Dow slid back 14, advancers over decliners about 2-1 & NAZ edged up 17. The MLP index jumped 8 to the 224s & the REIT index hardly changed in the 367s. Junk bond funds fluctuated & Treasuries had modest selling, bringing higher yields. Oil added 1+ to the 71s & gold was flattish at 2019.
AMJ (Alerian MLP Index tracking fund)
Pres Biden sounds optimistic about the odds of reaching a deal with Reps to raise or suspend the debt limit in time to avoid economic fallout from even a potential US debt default. “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it,” Biden said. As to his state of mind, he said, “I remain optimistic because I’m a congenital optimist.” Biden also characterized the talks underway between White House liaisons & congressional aides as “a negotiation,” a notable choice of words after months of insisting that he would not “negotiate” over the debt limit. The pres & the top 4 congressional leaders plan to meet again about the debt ceiling tomorrow. “I’ve learned a long time ago, and you know as well as I do: It never is good to characterize a negotiation in the middle of a negotiation,” Biden said in response to a question about the status of the talks. The pres appeared to take his own advice when reporters asked Biden if he could provide any updates on the budget talks. “No,” said Biden, who was en route to Philadelphia for the day. Biden's remarks followed the postponement of a White House meeting, originally set for Fri, with House Speaker Kevin McCarthy, Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer & Minority Leader Mitch McConnell.
Biden optimistic about a debt limit deal, but McCarthy says White House isn’t being serious
Americans are drowning in credit card debt as chronic inflation makes the cost of everyday necessities more expensive. The New York Federal Reserve Bank's Quarterly Report on Household Debt & Credit, slated for release today, is expected to show that credit card debt soared to a historic $1T in the first 3 months of 2023, according to LendingTree. That will smash the previous high of $986B. "I think it’s fairly clear that what we’re seeing now is becoming more and more about people struggling in the face of ongoing inflation and seemingly constant rising interest rates," Matt Schulz, the chief LendingTree credit analyst,said. "It's a tough time." The $1T figure would mark a major reversal from just 3 years ago when households were rapidly paying off credit card debt with the stimulus payments they received during the COVID-19 pandemic. The rise in credit card usage & debt is particularly concerning because interest rates are astronomically high right now. The average credit card annual percentage rate, or APR, hit a new record of 20.33% last week, according to a Bankrate database that goes back to 1985. The previous record was 19% in 1991. If people are carrying debt to compensate for steeper prices, they could end up paying more for items in the long run. For instance, if $5000 is owed, which the average American does, current APR levels would mean it would take about 277 months & $7723 in interest to pay off the debt making the minimum payments. "It's been a really rough year for credit card holders," Schulz said. "Even though the Fed seems to be taking their foot off the gas with interest rates, the unfortunate reality is credit card holders shouldn’t expect things to get a ton better anytime terribly soon, just because interest rates aren’t going down anytime soon."
Americans drowning in credit card crunch from chronic inflation
Atlanta Federal Reserve Pres Raphael Bostic said that he doesn't foresee rate cuts at least through 2023, even if there's a recession. “For me, inflation is job No. 1. We’ve got to get back to our target,” he said. “If there’s going to be some cost to that, we’ve got to be willing to do that.” His comments came as the Fed has raised rates 10 times since Mar 2022 in an effort to bring down inflation that a year ago was running at its highest levels since the early 1980s. Even though inflation is still running well ahead of the central bank’s 2% year-over-year target, market pricing is indicating that the Fed is done hiking & will be cutting rates multiple times before the end of the year. That is based largely on expectations that the economy is headed for a sharp slowdown & a likely shallow recession, which has been predicted by the Fed’s own economists. But Bostic said he doesn't see cuts coming anytime soon & in fact expects an increase would be more likely at this point. The consumer price index, released last week, showed headline inflation running at a 4.9% annual rate while core, which excludes food & energy & usually receives greater emphasis from Fed officials, was at 5.5%. “What we’ve seen is that inflation has been persistently high, consumers have been really resilient in terms of their spending, and labor markets remain extremely tight. All of those suggests that there’s still going to be upward pressure on prices,” he added. “If there’s going to be a bias to action, for me it would be a bias to increase a little further as opposed to cut.”
Fed’s Bostic casts doubt on rate cuts this year even if there’s a recession
Those guys in DC are meeting tomorrow to continue the debt ceiling talks. In addition more economic news keeps coming. With all this uncertainty, investors are not inspired to buy more stocks.Dow Jones Industrials
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