Monday, July 10, 2023

Markets edge higher as earnings season begins

Dow went up 119, advancers over decliners 5-2 & NAZ slid back 14.  The MLP index added 1 to the 232s & the REIT index was off 1+ to the 373s.  Junk bond funds were little changed & Treasuries inched higher which hardly affected yields (more below).  Oil crawled higher to go over 72 & gold dropped 5 to 1927.

AMJ (Alerian MLP Index tracking fund)


 

 




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The Covid-19 pandemic, rather than Biden's economic policies & stimulus packages, is the “real cause” of high inflation, according to a member of the Council of Economic Advisers.  A key criticism against “Bidenomics” & the huge stimulus it had brought, was that it had, to a certain extent, fueled inflation.  Boushey rejected this notion.  “What the president did when he first came into office, the American Rescue Plan — we were in the middle of a pandemic, and he put in place a policy that gave us enough flexibility to deal with all the challenges that came our way,” she said.  A $1.9T relief package, the American Rescue Plan was announced in Jan 2021 & passed by Congress in Mar of that year.  “Had we done that, and the United States’ inflation spiked higher than anyone else, well, maybe you could make the case that it was about that policy,” Boushey added.  “But the reality is, is that that isn’t what happened — yes, the United States had inflation, but so did other countries that did not have the same policies.”  “So the inflation, the real cause was the global pandemic, and that is about the resiliency of our global supply chains.”  Expanding on her point, Boushey said this was why the US was “making the investments that we need to make.”  The world's largest economy was also, she added, “encouraging our friends and allies around the world to work with us to foster the resiliency in supply chains that we will need, and to move us away from fossil fuels, which have these volatile prices, towards clean energy.”  The latter scenario would provide “more stable prices over time, where we can get away from some of the disruptions that the global economy can cause for domestic prices.”

Biden advisor defends stimulus and inflation surge: ‘The real cause was the global pandemic

Treasury Secretary Janet Yellen said her recent bilateral meetings with senior Chinese officials were productive & helped stabilize the relationship between the 2 world powers.  Yellen said the US & China remained in disagreement on several issues, but she is confident that her visit moved forward U.S. plans to "put the U.S.-China relationship on surer footing."  "The U.S. and China have significant disagreements," Yellen said, pointing to US concerns about what she described as "unfair economic practices" & recent punishment against US firms.  "But President Biden and I do not see the relationship between the U.S. and China through the frame of great power conflict," she continued.  "We believe that the world is big enough for both of our countries to thrive."  Her visit comes as the federal gov attempts to rekindle its relationship with China, which has been damaged in recent years over a number of issues, including Taiwan & technology.  She emphasized that the US was not looking to distance itself from China's economy, since doing so would be "disastrous for both countries and destabilizing for the world."  Yellen said the US would like to see an "open, free and fair economy" instead of one that forces countries to pick a side.  Yellen said the goal of her visit was to strengthen ties to China's new economic team, reduce the risk of misunderstanding & create a path for cooperation in climate change, debt distress & other areas.  The US & China have both downplayed expectations for solutions during the talks.  "No one visit will solve our challenges overnight. But I expect that this trip will help build a resilient and productive channel of communication," Yellen said.  Chinese officials raised concerns about an expected exec order restricting outbound investment.  But she assured them that any measure addressing this issue would be narrow in scope & would be enacted transparently thru a rule-making process that would allow public input.

Yellen says 'significant disagreements' remain in US-China relationship, but sees 'progress'

The yield on the 10-year Treasury rose as investors awaited the latest comments from Federal Reserve officials & key inflation data due this week.  The benchmark yield traded more than 1 basis point higher at 4.062% & the 2-year Treasury yield, meanwhile, was unchanged at 4.931%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  The central bank is widely expected to hike rates again at its meeting later this month, even after last week's Jun jobs report from the Labor Dept showed that non-farms payrolls grew slightly less than expected.  The report also reflected stronger than anticipated wage growth of 4.4% compared with a year ago.  The Fed kept interest rates unchanged at their most recent meeting, but policymakers have since indicated that rates will likely need to be hiked further to bring inflation closer to their 2% target range.  This could mean multiple rate increases are still to come during the 4 meetings the Fed has left on its schedule for this year.  Several key economic reports that could in inform the Fed's next policy decisions are also expected this week, including Jun's consumer price index.

10-year Treasury yield rises as investors look to Fed speaker comments

The stock market is waiting for more speeches from Fed officials & new inflation data.

Dow Jones Industrials

 






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