supply chain disruptions.  After year-on-year growth in North American market imports of roughly 20-24% across the first 3 qtrs of 2024, Maersk expects the Q4 numbers to also be in double-digit territory, according to Charles van der Steene, pres for Maersk North America, who described the full year 2024 as “very strong with resilient demand.”  The surge of e-commerce shipments from Chinese online sellers has also fueled air freight prices.  Maersk is returning its China air cargo service to its South Carolina hub at the start of 2025.  “The e-commerce market has been surprisingly strong,” said van der Steene.  But he said shipping companies expect the volatility that has pervaded global trade since Covid to be back in 2025.  “Disruption will also be with us,” he added.  “The topic of resilience within the supply chain will continue to be, and should be, on everyone’s agenda.”  The disruptions include another potential Intl Longshoremen's Association strike at East Coast & Gulf ports across the US & tariff threats made by Pres-elect Trump ahead of an early Lunar New Year in Asia, when many manufacturing plants in China are idled for a month.  These threats have stoked the price of the cargo container as shippers vie for the coveted boxes to ship their imports.  Over the last several months, ocean freight spot rates had been on the decline, but on Mon when ocean carriers released their rates for the Dec 15-31 bookings, logistics managers said they jumped, a bullish demand indicator.  In ContainerXChange's latest update, it reported North America has experienced the sharpest rise on a global basis, at 20%, in average container prices over the last 90 days.  The National Retail Federation recently said inbound cargo traffic as a result of strike & tariff threats would fuel container import records in both Nov & Dec.  Maersk has started to see a progression of trade moving over to the West Coast, Van der Steene said.  With volumes remaining strong, “We can at least conclude that volumes are being pulled forward, or volumes are incredibly more strong now because of the anticipation of a potential disruption,” he continued.

Shipping giant Maersk sees ‘another year of disruption’ for global trade in 2025

An orderly selloff in the US gov bond market continued for a 5th straight day, with the 30-year bond's yield headed for its biggest weekly increase of the year.  Driven in part by shifting expectations the Federal Reserve will cut interest rates next month & potentially pause next year, the rise in yields back toward their Nov highs also was fueled by weak demand for an auction of 30-year debt yesterday.  The yield for that tenor reached 4.61% today, about 27 basis points higher on the week.  Conviction that the Fed will drop its target for the US overnight lending rate to 4.25-4.50% on Dec 18 moved toward certainty this week after Nov inflation data in line with expectations were viewed as no obstacle.  That was keeping downward pressure on short-term yields, while longer maturities priced in a risk that policymakers will simultaneously signal an intention to pause cuts next year amid economic resilient and halting progress toward lower inflation.  Next week's Fed meeting includes an updated summary of economic projections showing where officials see interest rates over the next 3 years & their estimate of the neutral rate, a theoretical level that neither stimulates or restricts the economy.  In Sep, the projections anticipated a drop in the policy rate to 3.25%-3.50%, or 4 qtr-point cuts assuming 1 next week.  While traders continue to price in that a qtr-point rate cut next week will be followed by 2 more in 2025, economists at Deutsche Bank & BNP Paribas have predicted no Fed action in 2025.  BNP Paribas expects next week's action to be accompanied by hawkish language supporting that view.  They see the 10-year Treasury yield rising to 4.65% next year.

Bond market has worst week in months with less Fed action seen

Gold prices fell after bullion hit a more than 5-week high in the previous session and as the $ gained, but prices were on track for a weekly rise on expectations of a Federal Reserve rate cut next week.  Spot gold was down 0.8% at $2658 per ounce, as the $ hovered near its highest in more than 2 weeks.  Bullion hit its highest since Nov 6 yesterday & has risen nearly 1% for the week.  US gold futures fell 1.1% to $2678.  Underpinned by easing monetary policies, robust central bank buying & safe-haven demand, gold has shattered multiple record peaks this year.  Traders now see a 97% chance of a 25 basis point rate cut at the Fed's Dec 17-18 meeting.  The focus will also be on Chair Jerome Powell's commentary as market participants analyze US monetary policy for 2025, especially in the light of Pres-elect Donald Trump' tariff plan which may would stoke further inflation.

Gold slips, but set for weekly rise on potential Fed rate cut

Oil prices climbed about 2% to settle at a 3-week high, on expectations that additional sanctions on Russia & Iran could tighten supplies & that lower interest rates in Europe & the US could boost fuel demand.  Brent futures rose $1.08 (1.5%) to settle at $74.49 a barrel & US West Texas Intermediate crude rose $1.27 (1.8%) to settle at $71.29.  That was Brent's highest close since Nov 22 & put the contract up 5% for the week.  WTI posted a 6% gain for the week & closed at its highest since Nov 7.

Oil up 2%, settles at 3-week high as more sanctions loom on Russia, Iran

Stocks headed for a losing week today despite Broadcom's (AVGO) jump to all-time highs after the chipmaker predicted an AI-driven sales surge.  The Dow had a losing week, with the blue-chip index on track for its 7th straight losing session, what would be its longest losing streak since Feb 2020.  But AVGO's market cap surpassed $1T after execs predicted an AI sales gain of around 65%, a much brisker pace than expected.  Meanwhile, the last pieces of economic data have have supported another rate cut from the Federal Reserve next week.  But persistently sticky inflation could force the Fed to tread more slowly next year.

Markets wobble ahead of the Fed meeting next week

Dow was off 17, decliners over advancers about 5-2 & NAZ slid back 21.  The MLP index slid 1 to 302 the REIT index was flat at 418.  Junk bond funds were mixed & Treasuries saw more selling which raised yields.  Oil was fractionally higher above 70 & gold dropped 30 to 2679 after its recent rally.

Dow Jones Industrials

Pres Xi Jinping sent a strong signal this week that Beijing was ready to work with Pres-elect Donald Trump to resolve trade disputes amid risks of a potential trade war.  In a letter to the US-China Business Council, Xi said the 2 sides should “choose dialogue over confrontation, win-win cooperation over a zero-sum game,” while reiterating his commitment to open up the China market for foreign companies, including US businesses.  The remarks echoed his speech at a this wee with visiting heads of major intl economic organizations, where he said “there will be no winners in tariff wars, trade wars, technology wars.”  Xi called both sides to maintain dialogue and manage differences.  The flurry of messages from Beijing reflects “a sense of anxiety”& “these overtures have occurred in a very public way,” said Kenneth Jarrett, senior advisor at Albright Stonebridge Group.  “This could mean that Chinese authorities lack channels to the new Trump team ... and that Beijing believes there are political benefits in projecting a public image of a willingness to work together with the new U.S. administration,” Jarrett added.  Trump has vowed an additional 10% tariffs on all US imports of Chinese goods.  During his election campaign, Trump had threatened to impose tariffs in excess of 60% on China.  Earlier this month, the Joe Biden administration announced broader restrictions on US exports of advanced memory chips & chipmaking machinery to Chinese companies.  The next day, Beijing responded by banning exports of several rare materials used in semiconductors & military applications.

China signals readiness to mend ties with U.S. ahead of Trump inauguration

Shares of Broadcom (AVGO) popped, pushing the company's market cap beyond $1T for the first time.  The move comes after the company reported 4th-qtr results that beat expectations for earnings & showed strong artificial intelligence revenue growth.  AVGO reported $14.05B in revenue for the 4th qtr, up 51% year over year but shy of the $14.1B estimate.  In its semiconductor solutions group, which includes its AI chips, revenue increased 12% to $8.23B from $8.03B a year ago.  The company said AI revenue jumped 220% for the year to $12.2B.  The stock popped when CEO Hock Tan said the company is developing custom AI chips with large cloud customers.  Net income came in at $4.3B (90¢ per share), up 23% from $3.5B (83¢ per share) in the same qtr a year earlier.  The stock soared 36 (20%).

Broadcom stock jumps 21%, pushing company past $1 trillion market cap for the first time

Charles Schwab (SCHW) raised its full-year revenue growth forecast on optimism around investor engagement & strength in the equity market following the US presidential election.  SCHW now expects revenue to increase 3-3.5%, up from its previous forecast of 2-3% growth.  In addition to increased engagement & stronger markets, the firm said the slowing pace of customers searching for higher-yielding alternatives for their cash also contributed to the rosier revenue outlook.  The firm's total client assets also surpassed $10T for the first time in Nov, reaching $10.3T at the end of the month.  Transactional sweep cash, which helps the firm pay down costly debt it previously accumulated, ended the month at $393.7B, flat from Oct.  SCHW is expecting leadership changes at the end of this year, with CEO Walt Bettinger retiring & Rick Wurster slated to step into the CEO role.  The milestone for client assets & raised guidance represent a marked contrast from last year, which Bettinger called the firm's “most challenging” in decades.  In addition to the CEO change, a new chief financial officer was named to oversee the books of the Westlake, Texas-based firm, founded more than 5 decades ago.  The stock fell 3.22.

Schwab lifts revenue outlook on post-election market optimism

AVGOs market cap surpassed $1T after execs predicted an AI sales gain of around 65%, a much brisker pace than expected.  This week, the Dow has struggled, partly on the back of a continued plunge in UnitedHealth (UNH)) shares as the insurance industry continues to grapple with the fallout of the UnitedHealthcare CEO's fatal shooting.  Shares of the healthcare giant are down over 15% in the week since the shooting.  Meanwhile, the last pieces of economic data have teed up another rate cut from the Federal Reserve next week.  But persistently sticky inflation could force the Fed to tread more slowly next year.

Markets slide with rate cuts and inflation data in focus

Dow dropped 234 (session lows), decliners over advancers about 5-2 & NAZ fell 134.  The MLP index added 1+ to 303 & the REIT index was flat in the 418s.  Junk bond funds hardly budged in price & Treasuries were sold which raised yields.  Oil slid back pennies but remained above 70 & gold dropped a very big 51 to 2705 (more on both below).

Dow Jones Industrials 

Adobe (ADBE) shares tumbled for their steepest drop since Mar after the software vendor issued disappointing revenue guidance.  Sales in the fiscal first qtr will be between $5.63-5.68B, ADBE said in its 4th-qtr earnings report.  Analysts were expecting revenue of $5.73B.  While its forecast trailed estimates, the 4th-qtr results exceeded expectations.  Adjusted EPS came in at $4.81, topping the estimate of $4.66.  Revenue in the 4th qtr increased 11% to $5.61B, beating the estimate of $5.54B.  Monetizing generative artificial intelligence, especially in stand-alone offerings such as Firefly image generation or additional offerings across the Creative Cloud, has been central to ADBE's growth strategy.  Analysts at Deutsche Bank maintained their buy rating but lowered their target price from $650 to $600.  “These results and guidance require a bit of faith in the full year next year,” the analysts wrote. Still, they said,  “We see tangible evidence that Adobe is one of few application software companies in our coverage successfully monetizing generative AI today.”  The stock plummeted 75.80 (13%).

Adobe shares plunge 13% on disappointing revenue guidance

The Consumer Financial Protection Bureau (CFPB) announced the final version of a rule limiting banks' ability to charge overdraft fees.  It says the rule will save American consumers $5B annually.  The regulator said that banks could opt to charge $5 for overdrafts, a steep drop from the average fee of around $35 per transaction, or limit the fee to an amount that covers the lenders' costs, or charge any fee while disclosing the interest rate of the loan.  “For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts,” CFPB Director Rohit Chopra said.  “The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans.”  While overdraft fees have been a lucrative line item for the industry, generating $280B in revenue since 2000 according to the CFPB, banks' revenue from the service has been on the decline.  That's because lenders have either reduced the fees or limited the types of transactions that trigger them, while some banks dropped the fee altogether.  The CFPB rule applies to banks & credit unions with at least $10B in assets.  The effort, part of a flurry of activity from the CFPB in the waning days of the Biden administration, faces stiff opposition from US banking groups that have successfully stymied other efforts from the regulator.  For instance, a rule capping credit card late fees at $8 per incident that was set to take effect in May has been held up in federal court.  The CFPB said its overdraft rule will take effect Oct 1, 2025, though the rule's ultimate fate is unclear.

CFPB announces rule limiting bank overdraft fees

US household wealth rose to a fresh record in the 3rd qtr, fueled by a stock-market rally ahead of the presidential election.  Household net worth increased nearly $4.8T (2.9%) from the prior qtr, to $169T, a Federal Reserve report showed.  The value of Americans' equity holdings rose $3.8T.  The value of real estate eased by almost $200B after sizable advances in the first ½ of the year.  In the 3rd qtr, investors benefited from a stock-market rally in anticipation of interest-rate cuts from the Fed & that Donald Trump would return to the White House next year.  Since his victory in the Nov 5 election, the S&P 500 has climbed to new highs amid expectations that the pres-elect will enact pro-business policies.  Households have been the main driver behind robust economic growth in recent years, as healthy balance sheets & strong wage growth have supported resilient consumer spending.  Economists generally expect a moderation in demand against a backdrop of still-elevated borrowing costs & a higher cost of living.  The Fed's report showed that consumers increased their borrowing at a faster pace last qtr, while business borrowing cooled.  Business debt outstanding increased at a 3% annualized rate, while consumer non-mortgage credit rose at a 2.5% pace.  Mortgage debt climbed 3.1% for a 2nd qtr.  In the public sector, state & local gov debt grew at a slower rate.  Household liquidity picked up to a record.  Deposits held by households & nonprofit organizations, which includes savings & checking accounts & money market funds, rose by $379B to $18.9T.

US household wealth climbs to record on higher stock values

Gold slipped over 1% as investors booked profits after it briefly reached a 5-week high earlier in the session & squared positions ahead of a US Federal Reserve meeting next week.  Spot gold lost 1.2% at $2684 per ounce, while US gold futures settled 1.7% lower at $2709.  Bullion climbed to its highest level since Nov 6 earlier in the session.

Gold slides from 5-week high, down over 1% on profit-taking

Oil prices were little changed in Asian trade as forecasts of weak demand & a higher-than-expected rise in US gasoline & distillate inventories stemmed gains from an additional round of EU sanctions threatening Russian oil flows.  Brent crude futures were up 14¢ at $73.66 a barrel & US West Texas Intermediate crude futures rose 6¢ to $70.35.  Both benchmarks rose over $1 each yesterday.  OPEC cut its demand growth forecasts for 2025 for the 5th straight month yesterday & by the largest amount yet.  Investors will be closely monitoring the IEA's market balance estimates for 2025, which will reflect OPEC's recent announcement.  In the world's top oil consumer, the US, gasoline & distillate inventories rose by more than expected last week, according to data from the Energy Information Administration.  Weak demand, particularly in top importer China & non-OPEC+ supply growth were 2 factors behind the move.  However, investors anticipate a rise in Chinese demand, after Beijing unveiled plans this week to adopt an "appropriately loose" monetary policy in 2025, which could spur oil demand.  Global oil demand rose at a slower-than-expected rate this month, but has remained resilient.

Oil little changed as demand weakness offsets sanctions-driven supply risks

Pres-elect Donald Trump rang the opening bell this morning as stocks edged lower after fresh inflation data cast doubt on investor confidence for the path of interest rates ahead.  The in-line consumer price index reading cleared 1 of the last remaining risks to easing by the Fed in Dec.  That boosted bets on a qtr-point rate cut in Dec to a near 99% chance, per the CME FedWatch tool.  But the Nov producer price index released today came in hotter than expected, rising 0.4% from the previous month.  Economists had been expecting an increase of 0.2% & that has put the chances of the Fed holding rates steady in Jan in focus, as several officials have voiced a cautious stance on policy.

Markets slide after a warm inflation report and tech shares slip lower

Dow crawled up 16. decliners over advancers better than 3-2 & NAZ slid back 37.  The MLP index added 2+ to the 303s & the REIT index rose 3 to the 421s following recent weakness.  Junk bond funds were mixed & Treasuries had a little selling, allowing yields to slip lower.  Oil dropped 1 to the 69s as IEA sees global market ‘comfortably supplied’ next year & gold sank 55 to 2701.

Dow Jones Industrials

A measure of wholesale prices rose more than expected in Nov as questions percolated over whether progress in bringing down inflation has slowed, the Bureau of Labor Statistics (BLS) reported.  The producer price index (PPI) which measures what producers get for their products at the final-demand stage, increased 0.4% for the month, higher than the estimate for 0.2%.  On an annual basis, PPI rose 3%, the biggest advance since Feb 2023.  However, excluding food & energy, core PPI increased 0.2%, meeting the forecast.  Also, subtracting trade services left the PPI increase at just 0.1%.  The year-over-year increase of 3.5% also was the most since Feb 2023.  In other economic news, the Labor Dept reported that first-time claims for unemployment insurance totaled a seasonally adjusted 242K last week, considerably higher than the 220K forecast & up 17K from the prior period.  On the inflation front, the news was mixed.  Final-demand goods prices leaped 0.7% on the month, the biggest move since Feb of this year.  80% of the move came from a 3.1% surge in food prices, according to the BLS.  Within the food category, chicken eggs soared 54.6%, joining an across-the-board acceleration in items such as dry vegetables, fresh fruits & poultry.  Egg prices at the retail level swelled 8.2% on the month & were up 37.5% from a year ago in a separate report yesterday on consumer prices.  Services costs rose 0.2%, pushed higher by a 0.8% increase in trade.

Wholesale prices rose 0.4% in November, more than expected

The economy is doing "exceptionally well" as Pres-elect Donald Trump gets ready to enter the White House, according to Moody's Analytics chief economist Mark Zandi.  Zandi, speaking at the Consumer Federation of America's financial services conference, noted some of the glowing areas: Gross domestic product has been growing at around 3%, productivity & business formation rates are strong & the stock market is up.  "The economy can weather a lot of storms," Zandi added.  But, he added, "I do think there are some potential storms coming" next year under the new administration.  Zandi expects Trump to act quickly on deporting immigrants & implementing tariffs, 2 moves that could have profound impacts on the US economy.  "I believe President Trump is going to do what he said he'll do on the campaign trail," Zandi continued.  "He's going to be quite aggressive in pursuing the policies."  Immigration has played a big role in the economy's strength, Zandi said.  Others agree.  "Recent immigrants have flowed disproportionately into the parts of the labor force that were particularly tight in 2022, contributing to labor supply in places where it was most badly needed," Goldman Sachs analysts wrote in May.

Economy faces 'some potential storms' in 2025, Moody's chief economist says

Americans this holiday season say they are seeing a ghost of Christmas past: inflation.  The CNBC All-America Economic Survey finds inflation is still haunting the buying public, leading to what's shaping up to be just an average season for retailers.  Just 16% of respondents say they will spend more, down 2 points compared to last year & 48% said that they'll lay out the same amount for holiday gifts, up 5 points.  At the same time, 35% say they'll spend less, down 2 points as well.  The survey of 1002 Americans nationwide was conducted Dec 5-8 by Hart Research in conjunction with Public Opinion Strategies, the Rep pollsters for the survey.  It has a margin of error of +/- 3.1%.  When it comes to prices, 64% say they are higher this year compared to last for their holiday gifts, with 34% saying they are much higher.  More than a qtr of participants say they are about the same & just 4% are seeing lower prices.  The result: average spending per person comes in at $1014, about typical for the past several years, but down from a large outlying number of $1308 in 2023.  Older & lower-income Americans & women aged 18-49 are those most likely to say they’ll spend less.  At 36%, inflation tops the list of reasons cited by those spending less.  More than 1 in 5 say it's because they have less income & 20% report it's because they have trouble paying their bills.  In all, 46% of Americans say they have arrived at the holiday season with a some or a lot of debt & they also plan to spend less than most.  Among those spending more are younger Americans aged 18-34, as well as those living in urban counties & Latinos.  Of those who are spending more, 37% say it’s because their incomes are higher, but that's followed by 25% who cite higher prices.  “Inflation is still really on people’s minds,″ said Jay Campbell, partner at Hart Research, who served as the Dem pollster for the survey.  He said the data show, “To the degree inflation has an effect, it is a pushing down spending more than pushing up spending.”  Another factor for shoppers to negotiate this season: Thanksgiving fell on Nov 28, the latest date possible, meaning a shorter season.  The survey found that about ½ of Americans have done less than ½ or none of their shopping when the poll was taken.  A 3rd said they had done none at all.

Only 16% of holiday shoppers plan to spend more this season, CNBC survey shows

Investors received a piece of the inflation puzzle today, an update on wholesale prices, after the latest consumer inflation data invigorated stocks yesterday.  The PPI raised investors' concerns about a rate cut at the Fed's meeting next week.