Markets take a breather from the latest records

Dow retreated 248, decliners modestly ahead of advancers & NAZ was off 34.  The MLP index went up 2+ to the 309s & the REIT index slid back 1 to the 426s.  Junk bond funds were mixed & Treasuries hardly budged (keeping yields pretty much even).  Oil was flattish in the 68s & gold dropped 22 to 2253 (more on both below).

Dow Jones Industrials 

Mortgage rates moved lower for the 2nd consecutive week, sending purchase applications higher in further signs of pent-up demand amid an ongoing affordability crisis in the housing market.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.69%, the lowest since Oct, from last week's reading of 6.81%.  The average rate on a 30-year loan was 7.03% a year ago.  Many would-be buyers & sellers are holding out to see if rates fall further.  Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey from earlier this year.  "This week, mortgage rates decreased to their lowest level in over a month," said Sam Khater, Freddie Mac's chief economist.  "Despite just a modest drop in rates, consumers clearly have responded as purchase demand has noticeably improved. The responsiveness of prospective homebuyers to even small changes in rates illustrates that affordability headwinds persist."  The average rate on the 15-year fixed mortgage fell to 5.96% from 6.10% last week.  One year ago, the rate on the 15-year fixed note averaged 6.29%.

Mortgage rates fall for second straight week, lowest since October

Dell Technologies (DELL) has deployed tens of thousands of graphics processing units to power artificial intelligence work at Elon Musk’s supercomputer project in Memphis.  “We’ve gone from a blank piece of paper to deploying, at scale, tens of thousands of GPUs in a handful of months,” COO Jeff Clarke said.  “That cluster continues to be built out and we’re distinguishing ourselves.”  Musk's startup AI is developing a massive facility to boost its computing capacity in the race to build AI-powered tools.  The Greater Memphis Chamber said that Nvidia (NVDA), Dell & Super Micro Computer (SMCI), the companies providing hardware for the project, would be establishing operations in the city.  Technology stalwart DELL has seen a boom in business this year thanks to demand for high-powered servers containing NVDA GPUs, the chips needed to run artificial intelligence workloads.  DELL shipped $2.9B in AI-oriented servers in the qtr that ended Nov 1.  The Memphis business organization also said that Musk's facility will contain at least 1M GPUs.  “Our job is to go win our unfair share portion of that,” Clarke said, without commenting on what share of servers or other infrastructure DELL is providing to the project.  DELL stock fell 1.03.

Dell Deploys Tens of Thousands of Chips for AI at Musk’s Memphis Supercomputer

The number of Americans filing new applications for unemployment benefits rose slightly last week, pointing to steadily easing labor market conditions heading into the final stretch of 2024.  Sluggish hiring, however, means some people who lose their jobs are collecting unemployment checks for longer periods relative to early this year, potentially keeping the jobless rate above 4.0%.  Economists said this should allow the Federal Reserve to cut interest rates again this month despite stalled progress in lowering inflation to the central bank's 2% target.  Initial claims for state unemployment benefits rose 9K to a seasonally adjusted 224K for the week ended Nov 30, the Labor Dept said.  The forecast called for 215K claims for the latest week.  The data included the Thanksgiving holiday, which could have injected some noise into the report.  Claims are entering a period of volatility, which could make it difficult to get a clear picture of the labor market.  Unadjusted claims dropped 35K to 210K.  There were also sizeable declines in Florida & North Carolina as the effects of Hurricanes Helene & Milton faded.  Claims remain at levels consistent with continued job growth & have signaled a sharp rebound in nonfarm payrolls in Nov after the labor market was severely distorted by Helene & Milton as well as strikes by factory workers at Boeing (BA) & another aerospace company.

US weekly jobless claims rise moderately

Gold traded lower, moving down even as the $ weakened following an unexpected jump in US initial jobless claims last week.  Gold for Feb was last seen down $28 to $2648 per ounce.  The  Dept of Labor reported 224K initial jobless claims were made last week, above the estimate & prior week level of 215K.  The results follows on a weaker than expected rise in private sector employment in Nov, with the ADP Employment Report showing a rise of 146K positions, under expectations for 163K jobs.  The Nov employment report, with a rise of 214K new jobs expected, up from just 12K a month earlier.  The $ fell following the data, with the ICE dollar index last seen down 0.35 points to 105.97.  Treasury yields rose, with the US 2-year note last seen paying 4.171%, up 3.3 basis points, while the yield on the 10-year note was up 1.1 basis points to 4.192%.

Gold Trading Lower Even as Dollar Falls Following Jump in U.S. Initial Jobless Claims

Oil prices fell as investors weighed an ample supply outlook for next year against OPEC+ delaying its planned output increase by 3 months to Apr 2025.  Brent crude settled down 22¢ at $72.09 a barrel, while West Texas Intermediate (WTI) settled down 24¢ at $68.30 a barrel.  OPEC+, the Organization of the Petroleum Exporting Countries plus allies including Russia, had been planning to start unwinding cuts from Oct 2024, but slowing global demand & booming production outside of the group forced it to postpone the plans on several occasions.  The gradual unwinding of 2.2M barrels per day (bpd) of cuts will start from next Apr with monthly increases of 138K bpd & lasting 18 months until Sep 2026.  OPEC+ pumps around ½ the world's oil.  A cooling $ was lending some support today & expectations for the Federal Reserve to cut interest rates this month should further ease the $'s strength & support the oil market.  A stronger greenback makes $-denominated oil more expensive for investors holding other currencies, hurting demand.

Oil falls as investors weigh ample 2025 supply outlook, delayed OPEC+ output hike

Stocks drifted lower as investors waited for the crucial jobs report tomorrow.  Investors are waiting for the monthly jobs report for a reality check on Powell's upbeat take on the strength of the US economy.  While he said that means policymakers can move cautiously, he stopped short of challenging the market's belief in a Dec rate cut.  A strong reading in Nov's nonfarm payrolls report could upend those bets for a rate cut.

Markets slide ahead of jobs data tomorrow

Dow dropped 118, decliners over advancers 4-3 & NAZ gained 14.  The MLP index added 2 to the 309s & the REIT index fell 2+ to the 424s.  Junk bond funds inched higher & Treasuries had limited selling which increased yields.  Oil rose slightly in the 68s after OPEC+ again delays phase-out of production cuts (more below) & gold was off 10 to 2665.

Dow Jones Industrials

Boeing (BA), a Dow stock, is issuing layoff notices to more than 100 employees across Florida starting in Jan, according to a Worker Adjustment and Retraining Notification Act letter.  Locations include Titusville & the Kennedy Space Center, where BA plays a key role in the aerospace industry.  In 2023, the company spent over $1B with suppliers in Florida, underscoring its economic influence in the region.  BA issued a statement attributing the layoffs to its need to "align workforce levels with financial realities and a more focused set of priorities."  In Oct, BA issued cuts to approximately 17K employees who were expected to leave the company in mid-Jan.  The cuts, which came after a labor union strike, equate to 10% of its workforce.  "We are adjusting our workforce levels to align with our financial reality and a more focused set of priorities," BA said in Oct.  In an Oct 23 statement, CEO Kelly Ortberg said the company is "at a crossroads."  He said that trust in the company has eroded & it is saddled with too much debt.  Still, he foresaw great opportunities ahead including a backlog of roughly half-a-trillion $s & "a customer base that want[s] us and need[s] us to succeed."  "So, my mission here is pretty straightforward.  Turn this big ship in the right direction and restore BA to the leadership position that we all know and want," said Ortberg.  Experts in the field are worried about what this could mean.  "I’m very concerned for the people and the program," local space expert & founder of the online publication Space Upclose Ken Kremer said.  BA, which has more than 170K employees worldwide and 2348 in Florida, has faced financial pressures in recent years.  For the first 9 months of fiscal 2024, the company reported $51.3B in revenue, a drop from $55.8B during the same period in 2023.  The stock was up 10¢.

Boeing announces layoffs as concerns about the company continue to grow

The OPEC+ oil producers' alliance has postponed plans to unwind several formal & voluntary crude production cuts into 2026 amid a lukewarm outlook for global demand, according to delegate sources & internal documents.  Under its formal output strategy, the broader OPEC+ coalition is now restricting its combined production to 39.7M barrels per day (bpd) until Dec 31, 2026, after previously only applying this quota throughout 2025.  8 OPEC+ members will now extend their 2.2M-barrel-per day voluntary production decline into the first qtr & will begin hiking production incrementally in Apr- Sep 2026.  Several OPEC+ members will also be postponing the unwinding of a 2nd 1.7M-barrels-per-day cut until the end of next year.  This latter production decline was previously only set to last thru 2025.  Despite these sets of production trims & ongoing conflict threatening the hydrocarbon-rich Middle Eastern region, global oil prices have remained subdued for the better part of this year, under pressure from a tepid demand outlook.  The Brent contract with Feb expiry & front-month Jan Nymex WTI futures were both trading flat today.  Adding to geopolitical uncertainty is the imminent White House return of Pres-elect Donald Trump — who has led his electoral campaign on pledges to further unleash the output of the world's largest oil producer.

OPEC+ members to delay oil production increases

Southwest Airlines (LUV) raised their 4th-qtr forecasts, citing strong demand & higher fares, sending shares in the carriers higher.  LUV  said that 4rth-qtr unit revenue will likely rise 5.5-7% from last year, up from a previous forecast of an increase of no more than 5.5%.  The airline said its network changes aimed at culling unprofitable flights are paying off & that demand into next year appears solid.  “The Company is encouraged by recent revenue trends and forward bookings, including fourth quarter holiday travel, and currently expects strong revenue trends and tactical initiative performance to carry into 2025,” LUV said.  LUV also said it would complete its first sale-leaseback of aircraft in the first qtr.  American Airlines (AAL) said that it expects unit revenue in the last 3 months of the year to be on par to up as much as 1% over the same period of 2023, compared with an earlier estimate for unit revenue to be down as much as 3% from last year.  AAL also raised its adjusted earnings estimate to 55-75¢, up from 25-50¢ a share.  A day earlier, JetBlue Airways (JBLU) raised its revenue forecast for the qtr & told staff it would further cut unprofitable routes & make tweaks to its summer 2025 Europe schedule later this week.  LUV stock rose 1.49, AAL stock rose 2.15 & JBLU stock was up 12¢.

Southwest and American airlines raise sales outlooks

Stocks drifted lower as investors waited for tomorrow's crucial jobs report.  UnitedHealth Group (UNH), another Dow stock, is under a cloud after its CEO was killed yesterday & related news stories.

Markets climb to new heights led by tech stocks on Nasdaq

Dow rose 308 (near session highs & topped 45K), decliners slightly ahead of advancers & NAZ was up 254.  The MLP index sank 6 to 307 & the REIT index was off 1+ to the 426s.  Junk bond funds fluctuated & Treasuries saw buying which lowered yields.  Oil slid back 1+ to the 68s & gold was up 9 to 2676 (more on both below).

Dow Jones Industrials 

The economy has entered a new phase with consumers able to push back on prices successfully, but new tariffs from Pres-elect Trump could usher in another round of price increases & after years of inflation, consumers will be more inclined to take it, says Federal Reserve Bank of Richmond CEO & Pres Tom Barkin.  During the more-than-2-year stretch of inflation that was born out of pandemic shortages & supply chain issues & continued as companies raised prices, consumers largely stayed resilient & continued to spend.  However, as consumer price fatigue finally hit a tipping point, major companies announced plans to reduce prices on groceries & goods, aiming to keep consumer wallets open.  “What I started hearing around May, and then increasingly through the summer, was that finally consumers had the emotional capacity to start pushing back,” Barkin said.  “What we’re seeing, I think very strongly now, is [that] consumers are frustrated — they’re frustrated by high prices.”  Barkin added that amid the supply chain challenges and shortages of recent years, consumers “didn’t have the energy” to push back on pricing, but that has changed, something that is being reflected in recent company earnings calls.  “The [companies] that seem to be maintaining momentum are [companies] who have put stuff on discount or selling things on promo, the consumers trading down from beef to chicken or moving channels from the mass market grocers to the Walmarts of the world,” Barkin said.  “People are frustrated, and they’re trading down.”  The threat of proposed tariffs from the Trump administration has many companies, retail trade groups & industry analysts warning that those moves could fuel higher prices on a wide range of purchases.  For example, Walmart CFO John David Rainey said last month that the retailer could have to raise prices on some items if Pres-elect Trump's proposed tariffs take effect.  “Our model is everyday low prices. But there probably will be cases where prices will go up for consumers,” Rainey said.  While the specter of increased prices due to Trump tariffs loom, Barkin said 1 of the things that he is focused on is the changed relationship he believes that consumers have with price increases compared to during the first Trump presidency.  “If you look forward a year or two, and you start imagining cost increases in sectors either because you’ve got commodity supply constraints or tariffs coming, I think the bar to raising prices is lower than it was five years ago,” Barkin continued.  He said that in 2018 & 2019 he met with companies & asked if they were going to pass on Trump tariff-driven cost increases to consumers. “I heard a lot of people say things like, ‘Well I’ll pass it on where I can, but there’s just no way I’m going into Home Depot and giving a price increase. They’re not going to accept it.’”

Prepare for Trump tariffs to increase prices: Richmond Fed president

US economic activity has expanded slightly in most regions since early Oct, with employment growth "subdued" & inflation rising at a modest pace & businesses expressing optimism about the future, the Federal Reserve said in a summary of surveys & interviews from across the country known collectively as the "Beige Book."  "Though growth in economic activity was generally small, expectations for growth rose moderately across most geographies and sectors," the central bank said in its regular temperature check on the economy, drawing on observations from the business & community contacts of each of its 12 regional banks thru Nov 22.  "Business contacts expressed optimism that demand will rise in coming months."  The findings will help shape Fed policymakers' thinking about how fast & how much further they may need to lower the policy rate, which is currently 4.50%-4.75% after reductions in Sep & Nov.  The Fed's last rate-setting meeting of the year is in 2 weeks, & financial markets are betting it will deliver a qtr-percentage-point cut in borrowing costs despite inflation that has proven to be stickier than hoped for.  Many Fed policymakers say they remain convinced that inflation is headed back down, particularly with short-term borrowing costs well above the neutral level where they would cease to be a significant drag on the economy.  As of Sep, most policymakers estimated the neutral rate to be no higher than 3.5%.  With the labor market still strong but gradually cooling, Fed officials are wary of leaving the policy rate too far above that level for too long.

US economy grew slightly in recent weeks, Fed survey says

Federal Reserve Chair Jerome Powell said he's confident he'll have a similar relationship with the incoming administration, including Treasury nominee Scott Bessent, as he has now.  “I fully expect that we’ll have the same general kinds of relationships, institutional relationships, for example with the Council of Economic Advisers, but most importantly with the Treasury Department,” Powell said.  Speaking of Bessent, Powell said he was “confident that I will have the same kind of relationship with him once he’s confirmed as I’ve had with other Treasury secretaries.”  Bessent has backed the idea of nominating a “shadow Fed chair” well in advance of the end of Powell's term in 2026, a move that would effectively undermine the Fed leader's influence with financial markets.  Powell said he didn't believe the incoming administration would pursue that idea.  “I don’t think that’s on the table at all,” he said.  On monetary policy, the Fed chair said he & his colleagues can afford to be cautious as they lower rates toward a neutral level, one that neither stimulates nor holds back the economy.

Powell Says He Expects Good Relations With Trump Administrationo

Gold edged higher after data showed US private payrolls rose at a moderate pace last month, while investors digested remarks from Federal Reserve Chair Jerome Powell & looked forward to Fri's non-farm payrolls report.  Spot gold was up 0.4% at $2654 an ounce & US gold futures settled 0.3% higher at $2676.  Private payrolls rose by 146K last month, the ADP report showed.  The  forecast called for private employment increasing by 150K positions.  Powell said the recent performance of the economy will allow the central bank to be more judicious with the future path of interest rate cuts.  Gold is seeing a muted reaction today, with a stronger impact expected from the upcoming nonfarm payrolls & if data points to weakening employment it would support prices.  US central bankers yesterday signaled inflation is gradually heading toward the 2% target, hinting at potential interest rate cuts.  Traders are pricing in a 77% chance of a 25-basis-point cut at the Fed's Dec 17-18 meeting.  Bullion, which does not pay any interest, historically performs well in low-interest rate environments.  Safe-haven gold was also supported by global geopolitical unrest, including South Korea's political turmoil, France's gov facing collapse, relentless Russian drone strikes in Ukraine & Israel threatening war with Lebanon if its truce with Hezbollah collapses.

Gold Prices Tick Higher on Benign US Employment Data

US oil futures finished lower as pressure from uncertainty a day ahead of a decision by major oil producers on output levels outweighed support from weekly US data showing a crude inventory drop of more than 5M barrels.  Investors also weighed news of deepening US sanctions on Iranian oil exports.  West Texas Intermediate crude for Jan fell $1.40 (2%) to settle at $68.54 a barrel after gaining 2.7% yesterday.  Feb Brent crude, the global benchmark, lost $1.31 (1.8%) at $72.31 a barrel.  The Organization of the Petroleum Exporting Countries &

 

 

 

 

 

 its allies (OPEC+) are set to meet tomorrow, after postponing a gathering that had been set for Dec 1.  OPEC+ had earlier this year approved a plan to begin unwinding around 2.2M barrels a day of production cuts in Oct but subsequently delayed that plan.  At present, the plan is scheduled to take effect at the end of Dec, but it is expected to be pushed back further due to softness in the crude market & fears that a production increase would add to a surplus.

Oil Prices End Lower as Investors Look to OPEC+ Decision

Investors digested Powell's comments that the Fed can be "cautious" while lowering interest rates.  He did little to shake investor confidence that the Fed will cut interest rates at its Dec meeting.  Traders see near 77% odds of a 25 basis point cut, compared with around 67% a week ago.

Markets edge higher before Powell's speech later today

Dow went up 196, decliners slightly ahead of advancers & NAZ gainedn188.  The MLP index dropped 4+ to the 308s & the REIT index was off 2+ to 426.  Junk bond funds were mixed & Treasuries hardly budged, keeping yields flattish.  Oil was about even in the high 69s as investors await OPEC+ decision & gold  added 12 to 2680.

Dow Jones Industrials

As the US economy's future takes the forefront with 2024 soon coming to an end, the Federal Reserve Bank of San Francisco's pres detailed what Trump's tariffs & rate decisions could mean for markets.  Mary Daly directly answered what may happen if a 10% tariff on goods imported thru the Port of Los Angeles is implemented.  "It really depends," Daly said.  "This is why we don't, the Fed, does not think in hypotheticals, because the economy is a complex and large thing."  "It depends on what's tariffed, how it is, have firms in the US adjust[ed] it? What are the other players in the global economy who might substitute their goods for goods that come in from another country?" Daly further posited.  "So we've had trade issues and tariffs before, and the economy adjusts, and it doesn't usually derail growth."  Last week, Pres-elect Trump said he would issue an exec order upon taking office to charge Mexico & Canada a 25% tariff on all products coming into the US, as well as additional tariff hikes on China over the flow of illegal immigrants & illicit drugs.  In a subsequent post, Trump added that he would institute an additional 10% tariff on all Chinese goods being imported into the US over the "massive amounts" of drugs, in particular fentanyl, being smuggled into the country.  Daly clarified that the Fed does not have a tariff forecast model in place, as it falls under the category of "hypothetical."  "We know historically how tariffs impact the economy. There's a lot of work there. So we're very prepared to assess things. But, the president-elect hasn't even come into office yet," the San Fran president added.  "And I think it's only the right thing to give him and his team a chance to put the policies forward before we react."  When it comes to the macroeconomy, Daly expressed the central bank's belief that it’s "in a really good place," although a Dec rate cut is not completely off the table.  "In order to keep the economy in a good place, we have to continue to recalibrate policy," Daly noted.  "Now, whether it'll be in December or sometime later, that's a question we'll have a chance to debate and discuss in our next meeting. But the point is, we have to keep policy moving down to accommodate the economy because we want a durable expansion with low inflation."

San Francisco Fed president on Trump tariffs: 'Very prepared' to assess impact

Private payrolls growth was less than expected in Nov, reflecting a slowing labor market, according to a report from ADP.  Companies added 146K jobs on the month, below the downwardly revised 184K in Oct & less than the estimate for 163K.  Education & health services led job creation, adding 50K positions on the month.  That was followed by construction with 30K new jobs, trade, transportation & utilities with 28K additions, & the other services category, which contributed 20K jobs.  Manufacturing lost 26K positions on the month.  Businesses with fewer than 50 employees also reported a drop of 17K.  Wage growth accelerated, by 4.8%, a faster gain than Oct, the first time that has happened in 25 months.  "While overall growth for the month was healthy, industry performance was mixed," ADP's chief economist, Nela Richardson, said.  "Manufacturing was the weakest we've seen since spring. Financial services and leisure and hospitality were also soft."  Even with the lower-than-expected total & downward Oct revision, ADP's count was still well ahead of the Bureau of Labor Statistics' more closely watched nonfarm payrolls count, which showed an increase of just 12K jobs in Oct.

Private payrolls grew by 146,000 in November, less than expected, ADP says

General Motors (GM) expects a restructuring of its joint venture operations with SAIC Motor in China to cost more than $5B in noncash charges & write-downs, the Detroit automaker disclosed.  It expects to write down the value of its joint-venture operations in China by $2.6-2.9B.  It also anticipates another $2.7B in charges to restructure the business, including “plant closures and portfolio optimization.”  GM, which previously announced plans to restructure the operations in China, did not disclose any additional details about the expected closures.  “As we have consistently said, we are focused on capital efficiency and cost discipline and have been working with SGM to turn around the business in China in order to be sustainable and profitable in the market. We are close to finalizing our restructuring plan with our partner, and we expect our results in China in 2025 to show year-over-year improvement,” GM said.  GM believes the joint venture “has the ability to restructure without new cash investments” from the American automaker.  A majority of the restructuring costs is expected to be recognized as noncash, special item charges during the 4th qtr.  That means they will impact net income, but not its adjusted earnings before interest & taxes – a key metric.  The stock fell 36¢.

GM expects more than $5 billion impact from China restructuring

Stocks rose as techs helped set the stage for fresh record highs & investors waited to hear from Federal Reserve Chair Jerome Powell for clues on what's next for interest rates.  Anticipation is building for Powell's appearance to find out whether growing confidence in a Dec rate cut is justified.  Fed officials have signaled support for more easing as they prepare for their final meeting of the year.  The central bank is widely expected to lower rates at its Dec 18 meeting.  Traders see near 74% odds of a 25 basis point cut, compared with around 66% a week ago.  

Markets hesitate after key jobs data shows surprise rebound

Dow slid back 76, decliners over advancers 4-3 & NAZ added 76.  The MLP index hovered in the 312s & the REIT index was off 1+ to the 428s.  Junk bond funds remained slightly higher & Treasuries had limited selling which brought slightly higher yields.  Oil was up almost 2 to 70 & gold gained 5 to 2664 (more on  both below).

Dow Jones Industrials 

Consumers collectively spent a record $13.3B online during Cyber Monday, surpassing previous expectations.  According to the latest Adobe Analytics data, spending climbed 7.3% compared with the same period a year ago & surpassed its expectation of $13.2B.  In the final hours of the shopping day, consumers spent $15.8M every minute as they capitalized on larger-than-expected discounts.  Usage of buy now, pay later services has also hit a record on Cyber Monday, accounting for $991M in total spending, up 5.5% compared with the same time a year ago.  The Mon after Thanksgiving remains the biggest online shopping day of all time.  The strong holiday sales so far this season have demonstrated households' capacity to spend even with inflation slightly higher than the Federal Reserve's 2% target.  National Retail Federation chief economist Jack Kleinhenz said in Nov that falling energy prices were "likely provided extra dollars for household spending on retail merchandise."  So far this holiday season, from Nov 1 to Dec 2, consumers have collectively spent $131B online, a 9% jump compared with the same period a year ago.  More than ½ of all spending online has notably been driven by 3 categories, including electronics, apparel & furniture.  Online spending on electronics has already surpassed $30B, while spending on apparel & furniture totaled over $24B & $16B, respectively.  This demonstrates how the steep discounts from companies have driven consumers to spend more on higher-ticket items.  Over the past month, the "share-of-units-sold" for the most expensive goods increased by 28%.  Adobe's figures are not adjusted for inflation.  If online deflation was factored into its data, then growth in spending would be stronger. 

Cyber Monday spending hits record amount

China banned exports to the US of the critical minerals gallium, germanium & antimony that have widespread military applications, escalating trade tensions the day after DC's latest crackdown on China's chip sector.  The curbs strengthen enforcement of existing limits on critical minerals exports that Beijing began rolling out last year, but apply only to the US market, in the latest escalation of trade tensions between the world's 2 largest economies ahead of Pres-elect Donald Trump taking office next month.  A Chinese Commerce Ministry directive on dual-use items with both military & civilian applications cited national security concerns.  The order, which takes immediate effect, also requires stricter review of end-usage for graphite items shipped to the US.  "In principle, the export of gallium, germanium, antimony, & superhard materials to the United States shall not be permitted," the ministry said.  Gallium & germanium are used in semiconductors, while germanium is also used in infrared technology, fibre optic cables & solar cells.  Antimony is used in bullets & other weaponry, while graphite is the largest component by volume of electric vehicle batteries.  The move has sparked fresh concern that Beijing could next target other critical minerals, including those with even broader usage such as nickel or cobalt. "China has been signalling for some time that it's willing to take these steps, so when is the U.S. going to learn its lesson?" said Todd Malan of Talon Metals, which is trying to develop a nickel mine in Minnesota & is exploring for the metal in Michigan.  The only US nickel mine will be depleted by 2028.

China bans exports of gallium, germanium, antimony to US

2 Federal Reserve policymakers said they believe inflation is heading down to the central bank's 2% target & the job market is "solid," even as neither gave any clear steer on whether they'll support another interest rate cut later this month.  "I view the economy as being in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices," Fed Governor Adriana Kugler said.  "The labor market remains solid, and inflation appears to be on a sustainable path to our 2% goal."  And while she said the Fed is in the process of removing policy restraint, she did not indicate if she favors another qtr-percentage-point rate cut at the central bank's Dec 17-18 policy meeting, as anticipated by investors.  Fed Pres Mary Daly gave a similar read, & said that while a rate cut this month is "absolutely" not off the table, neither is it a sure thing.  "We have to continue to recalibrate policy - now, whether it will be in December or sometime later, that's a question we'll have a chance to debate and discuss in our next meeting," she said.  "I think we need to have an open mind here."  Kugler & Daly said they will be looking closely at the release on Fri of the US employment report for Nov to inform their decision & both said they would be watching inflation data.  Yesterday, Fed Governor Christopher Waller said he was leaning towards another rate cut this month.  Fed Chair Jerome Powell on Wed will give what are expected to his last public remarks before the meeting.  Fed officials are trying to avoid giving too much guidance about how policy is likely to evolve, particularly since Pres-elect Trump's victory in last month's US election.  Trump's promises of import tariffs, tax cuts & an immigration crackdown could change the economic outlook in the coming months.  Both Kugler & Daly said it was too early to make any judgments about how those policies will affect the economy.  Kugler used the bulk of her speech to make 1 point relevant to the coming policy debate, arguing that a jump in immigration in recent years was a positive supply shock which, along with a rise in productivity, allowed the economy to grow faster than expected while inflation continued to decline.

Fed's Kugler says inflation on path to 2% target, job market is solid

Gold edged higher to trade around $2630 after comments from a Federal Reserve (Fed) speaker raised the possibility of the Fed cutting interest rates at its Dec policy meeting.  Lower interest rates are positive for Gold as they reduce the opportunity cost of holding non-interest-paying assets.  Rising geopolitical risks can also support gold amid ongoing conflicts in the Middle East, now exacerbated by the outbreak of civil war in Syria, the Russia-Ukraine conflict & political risks in France.  During times of crisis, investors turn to gold for safety.  Gold edged higher after comments from several Fed members appeared to favor the central bank cutting US interest rates at its Dec meeting.  Atlanta Fed Pres Raphael Bostic said yesterday that he was "keeping his options open" regarding a Dec cut.  However, he also appeared to lean toward such a move, adding that because the risks to the labor market and inflation are "roughly balanced, we should also start shifting monetary policy toward a stance that is neither stimulating nor restraining economic activity."

Gold Edges Higher as Fed Speaker Supports Christmas Rate Cut

Oil prices rose, as traders awaited the outcome of the OPEC+ meeting later this week.  Brent crude was up 66¢ (0.9%) at $72.49 a barrel, while US West Texas Intermediate crude was up 63¢ (0.9%) at $68.73.  OPEC+ is likely to extend its latest round of production cuts until the end of the first qtr at its meeting on Dec 5.  Given the improved compliance with production cuts from Russia, Kazakhstan & Iraq, the decline in Brent prices & indications in press reports, OPEC+ production cuts are expected into Apr.  OPEC+, which accounts for about ½ of the world's oil output, has been pushing to gradually phase out output cuts by 2025.  However, the prospect of an oil market surplus has put downward pressure on prices, with Brent trading nearly 6% below its Dec 2023 average.  The outlook for global oil demand remains weak, with China's crude imports likely to peak as early as next year as demand for transportation fuels begins to decline, researchers & analysts say.  Saudi Arabia, the world's top exporter, is expected to cut its crude prices for Asian buyers to the lowest in at least 4 years.  Concerns that the Federal Reserve may not cut interest rates at its Dec meeting have also capped oil prices.  In the Middle East, cracks continued to appear in a US-brokered ceasefire between Israel & the militant group Hezbollah, with 9 people killed in attacks on 2 southern Lebanese towns shortly after Hezbollah fired missiles at Israeli military positions in the disputed Shebaa Farms region yesterday.

Oil prices edge up ahead of OPEC+ meeting

Stocks traded mixed as investors digested fresh jobs data & new thoughts came from Fed officials regarding the path forward for interest rates.  Job openings rose by 372K to 7.74M  in Oct compared to estimates of 7.52M.  The Job Openings & Labor Turnover Survey (JOLTS) also showed fewer hires were made during the month while the quits rate, a sign of confidence among workers, rose to 2.1% from 1.9% in Sep.  Retail holiday in the US got off to a great start (see above).

Markets slip from records as 2024's rally takes a pause

Dow declined 150, decliners over advancers 2-1 & NAZ crawled up 13.  The MLP index fell 2 to 311 & the REIT index was off 1+ to the 428s.  Junk bond funds inched higher & Treasuries had a little selling, which increased yields modestly (more below).  Oil added 1+ to the 69s & gold went up 5 to 2664.

Dow Jones Industrials

Available jobs rose in Oct while hiring fell during a month in which payrolls growth hit their lowest level in nearly 4 years, the Bureau of Labor Statistics (BLS) reported.  Job openings totaled 7.74M on the month, up 372K from Sep & more than the estimate for 7.5M, the BLS said in its Job Openings & Labor Turnover Survey.  The rate of openings as a share of the labor force rose to 4.6% from 4.4%.  That brought the ratio of available positions to unemployment workers up to 1.1, about ½ of where it was during the peak of a massive gap between supply & demand in 2022.  Hiring also tailed off at a time when the labor market was disrupted by violent storms in the Southeast as well as 2 major labor strikes involving dock workers & Boeing (BA), a Dow stock.  Hires totaled 5.3M, down 269K on the month, lowering the hiring rate to 3.3%, a decline of 0.2 percentage point.  Layoffs, though, fell to 1.63M, a decrease of 169K from Sep.  The data comes for a month in which the BLS reported nonfarm payroll growth of just 12K, the worst month since Dec 2020.  The Federal Reserve watches the JOLTS report closely for signs of tightness or slack in the labor market.  Markets expect the Fed to lower its benchmark borrowing rate by a qtr percentage point when it meets later this month, in part an effort to head off any potential weakness in the labor market.

Job openings jumped and hiring slumped in October, key labor report for the Fed shows

South Korean stocks dropped in the US after Pres Yoon Suk Yeol invoked emergency powers & declared martial law, raising fear of instability in the world's 13th largest economy.  The iShares MSCI South Korea ETF, which tracks more than 90 large & mid-sized companies in South Korea, tumbled 6% to hit a 52-week low.  The pres accused opposition parties of sympathizing with North Korea & controlling parliament.  Yoon did not specify how martial law, a temporary rule by military authorities in a time of emergency, would affect governance & democracy in the country.  Under the martial law declaration, all political activities and acts that “incite social disorder” are prohibited.  This is the first time since 1980 a South Korean leader has issued a martial law declaration.  The Korea Exchange announced it would hold an emergency meeting “to prepare response measures” &  later decide whether the market would open tomorrow.  The $ jumped 1.9% against the South Korean won.

South Korean stocks rocked in U.S. trading after martial law declared

The benchmark US 10-year Treasury yield edged lower as investors await data that will offer insights about the strength of the US economy.  The 10-year Treasury yield added 2 basis point to 4.215% while the yield on the 2-year Treasury dipped 1 basis point to trade at 4.19%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors will also scrutinize comments from Fed Governor Adriana Kugler & Chicago Fed Pres Austan Goolsbee for hints on interest rate policy.  The week's major economic release is the Nov jobs report, which will be published Fri & is expected to show that the US economy added 214K jobs last month, up from 12K jobs in Oct.  The unemployment rate is expected to land at 4.2%, up from 4.1% in the prior month.  The jobs report is important for investors as it will be the last major look at the labor market before the Fed's Dec 17-18 meeting, where it will decide on how much to cut interest rates.

10-year Treasury yield edges higher as investors await data, Fed speeches

Stocks drifted near all-time highs as investors weigh fresh jobs data & waited for new comments to cement or dent growing hopes for future interest rate cuts.  JOLTS serves as the first in a wave of key data this week that culminates in Fri's all-important monthly US payrolls report.  The unrest in South Korea needs to be watched closely.

Markets wobble while Nasdaq rises to a new record

Dow was off 128, decliners over advancers about 5-4 & NAZ rose 185.  The MLP index gave back 6+ to the 311s & the REIT index dropped 6+ to 430.  Junk bond funds fluctuated & Treasuries saw limited buying which allowed yields to creep higher.  Oil continued fractionally higher in the 68s & gold retreated 18 to 2662 (more below on both ).

Dow Jones Industrials 

A "record number" of flights traveled across the US during Thanksgiving week this year, the Federal Aviation Administration (FAA) says.  Between Sun-Thur, Nov 28, the FAA says it "safely moved more than 232K flights" in the US, including 52K alone on Tues.  A total of 12.1M people passed thru Transportation Security Administration (TSA) checkpoints during that timeframe, including more than 2.7M the day before Thanksgiving.  That's an increase from the 11.7M passengers that the TSA recorded traveling during the same 5-day period last year.  "To help with East Coast traffic volume, the FAA used military airspace off the Atlantic Coast and Gulf of Mexico that the military released for commercial plane use," the FAA said.  "Controllers implemented traffic management initiatives to help move air traffic expeditiously during bad weather in the Northeast and West Coast, and snow in the Rockies," it continued.  "Despite the record numbers, only 0.3 percent of flights were cancelled, and delays were a record low of 1.2 percent of flights," the FAA added.

FAA reports 'record number' of Thanksgiving week flights

Intel (INTC), a Dow company, ousted CEO Pat Gelsinger over the weekend, capping a tumultuous nearly 4-year tenure at what was America's leading semiconductor company before its stock price & market share collapsed.  The company announced Gelsinger's resignation today, came after a contentious board meeting last week over his perceived failure to respond to Nvidia's (NVDA) competitive edge & a lack of confidence in Gelsinger's turnaround plans.  CFO David Zinsner & INTC products CEO MJ Holthaus were named interim co-CEOs.  Longtime board member Frank Yeary will serve as interim exec chair.  “We are working to create a leaner, simpler, more agile INTC,” Yeary said.  Yeary was a key driver in Gelsinger's.  Yeary, INTC's longest-serving board member, will now have to preside over yet another CEO search process.  Gelsinger, 63, had an illustrious career at INTC, rising to become the company's first chief technical officer at the turn of the century, before he took a senior role at EMC.  Gelsinger returned to the company from VMware, where he was chief exec, to stabilize INTC in 2021, succeeding then-CEO Bob Swan.  “It has been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics,” Gelsinger said.  INTC stock lost 12¢.

Intel CEO Pat Gelsinger ousted by board after disastrous performance

Stellantis (STLA) CEO Carlos Tavares has unexpectedly resigned from the automaker amid increasingly “different views” between the exec & the board of directors, the company said.  The world's 4th-largest carmaker said its board accepted Tavares' resignation yesterday & his departure was effective immediately.  Jeep-maker STLA said that its process to appoint a new CEO is “well under way” & that it expects to conclude the search during the first ½ of next year.  Until then, the company said it will establish a new interim exec committee led by Chair John Elkann.  “Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the Board and the CEO. However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today’s decision,” Henri de Castries, its senior independent director said.  STLA on Sun reconfirmed its previously lowered guidance for the year that included an adjusted operating income margin of 5.5% - 7% & industrial free cash flow between minus €5B ($5.3B) to minus €10B.  STLA stock fell 84¢.

Stellantis CEO Carlos Tavares resigns amid problems in U.S., falling sales

Gold traded lower as the $ climbed on rising expectations the Federal Reserve may not lower interest rates when the central bank's policy committee meets later this month.  Gold for Feb was last seen down $21 to $2659 per ounce.  The precious metal has been mostly rangebound since correcting from a record high of $2800 on Oct 30, as the $ surged following the US election & inflation remains stuck above the Federal Reserve's 2% target.  Gold slipped as the $ rose overnight, highlighting its current rangebound behavior while we await fresh US economic data input & guidance on the pace & timing of additional US rate cuts.  The US Oct personal consumption expenditures index, the Fed's preferred inflation measure, was last week reported to have risen at a 2.3% annualized rate, up from 2.1% in Sep.  The rise, as well as potential economic turmoil from the incoming Trump Administration in Jan, has some analysts expecting the Fed will stand pat at the Dec 18 end of the meeting the FOMC.  The $ rose early, with the ICE dollar index last seen up 0.76 points to 106.50.  Treasury yields also rose, with the US 2-year note last seen paying 4.202%, up 4.3 basis points, while the yield on the 10-year note up 1.8 points to 4.193%.

Gold Trading Lower, Remains Rangebound, as Dollar and Yields Climb

Crude oil prices have started to rise as tensions mount ahead of the most important OPEC+ meeting before 2025, which will be held on Thurs.  Ahead of the meeting, Iranian official Afshin Javan made an ominous statement by issuing an opinion piece that blamed OPEC+ for the current low prices.  The main point of the opinion piece was that OPEC+ had kept oil prices high for too long, funding its competitors to boost cheaper alternatives.  The debate is heated ahead of Thurs's online meeting where OPEC+ will agree to extend its production curbs.  Crude Oil (WTI) was trading at $68.90 & Brent Crude Oil was at $72.75.

Crude Oil Prices Rise Slightly Ahead of OPEC+ Meeting

The S&P 500 & Dow are entering Dec on a high note, following their best monthly gains in a year.  The rally got a boost last month thanks to optimism around Pres-elect Donald Trump's victory.

Markets edge higher for data that could influence interest rates

Dow pulled back 102, decliners over advancers better than 3-2 & NAZ was up 163 to a new record.  The MLP index was off 5+ to the 311s following recent strength & the REIT index dropped 4+ to the 431s.  Junk bond funds were mixed & Treasuries had selling which raised yields (more below).  Oil crawled higher in the 68s & gold dropped 17 to 2663.

Dow Jones Industrials

Nov was a month to remember for the stock market.  The S&P 500 climbed 5.7%, the Dow jumped 7.5%, marking their best monthly performance this year.  NAZ closed 6.2% higher for its most positive month since May.  Recently, a host of factors have pumped up sentiment for stocks.  The presidential elections concluded with Donald Trump definitively securing the top seat in the White House.  That erased any uncertainty, which investors hate.  Also, Trump 2.8% annualized rate for the 3rd qtr.  Even though gross domestic product is forecast to be 1.3% in the 4th qtr, according to the St Louis Fed forecast, that still denotes an expansion, a stark contrast against nagging fears that a recession would strike the economy.  Slowing growth even has a silver lining.  It gives the Federal Reserve more incentive to cut rates a 2nd time this year at its Dec meeting, which would stimulate economic activity.  Nov's seasonal strength for stocks sent a course of good feelings into investors. 

November was a month to remember for stocks

Treasury yields were higher as investors awaited labor & manufacturing economic data this week.  The yield on the 10-year Treasury rose by 1 basis point to 4.207% & the 2-year Treasury yield rose by 3 basis points to 4.206%.  On Fri, the 10-year Treasury yield had fallen to its lowest levels since late Oct.  1 basis point equals 0.01% & yields & prices move in opposite directions.  Investors are keenly anticipating labor data which will offer insights about the strength of the US economy.  First, the Job Openings & Labor Turnover Survey for Oct will be published on Wed & provide estimates of the number of job openings, hires, layoffs & quits.  The Nov jobs report will be published on Fri & is expected to show that the US economy added 177K jobs last month, up from 12K jobs in Oct.  Additionally, the unemployment rate is set to rise to 4.2%, up from 4.1% previously.

Treasury yields rise as investors look to key labor data this week

The business activity in the US manufacturing sector continued to contract, albeit at a softer pace in Nov, with the ISM Manufacturing PMI rising to 48.4 from 46.5 in Oct.  This reading came in better than the market expectation of 47.5.  The Employment Index of the PMI survey edged higher to 48.1 from 44.4 in the same period & the Prices Paid Index retreated to 50.3 from 54.8.  Finally, the New Orders Index improved to 50.4 from 47.1. 

US ISM Manufacturing PMI improves to 48.4 in November vs. 47.5 expected

Dec begins on a high note, having ended Nov with the best monthly gains for stock averages in a year.  The rally got a boost last month thanks to optimism around Pres-elect Trump's victory.  YTD the Dow has gained nearly 20% & tech-heavy NAZ has gained nearly 30%.