Dow gained 231 but off opening highs, advancers over decliners 5-1 & NAZ went up 219. The MLP index was up chump change in the 227s & the REIT index rose 7+ to 393 while yields declined. Junk bond funds were higher along with stocks & Treasuries soared as Treasuries yields plunged. Oil was up 1+ to the 75s & gold jumped 32 to 1825.
AMJ (Alerian MLP index tracking fund)
Inflation moderated more than expected in Nov, an early sign
that painfully high consumer prices are beginning to loosen their
stranglehold on the US economy. The
Labor Dept said that the consumer price index, a broad
measure of the price for everyday goods including gasoline, groceries & rents, rose 0.1% in Nov from the previous month. Prices climbed
7.1% on an annual basis. Those figures were both lower than the
7.3% headline figure & 0.3% monthly increase forecast, a potentially reassuring sign for the Federal Reserve
as it tries to tame runaway inflation with a series of aggressive
interest rate hikes. It marked the slowest annual inflation rate since
Dec 2021. In another sign that suggests underlying inflationary pressures
in the economy are starting to slow, core prices – which strip out the
more volatile measurements of food & energy – climbed 0.2% in Nov
from the previous month, down from 0.3% in Oct. From the same time
last year, core prices jumped 6%. The forecast expected that core prices would climb 0.3% on a monthly basis & 6.1% from the previous year. The report showed that gasoline prices tumbled last month, as did the
cost of used cars, medical care & airline tickets. However, even with
the slowdown in inflation, prices remain well above the Fed's 2% target. Scorching-hot inflation has created severe financial pressures for most
US households, which are forced to pay more for everyday necessities
like food & rent. The burden is disproportionately borne by low-income
Americans, whose already-stretched paychecks are heavily impacted by
price fluctuations. The report will have significant implications for the Federal Reserve,
which has embarked on one of the fastest tightening paths in decades. Policymakers have already approved six straight rate hikes, including 4 back-to-back 75-basis-point increases & have shown no signs of
pausing.
Inflation climbs again as prices remain near multi-decade high
Plans for the EU's Carbon Border Adjustment Mechanism took a significant step forward after a provisional deal between the Council of the EU & members of the European Parliament was reached. The Parliament said the CBAM levy would be established “to equalise the price of carbon paid for EU products operating under the EU Emissions Trading System (ETS) and the one for imported goods.” Under the plans, firms importing into the EU will need to buy “CBAM certificates.” These will be used to make up the difference “between the carbon price paid in the country of production and the price of carbon allowances in the EU ETS,” the statement said. The CBAM will cover a range of goods & sectors such as electricity, fertilizers, aluminum, cement, steel & iron. It has also been broadened to include hydrogen & other products like bolts & screws. “Only countries with the same climate ambition as the EU will be able to export to the EU without buying CBAM certificates,” This statement said, adding that the plans had been designed to fully comply with World Trade Organization rules. The new rules, it said, would “ensure that EU & global climate efforts are not undermined by production being relocated from the EU to countries with less ambitious policies.” The European Parliament's statement described the new bill as being “the first of its kind.” It is set to apply from Oct 2023, with a built-in transition period. In practice, the plan means countries not aligned with the EU's climate goals would be forced to cut emissions if they want to export goods into the EU, or stump up extra cash for certificates.
European Union reaches landmark agreement on a pollution tax for imports
China initiated a dispute against the US at the World Trade Organization over the US's sweeping semiconductor export curbs that look to cut the world's 2nd-largest economy off from high-tech components. In Oct, the US introduced rules that restricted chips made using American tools from being exported to China as well as any semiconductors designed for artificial intelligence applications. The move has effectively kneecapped China's semiconductor industry. The Chinese Ministry of Commerce confirmed the trade dispute & accused the US of abusing export control measures & obstructing normal intl trade in chips & other products. It said that the WTO dispute is a way to address China's concerns thru legal means. The US has maintained that its export restrictions are in the interest of national security. Trade disputes via the WTO can take years to resolve. China has taken the first step known as a request for consultations. The WTO also has provisions in its rules that allow countries to impose restrictions in the interest of national security. This could make it difficult for China to win this particular dispute.
China brings WTO case against sweeping U.S. chip export curbs as tech tensions escalate
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