Dow dropped 280, decliners over advancers 2-1 & NAZ was up 24. The MLP index fell 2 to the 125s & the REIT index was off 3+ to 359. Junk bond funds fluctuated & Treasuries inched higher. Oil crawled higher to the 43s & gold slid back 2 to 1972.
AMJ (Alerian MLP index tracking fund)
| CL=F | Crude Oil | 43.13 | +0.16 | +0.4% |
| GC=F | Gold | 1,978.60 | +3.70 | +0.2% |
The Federal Reserve will not raise interest rates
just because the unemployment rate is falling, the central bank’s vice
chair, Richard Clarida, said. In a wide-ranging speech
that addressed a major policy shift in Fed thinking, Clarida also said
he & his fellow officials do not see negative interest rates as a
viable option now & doubt the effectiveness of yield curve controls,
though that could change. He
also acknowledged that policy may have gone astray in the past by
following models that were not effective in a world where lower interest
rates will be the norm. “My colleagues and I believe that this
new framework represents a critical and robust evolution of our monetary
policy strategy that will best equip the Federal Reserve to achieve our
dual-mandate objectives on a sustained basis in the world in which we
conduct policy today and for the foreseeable future,” Clarida said. Chair Jerome Powell last week outlined a series of new initiatives
from the Fed that mark a change in the way the central bank has
approached inflation & unemployment, the 2 pillars of its policy
mandate. Most critically, the Fed intends to allow inflation to
run higher than the traditional 2% target before it will increase
short-term interest rates, which currently are anchored near zero. The
purpose will be to help achieve the full employment aspect of the dual
mandate. In the past, when the Fed saw unemployment falling it assumed
inflation was on the horizon & thus hiked rates preemptively. The
new policy will seek an average inflation rate of 2% over time, meaning
that the Fed will allow it to run hot if it has been below the target
for a period. Inflation has been running below 2% for most of the time
since the last recession, & the Fed has run into credibility issues over whether it can lift the level to a point that it thinks is characteristic of an economy growing at a healthy pace. “This
change conveys our judgment that a low unemployment rate by itself, in
the absence of evidence that price inflation is running or is likely to
run persistently above mandate-consistent levels or pressing financial
stability concerns, will not, under our new framework, be a sufficient
trigger for policy action,” Clarida said. He acknowledged that the
models the Fed had followed in the past that indicated wages &
inflation would rise because more people were working “can be and have
been wrong” & that hiking rates just because a model indicates
inflation is coming “is difficult to justify.” However, Clarida
stopped short of advocating negative rates to spur inflation, saying
that Fed officials do not seem them “as an attractive policy option.” He
said yield curve controls could be implemented if “circumstances
changed markedly” but are not on the table for now.
Fed’s Clarida says rates won’t rise just because unemployment falls
US oill industry operators in the Gulf of Mexico are still reeling from the recent passage of Hurricane Laura as output remains down 70%. The Bureau of Safety & Environmental Enforcement said as of yesterday, personnel remain evacuated from 137 of the region’s 643 manned platforms. Their absence has caused an estimated 70% dip in crude oil production, amounting to around 1.29M barrels per day, it added. “Once all standard checks have been completed, production from undamaged facilities will be brought back online immediately,” the Bureau said. “Facilities sustaining damage may take longer to bring back online.” The Bureau is also estimating that natural gas output in the Gulf of Mexico remains down 50%. “As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location,” it added. “This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas, effectively shutting in production from wells in the Gulf and protecting the marine and coastal environments." Overall, facilities in the Gulf of Mexico account for 17% of America's crude oil production & 5% of its natural gas production. Gas prices nationally have risen as well, with a gallon now costing an average of $2.23, up from $2.19 a week ago, according to AAA.
Gulf of Mexico oil output down 70% following Laura, data shows
The Trump administration has cracked down on popular Chinese apps TikTok & WeChat but has more apps in its sights, White House trade adviser Peter Navarro said. "It is critical that this country not use apps that are made in China, or that can take our data and go to servers in China. That data will be used to survey, monitor and track you," Navarro added. "That's the policy position underlying why we have gone after TikTok and WeChat, and there will be others because China ... is basically going out around the world trying to acquire technology and influence." The Trump administration is worried about TikTok parent company ByteDance & its ties to China. Pres Trump issued an exec order on Aug 6 banning TikTok in 45 days, prompting the app to frantically search for an American bidder. The pres signed an additional exec order on Aug 6 partially banning WeChat, a Chinese-owned social media platform that facilitates messaging, social media & payment transactions.
After TikTok takedown, Trump admin will target other companies, top adviser says
Laura did substantial damage to energy production in the Gulf. However the energy companies are used to dealing with nature & can able to rebound quickly. Aug has been an outstanding month for the Dow & the stock market in general. The Dow is still up about 2K in Aug & up about 10K since the depression lows in late Mar. Investors continue to be optimistic about the economist.
No comments:
Post a Comment