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Markets see more selling as recession fears grow

noreply@blogger.com (Avi) — Mon, 10 Mar 2025 16:06:00 -0400

Dow plunged 890 (but above the very deep session lows), decliners over advancers better than 3-1 & NAZ tumbled 727. The MLP index was off 1 & the REIT index fell 4+ to the 408s. Junk bond funds remained weak & Treasuries were very heavily bought which sharply reduced yields. Oil was lower, dropping 1+ to the 65s, & gold gave back 24, taking it to 2890 (more on both below).

Dow Jones Industrials

Pres Trump declined to explicitly rule out a full-blown recession for the US economy this year, saying that the country will see a "period of transition" as his policies take effect. "I hate to predict things like that," he said of a recession. "There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing… it takes a little time, but I think it should be great for us." His comments come amid some business leaders' instability concerns over tariffs imposed on China, Canada & Mexico, as well as growing concerns of a potential economic slowdown. The Atlanta Federal Reserve has predicted a contraction of -2.8% in the first qtr. Goldman Sachs raised the expectations of a recession within the next 12 months to 20%, while JP Morgan says the probability of a recession stands at 35%. Commerce Secretary Howard Lutnick offered a more definitive answer yesterday when asked about the possibility of a recession. He said he would "never bet on" one.

Trump says US will experience 'period of transition' when asked if economy could see a recession this year

Nvidia (NVDA) has lost nearly a 3rd of its value just 2 months after notching a fresh high. The leading chipmaker slumped again today, building after last week's losses as heavy selling continued across the tech sector. The popular artificial intelligence stock has shed about a 4th of its market cap since Pres Trump’s inauguration. Tariff fears & growth concerns have rocked technology stocks, including NVDA, over the past week, with the tech-heavy NAZ dropping more than 4% & is at a 6-month low. Many technology companies rely on parts & manufacturing overseas & new levies could push up prices. That has also sparked worries of a US recession, which Trump did not rule out over the weekend. Tesla (TSLA) led the declines among the “Magnificent Seven” names, plummeting more than 13%. The Elon Musk-backed electric vehicle company has plunged more than 20% over the past week & shed nearly ½ its value since Trump took office in Jan. The stock is also coming off its longest weekly losing streak in history as a public company. Today NVDA stock fell another 5.71 & TSLA stock plunged an eye popping 40.52.

Nvidia down 30% from high as tech-led sell-off hits ‘Magnificent Seven’

The Federal Reserve won't lower interest rates at its policy meeting next week, but could deliver the first of a set of rapid-fire reductions in borrowing costs in Jun if rising fears of an economic downturn triggered by a trade war materialize. At least that's where the betting is in futures markets, where contracts that settle to the Fed's policy rate were increasingly priced for qtr-percentage-point reductions in Jun, Jul & Oct following Pres Trump's remarks last weekend about a "period of transition" as he ratchets up tariffs on China, Canada & Mexico. US stocks & Treasury yields also dropped today on concern that his comments signaled a coming recession. Fed Chair Jerome Powell on Fri said the central bank is in no rush to cut rates, with the labor market still strong, inflation on a bumpy path toward the central bank's 2% goal, & uncertainty high over the effect of Trump's trade, fiscal, immigration & regulatory policies. Economists say those policies could drive prices higher & slow the economy at least in the near term. Goldman Sachs economists just cut their US growth forecast to 1.7% & raised their inflation forecast. Such a scenario could force the Fed to make a tough choice between keeping pressure on inflation by leaving its policy rate in the current 4.25%-4.50% range or cutting rates to cushion the labor market against deterioration. While markets are betting on the latter approach, some economists see the Fed slow-walking rate cuts to keep tariff-inflated prices from stoking household & business inflation expectations, which could deepen the chance of persistently high actual inflation.

Fed to deliver rapid-fire rate cuts if economic downturn happens, traders bet

Gold eased as a slight rise in the $ dented safe-haven demand amid trade war concerns, while investors awaited inflation data this week for clues on the Federal Reserve's next interest rate decision. Spot gold fell 0.2% to $2905 an ounce, while US gold futures were steady at $2911. The dollar index pared losses slightly after hitting a more than 4-month low on Fri. The $'s strength was weighing on bullion & could bring a further correction below $2900. Meanwhile, the focus remains on trade tensions. In his latest warning to Canada, Pres Trump said that tit-for-tat tariffs on dairy products & lumber could be imminent. Data showed China's consumer price index, the top consumer of the metal, missed expectations in Feb & fell at the sharpest pace in 13 months, while producer price deflation persisted.

Gold Eases As Stronger Dollar Dampens Safe-Haven Demand

Oil prices held steady as concerns over the impact of US tariff uncertainty & rising output from OPEC+ producers weighed on prices while potential sanctions on Iranian oil exports provided some support. Brent crude was up 9¢ at $70.45 a barrel while US West Texas Intermediate crude was at $67.19, up 15¢. Last week marked WTI's 7th straight weekly loss, its longest losing streak since Nov 2023, while Brent fell for a 3rd straight week. Pres Trump's protectionist policies have rattled markets around the world, imposing & then delaying tariffs on its biggest oil suppliers, Canada & Mexico, while also raising duties on Chinese goods. China & Canada have responded with their own tariffs. Investors see the uncertainty over US tariffs as a negative, but potential sanctions on Iran & Russia could provide support in the short term. Looking at the bigger picture, the lingering uncertainty is likely to keep the oil rally short-lived. Oil rebounded from a 6-month low on Fri after Trump said the US would increase sanctions on Russia if it fails to reach a ceasefire deal with Ukraine. The US is also studying ways to ease sanctions on Russia's energy sector if Russia agrees to end its war with Ukraine. Russian Deputy Prime Minister Alexander Novak said Fri that OPEC+ could reverse the decision if there was a market imbalance. On the supply side, Trump is also seeking to halt Iran's oil exports as part of efforts to pressure the country to rein in its nuclear program. Iran's Supreme Leader Ayatollah Ali Khamenei said on Sat that his country would not be bullied into negotiating.

Oil Prices Steady As Tariff Uncertainty Keeps Investors On Edge

Stocks plunged as investors processed growing concerns about the health of the US economy after Pres & his top economic officials acknowledged the possibility of a potential rough patch. Political uncertainty is expected to persist into this week, with key economic data adding to the mix of potential market-moving factors. Updates on the inflationary picture will be in focus, with the Feb Consumer Price Index scheduled for release on Wed & the Producer Price Index set to follow on Thurs.

Markets sell-off on recession fears

noreply@blogger.com (Avi) — Mon, 10 Mar 2025 11:39:00 -0400

Dow sank 401, decliners over advancers better than 3-2 & NAZ plummeted 656. The MLP index rose 3+ to 316 & the REIT index added 2 to the 414s as yields dropped. Junk bond funds drifted lower & Treasuries saw heavy buying which sharply lowered yields. Oil slid lower in the 66s & gold was off 1 to 2913.

Dow Jones Industrials

Energy Secretary Chris Wright slammed the Biden administration's climate policies today, vowing to support natural gas production. “The Trump administration will end the Biden administration’s irrational, quasi-religious policies on climate change that imposed endless sacrifices on our citizens,” Wright said at an energy conference. The energy secretary dismissed the previous administration's focus on climate as “myopic.” Natural gas is responsible for 43% of US electricity production. There “is simply no physical way that wind, solar & batteries could replace the myriad uses of natural gas,” Wright said. The energy secretary rejected accusations that he is climate change denier. Wright has previously said there is no climate crisis & carbon dioxide emissions are not a pollutant. “The Trump administration will treat climate change for what it is — a global physical phenomenon that is a side effect of building the modern world,” Wright added. The energy secretary called Biden’s policies “economically destructive to our businesses and politically polarizing.” “The cure was far more destructive than the disease,” he said.

Energy Secretary Wright vows to reverse Biden climate policies, says renewables can’t replace gas

Inflation could prove sticky while prices might pick up again, Federal Reserve Governor Adriana Kugler warned, signaling that the central bank should keep interest rates steady for the time. “I’m actually quite concerned about some of the persistence in inflation that we have been seeing,” she said during a fireside chat. She pointed to a recent acceleration of inflation expectations, which she said she watches closely for their effect on how businesses set prices & how workers negotiate wages. This in turn means they could feed back into inflation. Several recent data points have indicated concerns from consumers about prices increasing, with the latest Consumer Confidence Index from the Conference Board showing 12-month inflation expectations jumped to 6% in Feb, up from 5.2% the prior month. “I have been one of those who has supported strongly any policy that really keeps inflation expectations well anchored. And I think that’s critical, and it has served us well,” Kugler continued. Looking ahead, the Kugler indicated that prices could also rise again. “I think you know there is reason to believe, potentially, that there could be price increases and more persistent inflation,” she noted, adding that higher prices could come from “some of the policies that maybe are being considered and some that have already been put into place.” Such policies could also impact economic activity, Kugler said. “We need to probably take account of some of this persistence that I mentioned, because of different categories of prices, because of inflation expectations, and potentially because some of the new policies that are ahead of us,” Kugler continued. Touching on the frequently changing developments surrounding the administration's decision to impose tariffs on goods imported from key trading partners, including negotiations and potential retaliatory moves, Kugler said there was still “considerable uncertainty.”

Kugler says Fed should hold interest rates amid inflation risks

Treasury yields were lower as investors await a busy week of key economic data & take in the state of the US economy after comments from Pres Trump over the weekend. The benchmark 10-year Treasury yield fell 10 basis points to 4.215% & the 2-year Treasury yield dropped by nearly 9 basis points to 3.916%. One basis point is equal to 0.01% & yields & prices move in opposite directions. Investor concerns picked up over the weekend, as Trump commented that his tariffs may affect US growth & didn't rule out the possibility of a recession by saying the economy was going thru “a period of transition.” Treasury Secretary Scott Bessent made similar remarks on Fri, saying the economy may be slowing. “Could we be seeing that this economy that we inherited starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent said. “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period,” he added.

10-year Treasury slides on rising recession concerns

Stocks fell solidly as investors processed growing concerns about the health of the US economy & readied for a busy week of economic data, headlined by a report on inflation amid concerns over its resurgence under Pres Trump's unpredictable trade policy. Mar's market struggles continue to be fueled by worries over the health of the US economy. Those concerns have become wrapped up in Trump's ongoing trade salvo, as tariff negotiations between the US, Mexico & Canada dominate the headlines. Yesterday Trump addressed concerns about a potential recession, describing the economy as undergoing a period of transition.

Markets rise after jobs report and Powell's speech

noreply@blogger.com (Avi) — Fri, 7 Mar 2025 16:07:00 -0500

Dow finished up 222 in choppy trading, advancers over decliners about 4-3 & NAZ went up 126. The MLP index rebounded 6+ to the 316s & the REIT index added 3+ to the 413s. Junk bond funds fluctuated & Treasuries were sold which raised yields. Oil gained about 1 to the 67s & gold gave back 13 to 2913 (more on both).

Dow Jones Industrials

Federal Reserve Bank of New York Pres John Williams said that so far there's no evidence that inflation expectations are starting to run into any form of trouble. Based on recent data, “there is no sign of inflation expectations becoming unmoored at any forecast horizon relative to the pre-pandemic period,” Williams said in the text of remarks. Williams, who spoke earlier this week in comments that highlighted no near-term need to change the current setting of monetary policy in an environment where trade tariffs may add to future inflation, did not comment on the monetary policy & economic outlook. His comments came in reference to a paper presented at the conference. Looking at the data, “a striking feature of these expectations is that they have fully returned to levels that prevailed between mid-2013 and mid-2016, before inflation expectations drifted downward during the extended low inflation experience prior to the pandemic.” Fed officials believe the projected path of inflation exerts a strong influence on where current levels of price pressures stand. Some recent data has been pointing to a rise in expected inflation amid the Trump administration's efforts to impose huge tariffs, import taxes that will largely be paid by Americans, that most economists expect will push inflation higher. That said, expected inflation tracked by the New York Fed has thus far been muted.

Fed's Williams: Data points to stable inflation expectations

Federal Reserve Chairman Jerome Powell said that the central bank can wait to see how Pres Trump's aggressive policy actions play out before it moves again on interest rates. With markets nervous over Trump's proposals for tariffs & other issues, Powell reiterated statements he & his colleagues have made recently counseling patience on monetary policy amid the high level of uncertainty. The White House “is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation,” he said. “It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.” Noting that “uncertainty around the changes and their likely effects remains high” Powell said the Fed is “focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry, and are well positioned to wait for greater clarity.” The comments seem at least somewhat at odds with growing market expectations for interest rate cuts this year. As markets have been roiled by Trump's shifting positions on his agenda, specifically his tariff plans, traders have priced in the equivalent of 3 qtr percentage point reductions by the end of the year, starting in Jun. However, his comments indicate that the Fed will be in a wait-&-see mode before mapping out further policy easing. “Policy is not on a preset course,” he continued. “Our current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.” In his assessment, Powell also spoke in mostly positive terms about the macro environment, saying the US is in “a good place” with a “solid labor market” & inflation moving back to target. However, he did note that recent sentiment surveys showed misgivings about the path of inflation, largely a product of the Trump tariff talk. The Fed's preferred gauge showed 12-month inflation running at a 2.5% rate (2.6% when excluding food & energy). “The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue,” Powell said. Fed Governor Adriana Kugler, who was not at the forum, said in a speech today that she sees “important upside risks for inflation” & added that “it could be appropriate to continue holding the policy rate at its current level for some time.” “Wages are growing faster than inflation, and at a more sustainable pace than earlier in the pandemic recovery,” Powell said.

Powell says central bank awaiting ‘greater clarity’ on Trump policies before next move

Apple (AAPL), a Dow stock, confirmed that it's delaying the release of a new AI-infused Siri digital assistant, saying the company now expects to roll out the software sometime “in the coming year.” The effort will give Siri “more awareness of your personal context, as well as the ability to take action for you within and across your apps,” the iPhone maker said. “It’s going to take us longer than we thought to deliver on these features.” A report on Feb 14 that AAPL was struggling to finish the new capabilities, which were first touted last Jun at the company's Worldwide Developers Conference ( WWDC). At the time, the company was aiming for a May debut, a postponement from earlier plans. The new capabilities include Personal Context, a feature that lets Siri tap into user data to help with queries, & App Intents, a mechanism for more precisely controlling applications & features across its operating systems. When AAPL announced the features at WWDC, it didn't provide an arrival date for the Siri upgrade. Within the company, though, the plan was to include the new technology in iOS 18.4, which comes out in Apr. The company's artificial intelligence team has been dealing with broader challenges, including leadership concerns & engineering problems. The stock rose 3.74.

Apple Confirms Delay of AI-Infused, Personalized Siri Assistant

Gold prices edged up, poised for a weekly gain on safe-haven inflows & a US jobs report that showed weaker-than-expected job growth in Feb, suggesting the Federal Reserve will cut interest rates this year. Spot gold was up 0.3% at $2918 an ounce. Bullion has gained more than 2% so far this week, as Pres Trump's ever-changing tariff policies fueled uncertainty. US gold futures were steady at $2925. The US dollar index was on track for its worst weekly performance since Nov 4, making $-priced bullion cheaper for foreign buyers. The weaker-than-expected number gave gold a little lift & the weaker $ for the week helped. A Labor Dept report showed the US economy added 151K jobs in Feb, compared with a gain of 160K expected, while the unemployment rate was at 4.1% compared with expectations of 4%.

Gold Heads For Weekly Gain On Safe-Haven Demand, Slow US Jobs Growth

Oil prices were up but retreated from session highs after Pres Trump threatened sanctions on Russia if it fails to reach a cease-fire with Ukraine. Trump said in a post that he was "strongly considering" sanctions on Russian banks & tariffs on Russian products because its armed forces continue attacks in Ukraine. Brent crude futures were up $1.10 (1.6%), to $70.56 a barrel & US West Texas Intermediate futures were up $1.06 (1.6%) at $67.42. The markets has been overwhelmed by Russia news. For the week, Brent was down 3.8%, its biggest weekly decline since the week of Nov 11. WTI is set to finish as much as 3.6% down for its biggest weekly drop since the week of Jan 21. Brent prices fell to their lowest since Dec 2021 on Wed after US crude inventories rose and OPEC+ announced its decision to increase output quotas.

Oil up, but off highs as Trump warns new Russia sanctions possible

Stocks wavered after the crucial monthly jobs report amid market uncertainty driven by Pres Trump's volatile trade policy. Downbeat economic data has boosted bets on interest rate cuts this year. Dow gave back 1039 last week.

Markets hesitate after jobs report and with Powell on deck

noreply@blogger.com (Avi) — Fri, 7 Mar 2025 11:49:00 -0500

Dow dropped 180, decliners slightly ahead of advancers & NAZ retreated 138. The MLP index was steady in the 309s & the REIT index hardly budged in the 409s. Junk bond funds were little changed & Treasuries had limited buying which allowed yields to slip. Oil recovered 1 to the 67s on reports the US is planning to refill its oil reserve & gold slid back 7 to 2919.

Dow Jones Industrials

The US economy added jobs at a slower pace than expected in Feb, giving the Federal Reserve more labor market data to consider as it prepares to meet later this month. The Labor Dept reported that employers added 151K jobs in Feb, below the estimate of 160K jobs. The unemployment rate was 4.1%, slightly higher than expectations that it would remain at 4%. The number of jobs added in the prior 2 months were both revised, with job creation in Dec revised up by 16K from a gain of 307K to 323K; while Jan was revised down by 18K from a gain of 143K to 125K. Taken together, the revisions reduce previously reported employment by 2K jobs. Private sector payrolls added 140K jobs in Feb, slightly below the 142K estimated. Federal gov employment declined by 10K jobs in Feb as the Dep of Gov Efficiency (DOGE) began to make cuts. Across all levels of gov, employment increased by 11K, with state govs adding 1K jobs & local govs 20K jobs to more than offset the federal job losses. Manufacturing added 10K jobs, above the estimate for a 5K gain & the retail sector shed 6K jobs in Feb & employment in the sector has shown little net change over the past year. The labor force participation was 62.4%, having changed little over the last year & falling slightly from the 62.6% reported in Jan. The number of people considered to be long-term unemployed, defined as being jobless for 27 weeks or more, was 1.5M – slightly higher than the 1.4M reported last month. The long-term unemployed accounted for 20.9% of all unemployed people. The number of workers employed part-time for economic reasons rose by 460K to 4.9M. These workers would've preferred full-time work but were working part-time because their hours were reduced, or they could not find full-time jobs.

US economy added 151,000 jobs last month, below expectations as the federal workforce shrinks

Treasury Secretary Scott Bessent acknowledged some signs of weakness in the US economy. “Could we be seeing that this economy that we inherited starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent added. “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period,” he continued. Describing the economy as inherited is a reference to the administration under then-Pres Biden. Under Biden, the US saw generally strong economic growth. However, there were signs of a slowdown in late 2024, & inflation remained above the Federal Reserve's 2% target. In its first few months, the Trump administration has taken steps to reshape global trade policies & to reduce the federal workforce. There has not been much hard economic data reflecting Trump’s term, though consumer surveys have shown a decline in confidence. One area where Trump's policies could be felt quickly are tariffs. The pres has hit Canada, Mexico & China with tariffs in his first 2 months in office, though the Canada & Mexico efforts now have a lengthy list of exemptions. The administration plans to implement broader tariffs in Apr. “Tariffs are a one-time price adjustment,” Bessent said, pushing back against the idea that tariffs would fuel continued inflation. Bessent also said the administration was “not getting much credit” for areas where costs have fallen since Trump’s inauguration, such as oil prices & mortgage rates.

Treasury Secretary Bessent says economy could be ‘starting to roll a little bit’

Treasury yields fell as investors digested a Feb nonfarm payrolls report that showed weaker-than-expected jobs growth. The benchmark 10-year Treasury yield dropped more than 2 basis points to 4.261% & the 2-year Treasury yield was down more than 3 basis points at 3.931%. 1 basis point is equal to 0.01% & yields & prices move in opposite directions. “Friday’s jobs report may change the calculus for the Federal Reserve’s plans on interest rates this year, and it’s possible that we see the next rate cut come as soon as June,” said Glen Smith, chief investment officer at GDS Wealth Management. Federal Reserve Chair Jerome Powell is expected to speak later in the day, which investors will monitor closely for hints about future monetary policy. Traders are also mulling Pres Trump's latest tariff reprieve. Goods imported from Canada & Mexico into the US, & which comply with the North American trade agreement known as the USMCA, will be temporarily excluded from 25% tariffs, a White House official said. The reprieve will last until Apr 2. “Markets are all over the place trying to price tariff impacts, which is really hard to do when the goal post moves, disappears, and morphs by the second,” said Jamie Cox, managing partner at Harris Financial Group.

10-year Treasury yield falls after weaker-than-expected jobs growth

Stocks stumbled as investors assessed the crucial monthly jobs report amid market uncertainty driven by Pres Trump's volatile trade policy. The stakes were high for Feb's job report as stocks flounder amid fears of weakening economic growth.

Markets get clobbered on tariff whiplash and fatigue

noreply@blogger.com (Avi) — Thu, 6 Mar 2025 16:05:00 -0500

Dow settled down 427 after limited buying into the close trimmed losses, decliners over advancers 5-2 & NAZ tumbled 483. The MLP index fell 4+ to the 308s & the REIT index sank 9+ to 410. Junk bond funds remained slightly higher & Treasuries had limited selling which allowed yields to rise. Oil crawled higher in the 66s & gold was off 2 to 2923 (more on both below).

Dow Jones Industrials

The US trade deficit widened to a record in Jan as companies scrambled to secure goods from overseas before Pres Trump imposed tariffs on America’s largest trading partners. The gap in goods & services trade widened 34% from the prior month to $131B, Commerce Dept data showed. The deficit was larger than all but 1 estimate in a survey of economists. The value of imports rose 10% to a record $401B, while exports increased 1.2%. The figures aren't adjusted for inflation. Trump promised sweeping tariffs during the 2024 presidential campaign, & on Tues he handed down sweeping 25% duties on Canada & Mexico while doubling tariffs on Chinese goods to 20%. Canada & China immediately announced retaliatory measures & Mexico is responding on Sun. Trump said yesterday he's exempting automakers from newly imposed tariffs on Mexico & Canada for 1 month as a temporary reprieve following pleas from industry leaders. But Canadian Prime Minister Justin Trudeau is not open to lifting full package of retaliatory duties if Trump leaves any tariffs on Canada in place. Canada's trade surplus with the US jumped to a record at the start of the year, driven by exports of cars, auto parts & oil, separate data from Statistics Canada showed today.

US trade deficit surged to record ahead of Trump tariffs

Pres Trump announced that he would exempt Mexico from tariffs on goods under the US–Mexico–Canada Agreement (USMCA) until Apr 2. He announced the extension in a post to Truth Social following a conversation with Mexican Pres Claudia Sheinbaum Pardo. "After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement," Trump wrote. "This Agreement is until April 2nd. I did this as an accommodation, and out of respect for, President Sheinbaum. Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the US &, likewise, stopping Fentanyl. Thank you to President Sheinbaum for your hard work and cooperation!" Sheinbaum Pardo thanked Trump for the extension. "Many thanks to President Donald Trump. We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties," she wrote in Spanish. "We will continue working together, particularly on issues of migration and security, which include reducing the illegal crossing of fentanyl into the United States, as well as weapons into Mexico. As President Trump mentions, Mexico will not be required to pay tariffs on all those products within the T-MEC. This agreement is until April 2, when the United States will announce reciprocal tariffs for all countries." A White House official said that "President Sheinbaum presented President Trump with tangible evidence that there’s been [an] increase in fentanyl seizures in the last 30 days and demonstrated real commitment to focus on curtailing cartels and drug trafficking."

Trump halts tariffs on some Mexican products after talking to country's president

President Donald Trump’s sanctions against Iran are designed to shut down the country's oil industry & “collapse its already buckling economy,” Treasury Secretary Scott Bessent said. The US is deploying sanctions against Iran aggressively for “immediate maximum impact,” Bessent said. Trump’s goal is to slash Iran's oil exports of 1.5M barrels per to a trickle, the Treasury secretary said. “We are going to shut down Iran’s oil sector and drone manufacturing capabilities,” Bessent added. The administration also intends to cut off Tehran's access to the intl financial system, he said. Prices for US crude oil & the global benchmark Brent turned positive after Bessent's comments. West Texas Intermediate rose 6¢ to $66.37 per barre while Brent gained 16¢ to $69.46. “Making Iran broke again will mark the beginning of our updated sanctions policy,” the Treasury secretary, a former global investment manager, said. “If I were an Iranian, I would get all my money out of the rial now,” he said. Trump re-imposed his pressure campaign on Iran thru a presidential memorandum on Feb 4. 2 days later, the Treasury Dept started imposing sanctions on an intl network shipping Iranian oil to China. Oil prices fell to multiyear lows on yesterday as Trump's tariffs against Canada, Mexico & China raised fears among investors that economic growth will slow & crude demand will falter. OPEC+ also confirmed this week that it will gradually bring 2.2M barrels per day back to the market starting in Apr.

U.S. will collapse Iran’s economy by shutting down its oil industry, Treasury Secretary says

Gold prices fell about 1% as investors booked profits after a 3-day rally, with markets eyeing US jobs data for clues on the Federal Reserve's interest rate path amid rising global trade tensions. Spot gold, which was down 0.5% at $2904 an ounce has gained more than 10% this year. It hit a record high of $2956 on Feb 24. US gold futures also fell 0.5% to $2912. Market focus is on the escalating global trade war after the US imposed 25% tariffs on imports from Mexico & Canada on Tues along with new duties on Chinese goods. Asian shares rose as investors hoped trade tensions could ease after Pres Trump exempted some automakers from tariffs for a month. Investors are turning to gold as a safe haven asset as geopolitical & economic uncertainty looms.

Gold Prices Fall On Profit-Taking, US Data In Focus

Oil prices were steady after falling for the past 4 sessions as US tariffs on Canadian crude supplies are likely to be eased, but investors remain wary of remaining tariffs on Mexico & major producers' plans to increase output. Brent crude futures were trading up 42¢ (0.6%) at $69.72 a barrel while US West Texas Intermediate (WTI) crude was up 40¢ (0.6%) at $66.71 a barrel. Brent has plunged 6.5% in the previous 4 sessions, falling to its lowest since 2021 on Wed, while WTI has dropped 5.8% over the same period to its lowest since May 2023. Prices fell after the US imposed tariffs on Canadian & Mexican trade, including energy imports, at the same time major producers decided to raise output quotas for the first time since 2022. The decline eased as the US said it would exempt automakers from 25% tariffs, raising optimism the impact of the trade dispute could be mitigated. In addition, sources familiar with the discussions said Pres Trump could remove a 10% tariff on Canadian energy imports, such as crude oil & gasoline, that comply with existing trade agreements. Tariffs also remain in place on Mexican crude oil imports from the US, a smaller supply stream than Canadian crude but an important flow for US refineries on the Gulf Coast.

Oil Prices Steady After Days Of Declines, But Traders Wary Of Tariffs, Supply Impact

Stocks tanked to session lows after more tariff whiplash from the Trump administration. Trade-war uncertainty has persisted as investors weighed how far Pres Trump would be willing to negotiate on tariffs. Today, Trump said he would pause tariffs on some Mexican goods & the White House later said the delay also includes goods from Canada.

Markets slide as traders wait for clarity on Canada and Mexico tariffs

noreply@blogger.com (Avi) — Thu, 6 Mar 2025 11:44:00 -0500

Dow slid 151, decliners over advancers better than 3-2 & NAZ dropped 168. The MLP index was off 2 to the 311s & the REIT index was off 7+ to the 412s. Junk bond funds eased higher & Treasuries saw more selling which brought higher yields. Oil was flattish in the 66s & gold gave back 6 to 2919.

Dow Jones Industrials

Pres Trump's efforts to pare down the federal gov workforce left a mark on the labor market in Feb, with announced job cuts at their highest level in nearly 5 years, outplacement firm Challenger, Gray & Christmas reported. The firm reported that US employers announced 172K layoffs for the month, up 245% from Jan & the highest monthly count since Jul 2020 during the heightened uncertainty from the Covid pandemic. In addition, it marked the highest total for the month since 2009 during the global financial crisis. More than 1/3 of the total came from billionaire entrepreneur Elon Musk's efforts, with Trump’s blessing, to reduce the federal headcount. Challenger put the total of announced federal job cuts at 62K, spanning 17 agencies. “With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,” Andrew Challenger, the firm's workplace expert, said. Jan's planned reductions brought the total thru the first 2 months of the year to 222K, also the highest for the period since 2009 & up 33% from the same time in 2024. The report comes amid heightened concern about the state of the labor market & the economy in general as Trump's plans for tariffs, slashing the size of gov & mass deportations & stringent immigration restrictions take shape. There has been a slew of mixed indicators about where things are heading, with consumer surveys showing concern over inflation & layoffs while other data shows economic strength continuing. Payrolls processing firm ADP reported yesterday that private sector hiring grew by just 77K in Feb. According to the Challenger report, it's not just gov cutting back. Retail saw 39K cuts for the month as companies such as Macy's & Forever 21 announced sharp staff reductions. The sector's cuts in 2025 are up nearly sixfold from where they were in 2024. Technology firms also listed another 15K in reductions, though the sector's cuts are actually lower from a year ago. On the upside, firms announced plans in Feb to hire a total of 35K new workers, putting the year to date total up 159% from a year ago.

Layoff announcements soar to the highest since 2020 as DOGE slashes federal staff

Philadelphia Federal Reserve Pres Patrick Harker said that trouble may be brewing for a US economy that is currently in good shape but showing signs of stress in the consumer sector & risks to the inflation outlook. "Unemployment still low, still getting growth, but there are threats to this. We're starting to see that confidence is starting to wane" on both the consumer & business fronts, Harker said. While inflation has been retreating, "I'm worried that right now that is at risk, that decline is at risk," he said, while adding it's still his expectation that price pressures will continue to retreat. Harker also said there is mounting evidence that the consumer sector is "under stress," especially for those who aren't wealthy. While Harker did not say what he thinks the central bank should do with interest rates in this environment of uncertainty, he added "I'm an avowed pragmatist when it comes to policy" & in highly uncertain periods, "you don't go very fast in either direction." He spoke as Trump administration policies roil the economy & markets & kindle fears of a resurgence in inflation & slowdown in economic growth. Markets have been pricing in more Fed rate cuts this year amid worries about growth and hiring. Harker, who is due to retire from his position at the Philadelphia Fed later this year, also said he's worried about gov borrowing & the $'s ongoing role as the world's reserve currency. He said the currency's status is underpinned by the rule of law, but sees threats on that front. When it comes to keeping the $ strong, "that's not one I lose sleep over right now, but I'm starting to worry more and more."

Fed's Harker sees warnings signs for the US economy

Treasury yields moved higher as investors breathed a sigh of relief over the potential for tariff exemptions & awaited key jobs data. The benchmark 10-year Treasury yield climbed almost 2 basis points to 4.284% & the 2-year Treasury yield was slid more than 3 basis points to 3.957%. 1 basis point is equal to 0.01%, & yields & prices move in opposite directions. Investors are feeling optimistic about the possibility of future tariff exemptions after The White House announced a 1-month delay to tariffs on automakers whose cars comply with the US-Mexico-Canada Agreement. “Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage,” Press Secretary Karoline Leavitt said on behalf of Pres Trump. This was after Trump implemented 25% tariffs on imports from Canada & Mexico on Tues, as well as an additional 10% duty on China. Canada, Mexico & China have said they will respond with reciprocal measures as a result. Investors will also be watching the big data release of the week, non-farm payrolls, due tomorrow. That comes after the volume of unemployment claims came in lower than economists anticipated today.

10-year Treasury yield ticks higher as investors digest potential tariff relief

Stocks fell but pared steeper losses after Commerce Secretary Howard Lutnick hinted that more temporary exemptions are likely within the Trump administration's current 25% tariff policy on Canada & Mexico. Tech remains leading the retreat. Fri could be a critical day for investors, with a high-stakes jobs report & a Powell speech.

Markets rebound after delay on Trump's tariffs

noreply@blogger.com (Avi) — Wed, 5 Mar 2025 16:05:00 -0500

Dow shot up 485 (near session highs), advancers over decliners 2-1 & NAZ rose 267. The MLP index was off 1+ to the 314s & the REIT index gained 4+ to 420. Junk bond funds remained mixed & Treasuries had more selling which raised yields. Oil fell 1+ to the 66s & gold added 9 to 1929 (more on both below).

Dow Jones Industrials

The White House announced a 1-month tariff exemption for automakers after Pres Trump spoke a day earlier with heads of General Motors (GM), Ford Motor (F) & Stellantis (STLA). Automakers have urged Trump to waive 25% tariffs on Mexico & Canada on vehicles that comply with the US-Mexico-Canada Agreement's rules of origin. “Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage,” Press Secretary Karoline Leavitt said on behalf of Trump. Leavitt confirmed the automakers requested today's call with Trump, who mentioned it during his address to Congress later in the day. The White House said it granted a 1-month delay for tariffs on automakers whose cars comply with USMCA, which was negotiated under Trump's first term in office. It was not immediately clear whether just vehicles will be exempt, or if automotive parts would also be included. The exemption allows for additional preparation & discussions between the White House and automotive industry on tariffs. It also more closely aligns with potential vehicle tariffs on imports from outside of North America. Trump previously said those tariffs would be confirmed on Apr 2, in a push for automakers to invest more in the US for vehicle production.

Trump grants automakers one-month exemption from tariffs

A sharp drop in mortgage interest rates finally lit a fire under loan demand. Both current homeowners & potential homebuyers jumped back into the market, after a lackluster showing for this year so far. Total mortgage application volume jumped 20.4% last week compared with the previous week, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index. This was not only the first increase in 3 weeks, but it is an outsized weekly move. Mortgage rates were clearly the culprit. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806K or less, decreased to 6.73% from 6.88%, with points falling to 0.60 from 0.61, including the origination fee, for loans with a 20% down payment. That is the lowest level since last Dec. “Mortgage rates declined last week on souring consumer sentiment regarding the economy and increasing uncertainty over the impact of new tariffs levied on imported goods into the U.S.,” said Joel Kan, an MBA economist. “Those factors resulted in the largest weekly decline in the 30-year fixed rate since November 2024.” Applications to refinance a home loan, which are most sensitive to weekly moves in interest rates, jumped 37% for the week & were 83% higher than the same week 1 year ago. While the vast majority of borrowers today still have loans with rates well below what is being offered today, more recent buyers from the last two years are now able to benefit from a refinance. Applications for a mortgage to purchase a home rose 9% for the week but were still just 2% higher than the same week 1 year ago. “This is a period where we typically see purchase activity ramp up and purchase applications were up over the week and continued to run ahead of last year’s pace, more green shoots as we head into the spring homebuying season,” Kan added. While the weekly jump in purchase volume is certainly positive, it is still historically low. Buyers are up against high home prices, limited inventory & more uncertainty about the overall economy. The new tariffs levied on China, Canada & Mexico are widely expected to raise home prices, especially for new construction. Mortgage rates moved very slightly lower to start this week, according to a separate survey from Mortgage News Daily. Today, when the tariffs went into effect, the stock & bond markets rode a roller coaster, with bond yields, which mortgage rates follow, dropping along with stocks. “As the day progressed, stocks and bonds bounced back in the other direction and the move was big enough for most mortgage lenders to reprice back toward slightly higher rates,” wrote Matthew Graham, COO at Mortgage News Daily.

Weekly mortgage demand surges 20% higher, after interest rates drop to the lowest since last year

"Six Districts reported no change, four reported modest or moderate growth, and two noted slight contractions," the US central bank said in its summary of observations from the commercial & community contacts of each of the Fed's 12 regional banks. "Overall expectations for economic activity over the coming months were slightly optimistic." Known collectively as the "Beige Book," the document provides a snapshot of the nation's economic experience & mood 2 weeks ahead of each Fed policy meeting. Over its 54 pages, there were 47 mentions of uncertainty, up from 17 in the Jan report, with a doubling of references to tariffs since then. With all the data collection complete by Feb 24, it may already be stale. Trump imposed 25% tariffs on most imports from Mexico & Canada, & doubled tariffs on Chinese goods to 20%, actions that many investors & analysts said went far beyond what they expected. Canada & China immediately retaliated with new import taxes on US goods & Mexican Pres Claudia Sheinbaum promised her own response this weekend. Although the White House today said autos coming in thru the US-Mexico-Canada trade agreement would be exempt from the tariffs for a month, some economists say the new levies augur stronger inflation & slower growth, a combination that could present a difficult policy choice for the Fed. That challenging mix is already evident in surveys showing rising consumer inflation expectations, slowing business activity, a drop in new factory orders & an increase in prices paid for manufacturing materials. The central bankers have signaled for now that they will keep the benchmark overnight interest rate in the current 4.25%-4.50% range at their Mar 18-19 meeting. They want to keep downward pressure on inflation that is making slow but bumpy progress toward their 2% goal, & they view the labor market as healthy & not in need of the support that a rate reduction could deliver.

US activity rises slightly and uncertainty also up, Fed survey shows

Gold prices edged lower despite a lower $ as investors held back from making large bets ahead of the release of US payrolls data later this week, although trade war jitters kept prices above the key level of $2900 per ounce. Spot gold was down 0.1% at $2913 an ounce & US gold futures settled 0.2% higher at $2926. There's still buying interest out there now, but there's going to be some measure of caution ahead of Fri's payrolls data although the underlying trend remains favorable. Concerns about Pres Trump's tariff measures have driven up the prices of safe-haven gold to 11 record highs this year, peaking at $2956 on Feb 24 & culminating in an overall year-to-date gain of 11%. In an address to Congress late yesterday, Trump said further tariffs would follow on Apr 2, including "reciprocal tariffs" & non-tariff actions aimed at balancing out years of trade imbalances. That move would follow new 25% tariffs on most imports from Mexico & Canada that took effect yesterday, along with a doubling of duties on Chinese goods to 20%.

Gold takes a breather as focus turns to US jobs data

Oil prices fell for a 3rd day, as investors worried about OPEC+'s plan to continue raising output in Apr & Pres Trump's tariffs on Canada, China & Mexico escalated trade tensions. Brent crude futures fell $1.02 (1.4%) to settle at $70.02 a barrel & US West Texas Intermediate (WTI) crude futures fell $1.33 (1.9%) to settle at $66.93 a barrel. Crude prices closed near their lowest levels in months the previous day, weighed down by expectations that US tariffs & retaliatory tariffs by affected countries would slow economic growth & reduce fuel demand. The US tariffs on China, Canada & Mexico have prompted swift retaliatory action from each country, raising concerns about slowing economic growth & the impact on energy demand. Canada & China quickly retaliated against Trump's tariffs yesterday & Mexican Pres Claudia Sheinbaum said the country would respond, without providing details. Meanwhile, the Organization of the Petroleum Exporting Countries & its allies including Russia (OPEC+) decided on Mon to increase output for the first time since 2022, further pressuring crude prices.

Oil Prices Fall For Third Day On OPEC+ Output Hike, Trump Tariffs

Stocks are rising following positive jobs data & signs of tariff relief, while oil futures drop to a 6-month low due to OPEC+ raising production & tariff concerns. With all the turmoil, gold remains at record levels above 2900.

Markets waver on tariff uncertainty and weak jobs data

noreply@blogger.com (Avi) — Wed, 5 Mar 2025 11:59:00 -0500

Dow was off 76, decliners barely ahead of advancers & NAZ pulled back 86. The MLP index retreated 5+ to 311 & the REIT index eased back 1+ to 414. Junk bond funds were mixed & Treasuries had a little selling which lifted yields. Oil dropped a big 2+ to the 65s & gold rose another 15 to 2936.

Dow Jones Industrials

Companies in the private sector added just 77K jobs in Feb, payroll processing firm ADP said. The figure, the lowest since Jul, is well below the estimate for 140K jobs & also more than the prior month's upwardly revised reading of 186K. Annual pay was up 4.7%, the same as the prior month. "Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month," said Nela Richardson, ADP's chief economist. "Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead." Leisure & hospitality added 41K positions, leading job creation in Feb. Professional & business services added 27K jobs, while financial activities & construction each contributed 26K. Manufacturing & other services added 18K & 17K jobs, respectively. On the negative side, trade, transportation & utilities lost 33K jobs in Feb, education & health services decreased by 28K & information services lost 14K. Natural resources & mining jobs decreased by 2K. Large businesses, those with 500 or more employees, added 37K jobs in the month. Businesses with 50 - 499 employees hired 46K workers. Establishments with fewer than 50 employees lost 12K jobs.

Private sector job growth falls well below expectations

Commerce Secretary Howard Lutnick signaled a possible agreement between the Trump administration & leaders of Canada & Mexico that could see some of the tariffs imposed on both nations rolled back. Canada & Mexico, 2 of the US' biggest trading partners, have imposed retaliatory tariffs following those imposed by Pres Trump that went into effect yesterday. Trump said the increases were in response to both countries not doing enough to curb the flow of illegal immigration & illicit drugs across their borders with the US. Yesterday Lutnick said host that Trump will likely look to meet America's neighbors in the middle with a focus on the US-Mexico-Canada Agreement (USMCA), which was created to create fairer trade between the nations. "He's really looking carefully at that trying to figure out if there is a way in there that he can come in the middle, where he can give the Canadians and Mexicans something, but they have to got do more," he said. "They've got to end fentanyl death. You can't just say it's OK that people can die. That is just not a thing." "It's not gonna be a pause. None of that pause stuff. But I think he's going to figure out, you do more, and I'll meet you in the middle someway," he added. "We're going to probably be announcing that tomorrow. So somewhere in the middle will likely be the outcome — the president moving with the Canadians and Mexicans but not all the way," he continued. The secretary said the administration has made its concerns about the border & illegal drugs known to Canadian & Mexican officials. "He's really looking carefully at that trying to figure out if there is a way in there that he can come in the middle, where he can give the Canadians and Mexicans something, but they have to got do more," he said. "They've got to end fentanyl death. You can't just say it's OK that people can die. That is just not a thing." "It's not gonna be a pause. None of that pause stuff. But I think he's going to figure out, you do more, and I'll meet you in the middle someway," he added. "We're going to probably be announcing that tomorrow. So somewhere in the middle will likely be the outcome — the president moving with the Canadians and Mexicans but not all the way," he noted. The secretary said the administration has made its concerns about the border & illegal drugs known to Canadian & Mexican officials. "If you respect us as your best trading partner, end it," he added. "And you have got to end fentanyl. And the way we're going to describe fentanyl is very simple — autopsied American guts. It's got to end." Effective yesterday, US imports from China, the 3rd-largest US trading partner, became subject to a new 10% tariff on top of the initial 10% tariff he imposed on Chinese goods last month.

Trump commerce secretary hints at trade compromise with neighbors

New orders for US-manufactured goods rebounded in Jan amid a surge in commercial aircraft bookings, but the broader manufacturing sector's recovery is likely to be hampered by tariffs on imports. Factory orders increased 1.7% after a revised 0.6% decline in Dec, the Commerce Dept's Census Bureau said. The forecast had factory orders increasing 1.6% after a previously reported 0.9% drop in Dec. Factory orders advanced 3.5% on a year-on-year basis in Jan. Manufacturing, which accounts for 10.3% of the economy, has been showing tentative signs of recovery after being undercut by the Federal Reserve's aggressive interest rate hikes in 2022 & 2023. But a trade war, triggered by Pres Trump's new 25% tariffs on imports from Mexico & Canada, which took effect yesterday, along with a doubling of duties on Chinese goods to 20%, is seen snuffing out the recovery. Domestic manufacturers rely heavily on imported raw materials & the duties are expected to increase production costs, which are then passed on to buyers of the finished products. An Institute for Supply Management survey on Mon showed fears about import levies dominated responses from manufacturers in Feb as well as discussions about who will pay for tariffs. Civilian aircraft orders soared 94% in Jan after dropping 29% in Dec. Orders for motor vehicles & parts decreased 1.5%. Transportation equipment orders rebounded 9.9%. Excluding transportation equipment, factory orders gained 0.2%.

US factory orders rebound in January on commercial aircraft

Stocks are drifting lower with selling in the last hour. Traders are uncertain about a rebound after a sharp sell-off, amid hopes that Pres Trump could soon scale back his new tariffs on Canada & Mexico. Soft data on labor-market hiring revived worries about a slowdown in Canada & Mexico.

Markets flip positive as Trump tariffs take effect

noreply@blogger.com (Avi) — Tue, 4 Mar 2025 16:05:00 -0500

Dow settled down 670 with selling into the close which pared a midday rebound, decliners over advancers 5-2 & NAZ gave back 65. The MLP index continued weak, down 5+ to the 317s, & the REIT index was off 5 to the 416s. Junk bond funds slid lower & Treasuries were sold in the PM, taking yields higher. Oil rebounded & finished steady at 68 & gold rose 22 to 2923 (more on both below).

Dow Jones Industrials

Pres Donald Trump is pushing back against Canadian Prime Minister Justin Trudeau, calling his tariffs "very dumb," saying that "when he puts a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!" Trump made remarks were after Trudeau slammed the Trump administration's new 25% tariffs. Trudeau previously announced 25% retaliatory tariffs on American goods in response to Trump's tariffs that went into effect today on Canadian imports. "So today the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense," Trudeau said. "Canadians are reasonable, and we are polite, but we will not back down from a fight, not when our country and the well-being of everyone in it is at stake," he continued. "I want to speak directly to one specific American. Donald, in the over eight years you and I have worked together, we've done big things," Trudeau added. "And now we should be working together to ensure even greater prosperity for North Americans in a very uncertain and challenging world. Now, it's not in my habit to agree with the Wall Street Journal. But Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do. We – two friends fighting – is exactly what our opponents around the world want to see." Trump signed an exec order authorizing an additional 25% tariff on imports from Canada & Mexico, & an additional 10% tariff on Chinese imports. Energy imported from Canada, including oil, natural gas & electricity, would be taxed at an additional 10%. The retaliatory tariffs Canada is imposing on $155B of US goods went into effect today. Canada will start with tariffs on $30B worth of American goods, followed by tariffs on $125B of American products in 21 days.

Trump responds to Trudeau's rebuke of hard-hitting tariffs officially going into effect

A US economy praised for its surprising resilience to a pandemic, high inflation & rapid interest rate hikes faces a new challenge from Pres Trump's self-declared trade war, seen by economists as a recipe for fewer jobs, slower growth & higher prices. The fallout, assuming Trump does not backtrack in the face of falling stock markets & cracks to consumer & business sentiment, is expected to be broad, deep & time-consuming as the world's largest economy adjusts to the overnight shock of a 25% tariff on most goods coming from Mexico & Canada, both close trading partners & geographic neighbors, & an additional 10% duty on imports from China. Canada & China have announced retaliatory tariffs on US imports, while Mexico is expected to do so this coming weekend. A price shock on its face, the tariffs could also begin to kill demand, said Diane Swonk, chief economist at KPMG, particularly if consumers retreat & firms facing heightened uncertainty curb investment and hiring. The move also risks unintended consequences - if, for example, banks tighten credit on small businesses instead of extending suddenly expensive customs bonds. A recession by the start of next year is not out of the question, Swonk said, with some analysts expecting a downturn could sweep the continent given the dependence of Canada & Mexico on exports to the US market. Retaliation could further deepen the impact. "We've got now multiple trade wars on multiple fronts," Swonk said. Her analysis shows the effective tariff rate spread across roughly $3T in US imports might rocket to 16% by early 2026 from a current baseline of about 3% if Trump follows thru on all his threats. "That would be the highest rate since 1936," during the Great Depression, and "gets you flirting with stagflation" - the toxic mix of weak growth, high joblessness & persistent inflation that epitomized the 1970s. While the US economy is ordered differently now than in the 1930s or 1970s, the sweep of Trump's actions & the uncertainty about what comes next still unnerved markets that had hoped he was only bluffing about tariffs to gain leverage in negotiations with trading partners.

Storm clouds gather over US economy as Trump kicks off trade war

Federal Reserve Bank of New York Pres John Williams said that Trump administration tariffs will have some impact on driving up price pressures but there is still a lot of uncertainty how this will all play out. “I do factor in some effects” from tariffs on inflation that will play out over the year, Williams said at an event in New York. He views monetary policy as being in a “good place” & “I don’t see any need to change it” right now.

Fed's Williams: Tariffs may push up inflation, rate policy in good place

Gold prices rose, driven by a weaker $ heightened safe-haven demand amid escalating trade conflicts following Pres Trump's imposition of new tariffs. Spot gold was up 0.6% at $2911 an ounce. Bullion has gained nearly 11% so far this year & hit a record high of $2956 on Feb 24. US gold futures settled 0.7% higher at $2920. The implementation of tariffs brings a high level of uncertainty to the markets, & safe-haven products like gold continue to do well. Trump's new 25% tariffs on imports from Mexico & Canada today. He also doubled duties on Chinese goods to 20%. China hit back immediately with additional 10%-15% tariffs on certain US imports from Mar 10 & a series of new export restrictions for designated US entities. Canada retaliated with 25% tariffs on $30B worth of US imports with immediate effect today. The US dollar index fell 0.6%, hitting its lowest level since Dec & making $-priced gold less expensive for buyers holding other currencies.

Gold rises on weaker dollar, trade war fears after Trump tariffs

Oil prices dropped again as traders faced up to a double whammy of new tariffs & plans to boost production in a number of OPEC countries. Brent crude futures, the intl benchmark, fell 1.3% to $70.68 a barrel, putting them down 3% so far in Mar & West Texas Intermediate futures, the US benchmark, were down 0.9% to $67.74, bringing their loss in Mar to around 3% as well. Both are more than 5% down in 2025. Pres Trump confirmed that 25% tariffs on Canada & Mexico were “all set” to take effect today. He also signed an order increasing levies on China by another 10%. Several members of OPEC+ expect to start raising production next month. In total, 8 countries will begin restoring output, adding about 2.2M barrels a day over 18 months.

Oil Prices Drop Again

US markets eliminated all of their post-election gains as stocks responded to fresh tariffs on Canada, Mexico & China. Rising fears of a full-on trade war drove yesterday's sell-off after Pres Trump said there was "no room left" for Canada or Mexico to strike a deal to mitigate promised tariffs. Stocks are retreating as markets assess the likely impact of Trump's broad tariffs on America's top trading partners. The measures, fresh 25% tariffs on Canada & Mexico, & a doubling in China duties to 20%, were signed into effect today. Comments by John Williams (above) were refreshing & brought back buyers in the PM.

Markets retreat on fears Trump tariffs will lead to a global recession

noreply@blogger.com (Avi) — Tue, 4 Mar 2025 11:56:00 -0500

Dow dropped 674, decliners over advancers a hefty 5-1 & NAZ sank 186. The MLP index tumbled 8+ to the 314s & the REIT index fell 4+ to the 416s. Junk bond funds were a little lower & Treasuries had limited buying which lowered yields. Oil was off 1 to the 67s & gold rose 15 to 2916.

Dow Jones Industrials

Pres Trump imposed tariffs on Canada & Mexico and an additional levy on China on today, escalating tensions with key trading partners. The US began imposing a 25% tariff on goods from Canada & Mexico today, & an additional 10% levy on Chinese imports as Trump looks to curtail drug trafficking & illegal immigration. Earlier this year, the administration delayed these tariffs to allow Canada & Mexico time to negotiate trade deals aimed at addressing US border security & halting the flow of drugs like fentanyl. Last week, Trump reaffirmed his decision to impose the levies, stating that "drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels." "We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled," Trump wrote, adding that "China will likewise be charged an additional 10% Tariff on that date." He also teased other tariffs launching Apr 2, but did not offer details. Shortly after his restoration to power, the White House said Trump is working "to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country." These levies are sending a message "that the flow of contraband drugs like fentanyl to the United States, through illicit distribution networks, has created a national emergency, including a public health crisis," the White House continued.

Tensions escalate with key trading partners as Trump's sweeping tariffs take effect

Treasury Secretary Scott Bessent projected confidence in Pres Trump's expansive plans to tariff foreign nations even as the stock market slumped in reaction to the first round of levies on Canada & Mexico. “Over the medium term, which is what we’re focused on, it’s a focus on Main Street. Wall Street’s done great, Wall Street can continue to do fine, but we have a focus on small business and consumers,” Bessent said. “So we are going to rebalance the economy.” Bessent argued that there would be a transition period as the tariffs kick in this month & next, but he argued that the market selloff was only temporary. “With the China tariffs, I am highly confident that the Chinese manufacturers will eat the tariffs — prices won’t go up,” Bessent added. “With Canada and Mexico, I think we’re in the middle of a transition, and as you mentioned, Honda moving to Indiana is a great start.” So far, Trump has imposed 25% tariffs on all Mexican imports & most Canadian ones — except for energy products, which face a 10% rate. He also has doubled his new charge on China to 20%, while 25% tariffs on steel & aluminum imports are due to take effect next week. He's also pledging to implement reciprocal levels of tariffs on foreign nations, & to place additional levies on lumber, pharmaceuticals, semiconductor chips, copper & auto imports, beginning as soon as Apr 2.

Bessent shrugs off tariff sell-off, says Wall Street isn't the focus

Best Buy (BBY) posted fiscal 4th-qtr earnings & revenue that topped expectations, but CEO Corie Barry projected that prices for US consumers would rise as Pres Trump's tariffs on China & Mexico go into effect. Barry said China & Mexico are the company's top 2 supply chain sources, with about 55% & 20% of its products sourced from those countries, respectively. “Trade is critically important to our business and industry. The consumer electronic supply chain is highly global, technical and complex,” Barry added. “We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely.” Barry added that the company directly imports only 2-3% of its products & that it's reviewing & adjusting its supply chain sourcing. The company typically carries 6 weeks of supply at a time & that she expects pricing changes to affect the 2nd thru 4th qtrs of the fiscal year. “The giant wild card here, obviously, is how the consumers are going to react to the price increases, in light of a lot of price increases potentially throughout the year and a general consumer confidence that is showing a little signs of weakness at the moment,” CFO Matt Bilunas said. 4th-qtr EPS was 54¢, compared with $2.12 during the year-ago period. Adjusting for a noncash goodwill impairment charge related to Best Buy Health & 4th-qtr EPS was $2.58. Comparable sales, revenue from online sales & stores open at least 14 months, rose 0.5% year over year for the qtr, excluding the additional week in fiscal 2024. BBY had forecast a change ranging from flat to down 3%. In the US, quarterly comparable sales rose 0.2% year over year. Full-year fiscal 2025 revenue came in at $41.5B, down 4.4% from $43.4B in fiscal 2024. Fiscal 2025 had 1 fewer week than the prior-year period, which the retailer estimates added $735M in revenue to its fiscal 2024 total. For fiscal 2026, the company issued full-year guidance of $41.4 - $42.2B in revenue - comparable sales growth of 0% - 2% year over year. “We believe consumer behavior will be largely similar to last year – remaining resilient but still dealing with high inflation that is driving expenses up across their lives, making them value focused and thoughtful about big ticket purchases. And, at the same time, we continue to see a consumer that is willing to spend on high price point products when they need to or when there is technology innovation,” Bilunas said. BBY said the guidance does not account for the impact of recent or proposed tariffs. The stock fell 12.93 (15%).

Best Buy shares plunge as CEO warns price increases are ‘highly likely’ due to Trump tariffs

Markets eliminated all of their post-election gains as stocks deepened their sell-off with fresh tariffs on Canada, Mexico & China now officially in effect. Notably, NAZ is set to close down at least 10% from its record closing high on Dec 16, which would mark correction territory for the tech-heavy index. Rising fears of a full-on trade war drove yesterday's sell-off after the pres said there was "no room left" for Canada or Mexico to strike a deal to mitigate promised tariffs. Stocks are retreating as markets assess the likely impact of Trump's broad tariffs on America's top trading partners. The measures, fresh 25% tariffs on Canada & Mexico, & a doubling in China duties to 20%, were signed into effect today.

Markets sink as losses accelerate on looming Trump tariffs

noreply@blogger.com (Avi) — Mon, 3 Mar 2025 16:04:00 -0500

Dow tumbled 649, advancers over decliners 2-1 & NAZ nosedived 497. The MLP index was off 2+ to the 323s & the REIT index slid back 1+ to 420. Junk bond funds saw a little buying & Treasuries were in demand, raising yields. Oil was off 1+ to the 68s as traders weigh Trump’s tariff plans & gold jumped 51 to 1899 following recent selling (more on both below).

Dow Jones Industrials

Semiconductor giant Taiwan Semiconductor Manufacturing Co (TSMC) is expected to announce a $100B investment, a White House source said. TSMC, a Taiwan-based chipmaker that builds advanced semiconductors which are used to power smartphones & artificial intelligence (AI) models, is expected to announce the investment following meetings with Pres Trump. The investment is expected to focus on advanced semiconductor manufacturing facilities over the next 4 years. TSMC has previously invested in a chip factory in Arizona with an initial $12B investment, & last Apr it announced an additional investment of $25B to add a 3rd factory at its Arizona facility by 2030 to bring its total investment there to $65B. The company also received an award of up to $6.6B in grants from the CHIPS Act for the Arizona facility as well as other federal funds from the law that aimed to bolster domestic semiconductor manufacturing in the US. TSMC said that it "looks forward to discussing our shared vision for innovation and growth in the semiconductor industry, as well as exploring ways to bolster the technology sector along with our customers."

Chip giant TSMC expected to announce $100B investment in US

The risks for higher inflation are on the rise, St Louis Federal Reserve Pres Alberto Musalem said. During a keynote address at the National Association for Business Economics conference, Musalem noted that his baseline case is for inflation to gradually move toward the central bank's 2%. This scenario requires inflation expectations to remain anchored & stable. However, “near-term inflation expectations have risen substantially over the last few weeks, and that’s something I’m watching closely,” Musalem added. The Feb reading on The Conference Board's consumer confidence index reflected the largest one-month drop since Aug 2021, as inflation expectations rise. The Institute for Supply Management's manufacturing PMI also showed a sharp increase in prices within the sector for the month. “Businesses and households are clearly more sensitive to expectations of higher inflation,” Musalem added. “That’s why the risks seem more skewed to the upside, but the baseline is for continued disinflation.” Investors came into 2025 expecting the Fed to lower rates this year. However, the central bank kept rates at their current 4.25%-4.50% range after its Jan meeting, where it noted that inflation remained “somewhat elevated.” The CME Group's FedWatch tool also shows that traders are pricing in a 93% likelihood that the Fed will keep rates at their current levels.

Inflation will move toward 2% target, but risks to outlook are rising, says Fed’s Musalem

Data from the Institute for Supply Management (ISM) show the Manufacturing PMI receding to 50.3 in Feb, down from 50.9 in the previous month & falling behind forecasts of 50.5. Meanwhile, the Prices Paid Index, which tracks inflation, advanced to 62.4 from 54.9, the Employment Index ticked lower to 47.6 from 50.3, & the New Orders Index deflated to 48.6, from 55.1. The Greenback maintains its downbeat performance at the beginning of the week, motivating the US Dollar Index to deflate to the 106.60 region.

US ISM Manufacturing PMI surprised to the downside in February

Federal Reserve rate cut bets are still on the table for Jun. Gold price is slowly but surely making its way higher as Pres Trump remains silent on tariffs. Gold's price is set to revisit the high in the Asian session near $2876 currently after a steady positive thus far. Tariffs are still set to hit tomorrow for Mexico & Canada & additional tariffs on China, they are not really triggering another flight into gold. Traders will need to look for new headlines about tariffs & there is still the chance that Pres Trump will change his mind. Meanwhile, traders are still digesting Fri's turn of events. The spat between Ukraine Pres Volodymyr Zelenskyy on one side & Pres Trump & VP JD Vance is still making headlines. The surprise move that took place afterward in London, with the UK extending several Bs in loans to be covered with the frozen Russian assets in Europe, was actually something that Pres Trump was after. With no rare earth deal in place, the televised spat in the Oval Office & now London reeling in the agreement on the frozen Russian assets, all bets could be off the table with even possibly the US withdrawing from NATO. The US 10-year benchmark rate is currently trading around 4.23%, a touch higher from its fresh low at 4.19% on Fri.

Gold props up over 0.50% at the start of the week despite tariffs being set to hit on Tuesday.

Oil prices fell about 2% to a 12-week low on reports OPEC+ will proceed with a planned oil output increase in Apr on worries what US tariffs would do to global economic growth & oil demand. The Organization of the Petroleum Exporting Countries (OPEC+) has decided to proceed with a planned Apr oil output increase, 3 sources from the producer group said. OPEC+ has been cutting output by 5.85M barrels per day (bpd), equal to about 5.7% of global supply, agreed in a series of steps since 2022 to support the market. Brent futures were down $1.48 (2.0%) to $71.33 a barrel, while West Texas Intermediate (WTI) crude fell $1.65 (2.5%) to $68.11. That puts both crude benchmarks on track for their lowest closes since Dec 6. Pres Trump will decide today what levels of tariffs he will impose early tomorrow on Canada & Mexico amid last-minute negotiations over border security & efforts to halt the inflow of fentanyl opioids. Trump has vowed to impose 25% tariffs on all imports from Canada & Mexico, with 10% on Canadian energy products.

Oil prices fall 2% to 12-week low with OPEC+ set to increase output

Stocks plummeted as investors assessed the economic impact of the Trump administration's tariff plans after Pres Trump indicated there was "no room left" for negotiations with Canada & Mexico. Tech stocks led the sell-off with NAZ dropping 3%. Federal Reserve's next meeting fast approaches, & the US economy faces the test of disproving investors' fears about growth. First qtr economic growth is expected to slide following a string of weaker-than-expected economic data.

Markets waver as economic and tariff worries swirl

noreply@blogger.com (Avi) — Mon, 3 Mar 2025 11:21:00 -0500

Dow fell 40, advancers over decliners 2-1 & NAZ slid back 77. The MLP index added 1 to the 326s & the REIT index rose 3 to the 421s. Junk bond funds inched higher & Treasuries saw a little buying which reduced yields. Oil remained in the 69s & gold rebounded 48 to 2896.

Dow Jones Industrials

Bitcoin rallied over the weekend after Pres Trump announced a US strategic crypto reserve & teased new details about the highly anticipated move by his cryptocurrency industry backers. Bitcoin was last trading above the $93,000 level, which is 19% above its Fri low of $78,226. Over the weekend, Trump announced the creation of a strategic crypto reserve – a pivot from the “bitcoin stockpile” he previously touted – that he said will include ether, XRP, Solana's SOL token & Cardano's ADA, in addition to Bitcoin. Bitcoin rose as high as $95,000, while the smaller coins rocketed double digits. It was welcome news to investors, who have been anxious for cryptocurrencies to come out of their consolidation. Last week, bitcoin fell under the key $90K level for the first time in 3 months to, at one point, 25% below its Jan all-time high. That break below support put it at risk of a bigger slide toward $70K. Losses in smaller, riskier coins have been even steeper.

Bitcoin jumps nearly $14,000 in three days on Trump’s crypto reserve announcement

Treasury Secretary Scott Bessent said that Pres Trump's proposed tariffs are unlikely to raise inflation, in part because China will “eat any tariffs that go on.” His comments come just 2 days before the tariffs are scheduled to go into effect tomorrow. Trump is expected to impose 25% tariffs on imports from Mexico & Canada. The pres also announced the US would impose an extra 10% duty on Chinese imports, on top of the 10% tariff he levied on the country on Feb 4. Some economists have raised concerns about the possibility that the tariffs could lead to an increase in inflation & keep interest rates elevated into 2026. When asked Bessent was asked what impact the tariffs could have on the average household, he said, “Well, we don’t know yet because it’s path-dependent, but what I can tell you is that I’m not worried about China,” “China will pay for the tariffs because their business model is exporting their way out of this inflation.” “They will eat any tariffs that go on,” Bessent added. China’s Ministry of Commerce said Fri that it “firmly opposes” Trump's latest tariff hike & vowed to retaliate as necessary. After the US enacted an initial round of tariffs in Feb, China raised duties on certain US energy imports & added 2 US companies to an unreliable entities list. Experts suggested China could take similar measures again following the addition of fresh tariffs. “If the U.S. insists on its own way, China will take all necessary countermeasures to defend its legitimate rights and interests,” a Ministry of Commerce spokesperson previously said.

Treasury Secretary Bessent says Trump tariffs won’t cause inflation to increase

Treasury yields sat near flat as investors awaited more clarity on Pres Trump's plans to impose tariffs. The benchmark 10-year yield Treasury yield slid 3 basis points to 4.199% & the 2-year yield Treasury yield added about 1 basis point, siting at at 4.001%. 1 basis point is equal to 0.01% & yields & prices move in opposite directions. Trump's tariff plans are again in focus this week, with 25% duties on imports from Canada & Mexico expected to go into effect tomorrow. Commerce Secretary Howard Lutnick said that the 25% tariff against Canada & Mexico are “fluid” which means it may be lower. The 10% duty on China imports is “set,” he added. Traders have expressed concerns about the effects of tariffs on the economy, as legendary investor Warren Buffett made a rare comment against Trump's policies over the weekend. Buffett, the chairman & CEO of Berkshire Hathaway, said tariffs are “an act of war, to some degree” and could trigger inflation & hurt consumers. “Over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay ’em!” Buffett added. “And then what? You always have to ask that question in economics. You always say, ‘And then what?’”

Treasury yields are little changed as tariff deadline nears

Stocks were mixed as a looming deadline fueled uncertainty around Pres Trump's tariff plans & investors looked ahead to the monthly jobs report & key retail earnings. Mar trading is kicking off with investors encountering more questions than answers as tariff deadlines loom, the Federal Reserve's next meeting fast approaches & the US economy faces the test of disproving investors encountering more questions.

Markets bounce back but remain lower in February

noreply@blogger.com (Avi) — Fri, 28 Feb 2025 11:08:00 -0500

Dow climbed 291, advancers over decliners better than 2-1 & NAZ went up 137. The MLP index added 1+ to the 321s & the REIT index added 2+ to the 207s. Junk bond funds were mixed & Treasuries had modest buying which lowered yields (more below). Oil slid back into the 69s after yesterday's rally on worries over tariffs & gold dropped another 42 to 2853.

Dow Jones Industrials

The Federal Reserve's preferred inflation gauge showed prices rose as expected in Jan at a pace that remains above the central bank's target level as its efforts to tamp down inflation continue. The Commerce Dept reported that the personal consumption expenditures (PCE) index was up 0.3% from the prior month & 2.5% on an annual basis. Those figures were in line with the estimates. Core PCE, which excludes volatile food & energy prices, rose 0.3% for the month & 2.6% from a year ago, in line with estimates. Federal Reserve policymakers are focusing on the PCE headline figure as they try to slow the pace of price increases to their target of 2%, though they view core data as a better indicator of inflation. Headline PCE declined slightly from 2.6% in Dec, while core PCE dropped from 2.9% last month. Headline PCE showed that prices for goods increased 0.5% after they had been relatively flat in recent months. Prices for services rose 0.2% last month, which was a slower pace than the 0.4% in Dec. Wages & salaries were up 0.4% in Jan from a month ago, the same as the increase seen in Dec. The personal savings rate as a percentage of disposable income was 4.6% in Jan, the highest rate recorded since 4.8% in Jun.

Inflation gauge favored by Fed showed prices grew as expected in January

China’s Ministry of Commerce said that it “firmly opposes” PresTrump's latest threat to ramp up tariffs on Chinese goods & vowed retaliation, if necessary. “If the U.S. insists on its own way, China will take all necessary countermeasures to defend its legitimate rights and interests,” a Ministry of Commerce spokesperson said. “We urge the U.S. side to not repeat its own mistakes, and to return as soon as possible to the right track of properly resolving conflicts through dialogue on equal footing.” The statement followed Trump's announcement yesterday that the US would impose an additional 10% duty on Chinese imports on March 4, which coincides with the start of China’s annual parliamentary meetings. The new tariffs would be on top of the 10% further tariffs that Trump levied on China on Feb 4. Trump announced the 2 rounds of China duties were being imposed in response to the Asian country's role in the fentanyl trade. The addictive drug, precursors to which are mostly produced in China & Mexico, has led to tens of thousands of overdose deaths each year in the US. “In the short term, China’s response will likely include raising tariffs on select U.S. imports, adding more American firms to its unreliable entity list, and potentially further tightening export controls on critical minerals,” Neil Thomas, a fellow on Chinese politics at the Asia Society, said. He noted he nevertheless expects Beijing’s retaliation will remain “measured,” as Chinese Pres Xi Jinping has an incentive to meet with his American counterpart & initiate negotiations to avoid measures that put greater pressure on already sluggish economic growth. China's exports have been a rare bright spot in an otherwise slowing economy. The US is China's largest trading partner on a single-country basis. While Beijing may maintain a “restrained” stance, upcoming moves will likely target industries that matter the most to Trump supporters, said Alfredo Montufar-Helu, head of the China Center at The Conference Board.

China vows to retaliate as necessary after Trump threatens more tariffs

Treasury yields moved lower as investors sifted through new economic data, including inflation numbers that largely matched expectations. The benchmark 10-year yield Treasury yield fell by about 5 basis points to 4.241% & the 10-year yield Treasury yield was down 4 basis points at 4.034%. 1 basis point is equal to 0.01% & yields & prices move in opposite directions. The personal consumption expenditures index rose 0.3% month over month in Jan & 2.5% year over year. The core PCE index, which excludes volatile food & energy prices, also rose 0.3% last month compared to Dec & 10-year yield Treasury yield. Those readings were in-line with expectations. Investors are anxiously monitoring Pres Trump's various tariff threats & orders. His plans for 25% tariffs on imports from Mexico & Canada will go into effect from Mar 4, after a 1-month pause. Trump said that China, which is already being charged tariffs, will face an additional 10% tariff on the same data. He also said he would impose 25% tariffs on imports from the EU but is walking back these threats after UK Prime Minister Keir Starmer visited the White House yesterday. “I think there is a very good chance that in the case of these two great friendly countries, I think we could end up with a real trade deal ... where the tariffs wouldn’t be necessary. We’ll see,” Trump told reporters.

10-year Treasury yield eases slightly after inflation data comes in as expected

Stocks inched higher following a key inflation reading that largely met expectations & as fresh tariff threats added to uncertainty over Big Tech prospects. Markets are heading into the last trading day of Feb facing sharp weekly & monthly losses after suffering the buffets of tariff moves.

Markets fall with selling in Nasdaq stocks leading the decline

noreply@blogger.com (Avi) — Thu, 27 Feb 2025 16:06:00 -0500

Dow dropped 193 with selling in the PM, decliners over advancers 2-1 & NAZ plunged 530 (session low). The MLP index was flattish in the 321 & the REIT index added 2+ to 415. Junk bond funds fluctuated & Treasuries had limited selling, lifting yields. Oil rose 1+ taking it over 70 & gold tumbled 30 to 280 (more on both below).

Dow Jones Industrials

Initial filings for unemployment benefits hit their highest level of the year last week in another potential signs of weakness in the labor market. Jobless claims for last week totaled a seasonally adjusted 242K, up 22K from the previous week's revised level & higher than the estimate for 225K, according to a Labor Dept report. The level of claims matched the highest since early Oct 2024 & comes amid questions over broader economic growth & worrying signs in recent consumer sentiment surveys. Pres Trump has been taking aggressive measures to reduce the federal workforce through Elon Musk's Dep of Gov Efficiency advisory board. The efforts so far have resulted in tens of thousands of jobs cuts & are expected to continue. In DC, new claims totaled 2K, an increase of 421 (26%) according to numbers not adjusted for seasonal factors. That is the largest number for the city since Mar 25, 2023, according to Labor Dept records, & is consistent with a surge that began in early Jan. However, the claims trend does not appear to be spreading to the surrounding areas. Virginia & Maryland both saw small declines on the week. California, which also has a large population of federal gov workers, saw a drop as well. “This report showed a healthy gain, but not the first ripples of what likely will be a major wave of unemployment claims, both from layoffs in the federal workforce and at companies such as Starbucks and Southwest,” wrote Robert Frick, corp economist at Navy Federal Credit Union. Continuing claims, which run a week behind, showed a small decrease and stood at 1.86M. However, the 4-week moving average of claims, which helps smooth out weekly volatility, rose sharply to 224K, an increase of 8500.

Weekly jobless claims jump to 242,000, more than expected in latest sign of economic softening

Nvidia (NVDA), the chipmaker at the center of an AI spending boom, delivered good-but-not-great quarterly numbers, disappointing investors accustomed to blowout results. Sales will be about $43B in the fiscal first qtr, which runs through Apr, NVDA said. Analysts had estimated $42.3B with some projections ranging as high as $48B. The company also warned that gross profit margins would be tighter than anticipated as it rushes to roll out a new chip design called Blackwell. And there's the risk of US tariffs weighing on results. The mixed outlook comes at a shaky time for the AI industry. NVDA shares have dipped this year on concerns that data center operators will slow spending. Chinese startup DeepSeek also has sparked fears that chatbots can be developed on the cheap, potentially reducing the need for NVDA's powerful chips for AI. Though NVDA execs addressed most of those issues, it's become harder for the company to produce blockbuster earnings reports. The company got $11B of revenue from Blackwell in the 4th qtr, something NVDA described as the “fastest product ramp” in its history. “Demand for Blackwell is amazing,” CEO Jensen Huang said. Though the company's fiscal 4th-qtr sales topped estimates, they did so by the smallest margin since Feb 2023. Earnings, meanwhile, had the narrowest amount of upside since Nov 2022. The stock dropped 9.42 (7%).

Nvidia Sinks After More Subdued Growth Fails to Wow Investors

Mortgage rates fell for a 6th consecutive week to the lowest level in more than 2 months, mortgage buyer Freddie Mac said. Freddie Mac's latest Primary Mortgage Market Survey, showed that the average rate on the benchmark 30-year fixed mortgage decreased to 6.76% from last week's reading of 6.85% & the average rate on a 30-year loan was 6.94% a year ago. "The drop in mortgage rates, combined with modestly improving inventory, is an encouraging sign for consumers in the market to buy a home," said Sam Khater, Freddie Mac's chief economist. The average rate on the 15-year fixed mortgage fell to 5.94% from 6.04% last week. 1 year ago, the rate on the15-year fixed note averaged 6.26%. Mortgage rates ranged from 6.91% to 7.04% in Jan & the National Association of Realtors (NAR) said that in comparison to 1 year ago, the monthly mortgage payment on a $300K home increased by an extra $50 to $1590.

Mortgage rates fall to lowest level in over 2 months

Gold prices dropped to their lowest level in over 2 weeks as the $ strengthened, with investors waiting for key inflation data that could shed light on the Federal Reserve's monetary policy path. Spot gold was down 1.1% at $2885 an ounce, after hitting its lowest level since Feb 12 earlier in the session. Prices hit a record high of $2956 on Mon, driven by safe-haven flows. US gold futures settled 1.2% lower at $2895. The direction of gold is very evident & these short-term bumps & profit-taking is just a normal part of the cycle. The dollar index, opens new tab rose 0.7%, making greenback-priced bullion more expensive for holders of other currencies. Investors' focus now turns to the US Personal Consumption Expenditures (PCE) index due tomorrow, expected to remain at 0.3%. Any significant deviation from the estimated PCE data could trigger a negative reaction, based on concerns that the Fed is less likely to lower interest rates. Markets expect the Fed to deliver at least 2 rate cuts this year, with about 55 basis points of easing priced in for 2025.

Gold hits two-week low with firm dollar, inflation data in focus

Oil prices rose more than 2% as supply concerns resurfaced after Pres Donald Trump revoked a license granted to US oil major Chevron (CVX) opens new tab to operate in Venezuela. However, investors were still keeping an eye on signs of a potential peace deal in Ukraine, which could result in higher Russian oil flows. Brent crude oil futures were up $1.53 (2.1%) at $74.06 a barrel & US West Texas Intermediate crude oil futures rose $1.64 (2.4%) to $70.26. The contracts had settled in the previous session at their lowest levels since Dec 10. Markets like clarity as opposed to uncertainty. Unless a clear path is presented on tariffs & Eastern European peace, oil prices will remain on the defensive with sporadic & spontaneous headline-based rallies. The CVX license revocation means the company will no longer be able to export Venezuelan crude. And if Venezuelan state oil company PDVSA exports oil previously exported by CVX, US refineries will be unable to buy it because of US sanctions. CVX exports about 240K barrels per day (bpd) of crude from its Venezuela operations, more than a qtr of the country's entire oil output.

Oil climbs more than 2% after Trump cancels Chevron's Venezuela license

Tech stocks led the major averages lower as NVDA shares sold off following the AI chipmaker's its earnings report & investors took stock of the economy amid Pres Trump's latest tariff pledges. Investors dug into NVDA's quarterly earnings beat, which signaled plenty of scope for growth as it eased worries about DeepSeek & faltering AI demand. Meanwhile, more signs emerged of a sluggish US economy. Data today showed GDP grew at an unrevised 2.3% annualized pace last qtr, confirming a slowdown from the previous qtr.

Markets seasaw despite Trump tariffs declaration & Nvidia's earnings

noreply@blogger.com (Avi) — Thu, 27 Feb 2025 11:40:00 -0500

Dow jumped 429, advancers were only even & NAZ was off 39. The MLP index slid 1 to 320 & the REIT index added 3+ to 416. Junk bond funds were mixed & Treasuries saw more selling which increased yields. Oil rebounded 1+ to 70 after Trump moves to end Venezuela crude deal & gold dropped 41 to 2889 on profit taking.

Dow Jones Industrials

The US economy grew at a rate of 2.3% in the 4th qt, in line with the prior reading & expectations. The Commerce Department's Bureau of Economic Analysis (BEA) released its first revision of the estimate for 4th qtr GDP, which found the US economy grew at an annual rate of 2.3% in the 4th qtr, which runs from Oct-Dec. The forecast had expected the economy to grow at a 2.3% rate in the qtr. The BEA's preliminary estimate of GDP in the qtr that was released last month also came in at 2.3%, though the forecast had expected 2.6% growth. GDP growth slowed in the 4th qtr when compared with the 3rd qtr, which had 3.1% growth. The BEA noted the deceleration in the 4th qtr was primarily due to downturns in investment & exports that were partially offset by an acceleration in consumer spending, while imports declined. Consumer spending grew 4.2% in the 4th qtr, with increases in both services & goods. It was up from 3.7% in the 3rd quarter and 2.8% in the 2nd qtr. Gov spending grew at a faster pace than initially estimated – it was up 2.9% in the 4th qtr, a larger increase than the initial 2.5% estimate, though it was slower than the 5.1% increase in the 3rd qtr. Business investment declined 5.7% in the 4th qtr, a deeper drop than the initial estimate of 5.6%. It had been relatively flat in the 3rd qtr, when it grew 0.8%. Last qtr, investment in equipment decreased 9% while investment in structures dipped 3.2% – both steeper declines than in the initial estimate. Personal savings as a share of disposable income came in at 3.8% in the 4th qtr, continuing a gradual decline that spanned 2024 after a 5.4% reading in the first qtr.

US economy grew during final months of Biden's presidency

Pres Trump said that his proposed tariffs on Mexico & Canada will go into effect on Mar 4, & that China will be charged an additional 10% tariff on the same date. The sweeping 25% tariffs on imports from Mexico & Canada had been paused on Feb 3 for 1 month. But the Trump administration has recently sown confusion about whether they would go back into effect when the delays expired. Trump clarified that they would. He claimed that illicit drugs “are still pouring into our Country from Mexico and Canada at very high and unacceptable levels,” despite pledges from both US neighbors to boost their efforts to police their borders. “We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” Trump wrote. He also announced that China, which already faces 10% US tariffs on its products, “will likewise be charged an additional 10% Tariff on that date.” Trump added in his post, “The April Second Reciprocal Tariff date will remain in full force and effect.” A White House official confirmed that the new duties on Beijing mean US tariffs on Chinese imports will total 20%.

Trump says Mexico, Canada tariffs will start March 4, plus additional 10% on China

High mortgage rates & elevated home prices combined to crush home sales in Jan. Pending sales, which are based on signed contracts for existing homes, dropped 4.6% from Dec to the lowest level since the National Association of Realtors (NAR) began tracking this metric in 2001. Sales were down 5.2% from Jan 2024 & these sales are an indicator of future closings. “It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” said Lawrence Yun, NAR's chief economist. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.” While weather may have been a factor, sales rose month-to-month in the Northeast & fell in the West, which would have seen the smallest impact of cold temperatures. Sales fell hardest in the South, which has been the most active region for home sales in recent years. Mortgage rates were also higher in Jan. The average rate on the popular 30-year fixed loan spent the first ½ of Dec below 7% but then began rising. It was solidly above 7% for all of Jan, according to Mortgage News Daily. Home prices have been easing over the last few months in certain areas, with more sellers cutting prices, but nationally they are still higher than they were a year ago. This drop in sales also came despite the fact that the inventory of homes for sales in Jan, including homes that were under contract but not yet sold, increased by 17% compared with last year, growing on an annual basis for the 14th month in a row, according to Realtor.com. “More for-sale inventory has the potential to generate more contract signings, but climbing home supply is not evenly distributed across the U.S.,” noted Hannah Jones, an economist with Realtor.com. “Moreover, many areas with high demand see relatively low for-sale inventory, which limits progress towards more home sales.”

Pending home sales drop to the lowest level on record in January

Stocks were mixed as investors weighed AI chipmaker Nvidia's (NVDA) earnings report & took stock of the economy amid President Trump's latest tariff pledges. Investors are digging into NVDA's quarterly earnings beat, which signaled plenty of scope for growth as it eased worries about DeepSeek & faltering AI demand. The results initially met a muted response as its profit outlook raised doubts & the stock erased early trading gains to slip more than 2%.

Markets struggle while safe haven gold continues over $2900

noreply@blogger.com (Avi) — Wed, 26 Feb 2025 16:04:00 -0500

Dow dropped 188, decliners over advancers about 5-4 & NAZ slid back 48. The MLP index remained in the 319s & the REIT index fell 2+ to the 412s. Junk bond funds fluctuated & Treasuries had buying which reduced yields. Oil was about even at 69 & gold added 20 to 2928 (more on both below).

Dow Jones Industrials

An ominous measure that the Federal Reserve considers a near surefire recession signal again has reared its head in the bond market. The 10-year Treasury yield passed below that of the 3-month note in trading today. In market lingo, that’s known as an “inverted yield curve,” & it's had a sterling prediction record over a 12- to 18-month timeframe for downturns going back decades. In fact, the New York Fed considers it such a reliable indicator that it offers monthly updates on the relationship along with percentage odds on a recession occurring over the next 12 months. At the end of Jan, when the 10-year yield was about 0.31 percentage point clear of the 3-month, the probability was just 23%. However, that is almost certain to change as the relationship has shifted dramatically in Feb. The reason the move is considered a recession indicator is the expectation that the Fed will cut short-term rates in response to an economic retreat in the future. Though markets more closely follow the relationship between the 10 & 2-year notes, the Fed prefers measuring against the 3-month as it is more sensitive to movements in the central bank’s federal funds rate. The 10-year/2-year spread has held modestly positive, though it also has flattened considerably in recent weeks. To be sure, yield curve inversions have had a strong but not perfect forecasting history. In fact, the previous inversion happened in Oct 2022, & there’s still been no recession 2½ years later. So while there’s no certainty that growth will turn negative this time around, investors worry that expected growth from an ambitious agenda under Pres Trump may not happen.

The Fed’s favorite recession indicator is flashing a danger sign again

Mortgage interest rates dropped again last week, hitting the lowest level in 2 months, but demand for mortgages didn't respond. Total mortgage application volume fell 1.2% from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766K or less) decreased to 6.88% from 6.93%, with points dropping to 0.61 from 0.66 (including the origination fee) for loans with a 20% down payment. “Treasury yields moved lower on softer consumer spending data as consumers are feeling somewhat less upbeat about the economy and job market. This pushed mortgage rates lower, with the 30-year fixed rate decreasing to 6.88%, the lowest rate since mid-December,” said Joel Kan, MBA’s VP & deputy chief economist. Applications to refinance a home loan, which had been surging through much of Jan early Feb, fell 4% for the week but were 45% higher than the same week 1 year ago. Last year at this time, mortgage rates were 16 basis points higher. “Although overall refinance application activity remained fairly weak, FHA refinance applications saw an 8 percent increase over the week,” Kan added. Applications for a mortgage to purchase a home were flat for the week & 3% higher than the same week 1 year ago. The resale market is seeing more supply, partly because homes are sitting on the market longer. But while there are more options, prices are not easing much, as inventories are still historically low. “Long story short, bonds are in fashion at the moment,” wrote Matthew Graham, COO at Mortgage News Daily, noting that when demand rises, rates fall. “The broadest and most common explanations have to do with expectations for a downshift in global economic growth in response to domestic tariffs and cost-cutting efforts.”

Mortgage rates drop to lowest since mid-December, but demand still falls short

Eli Lilly (LLY) said it will invest at least $27B to build 4 new manufacturing sites in the US, as demand for its blockbuster weight loss and diabetes injections soars & the company develops new drugs for other conditions. It comes as drugmakers & companies across different industries work to build goodwill with Pres Trump, who has emphasized reshoring manufacturing to the US & reducing reliance on foreign supply chains. He has threatened companies, and pharmaceutical businesses in particular, with tariffs if they do not manufacture products in the US. Eli Lilly made the announcement at an event in DC, emphasizing the political undertones of the strategy. The event featured several speakers from the Trump administration, including Kevin Hassett, director of the White House National Economic Council, & Commerce Secretary Howard Lutnick, who explicitly tied the announcement to Trump’s policies. Lutnick said the investment is “exactly what the Trump administration is all about, which is building and manufacturing and reshoring in America, investing in America, building in America.” He thanked LLY for “doing exactly what the president was hoping would happen.” Lutnick added that “if you want to understand the tariff policy” of the US, “I have just articulated it.” The move brings LLY's total US manufacturing investments to more than $50B in recent years. The other $23B is from the company’s investments in new plants & site expansions since 2020, which has helped ease supply shortages of its popular drugs. The stock rose 15.57.

Eli Lilly plans at least $27 billion in new U.S. manufacturing investments

Gold prices eased after a recent record rally, while investors looked towards inflation data due later this week & the latest developments on Pres Trump's tariff plans. Spot gold fell 0.7% to $2894 an ounce. Bullion, a preferred hedge against uncertainty & inflation, hit a record high of $2956 on Mon amid trade war concerns emerging from tariff threats. US gold futures fell 0.4% to $2908. Yesterday, Trump ordered a probe into potential new tariffs on copper imports to rebuild US production of a metal critical to electric vehicles, military hardware, the power grid & many consumer goods. Investors' focus was also on the US Personal Consumption Expenditures (PCE) report, the Federal Reserve's preferred inflation gauge, due on Fri. Higher than expected inflationary could delay further rate cuts, which is priced in; gold is 1 of the quintessential hedges against those inflationary pressures.

Gold prices slip, investors eye upcoming US PCE data

Oil prices held at 2-month lows as a potential peace deal between Russia & Ukraine continued to weigh on prices while lower US crude stockpiles provided some support. Brent crude was down 19¢ to $72.83 a barrel & US West Texas Intermediate crude oil futures fell by 13¢ to $68.80. Prospects for a peace deal between Russia & Ukraine are improving & the market was also watching for potential implications of a minerals deal between the US & Ukraine. This would take us a step closer to Russian sanctions being lifted, removing much of the supply uncertainty hanging over the market. Downside risks on oil prices increased because Pres Trump's policies, such as initiatives to support higher oil exports by Iraq. The US & Ukraine agreed terms of a draft minerals deal central to Trump's efforts to bring a swift end to the war in Ukraine. Supporting price, US crude stocks fell by 640K barrels last week.

Oil holds at two-month low on rising supply concern

Stocks pared gains after Pres Trump spoke about his tariff plans at a cabinet meeting as investors also braced for Nvidia's (NVDA) crucial earnings report due out after the bell. The leg lower in stocks & risk assets came after Trump said tariffs against the EU would include 25% on autos among other goods, while levies against Mexico & Canada will go into effect on Apr 2.

Markets climb despite tariff threats and export controls

noreply@blogger.com (Avi) — Wed, 26 Feb 2025 11:56:00 -0500

Dow went up 119, advancers over decliners 2-1 & NAZ gained 210. The MLP index inched up 1+ to the 321s & the REIT index stayed in the 419s, yesterday's close. Junk bond funds barely budged & Treasuries were even. Oil was flat at 69 & gold recovered 7 at 2926.

Dow Jones Industrials

A new analysis by the Bank of America Institute finds that small businesses appear to be gaining financial momentum, though policy changes related to tariffs could spur inflation & with it a new challenge to profitability. The Bank of America Institute's report analyzed the bank's small business account data & found that in the 6-month period from Aug-Jan, deposit growth among small business clients surpassed total payments growth for the first time in 3 years. "The positive is that revenues are rising and we're seeing that for the first time over the past three years where deposits are outpacing payments, so that's really good momentum entering 2025 and small business optimism is up," Bank of America economist Taylor Bowley said. "But that doesn't mean that there isn't still risk for cost pressures to curb small business enthusiasm and growth going forward." While inflation has slowed substantially since its 40-year high of 2022, it remains elevated & its impact on wages has contributed to continuing cost growth for small businesses. "Revenues seem to be rising, which is a really good thing because small businesses historically operate on pretty small profit margins," Bowley added. "But the one thing is that costs don't necessarily seem to be declining." Bowley said that payroll is 1 of the largest expense categories for small businesses & that wage inflation as it relates to payroll has been a key factor in rising costs faced by those companies, though workforce expansion may also be a factor. "Wage inflation is not the sole driver in terms of what we're seeing with payroll growth. It's an indication that small businesses are still able to keep people on the payroll, and also potentially expand their labor force," she continued.

Lowe's (LOW) topped quarterly earnings & revenue expectations & said its sales slump should end in the year ahead. Full-year total sales are expected to $83.5-84.5B, which on the upper end would be higher than its total revenue of $83.7B for fiscal 2024. It said it expects comparable sales to be flat to up 1% year over year & EPS to be $12.15 - $12.40. CEO Marvin Ellison stressed that LOW still faces “a challenging home improvement market.” High mortgage rates have created “a significant gap between today's rates for homebuyers and the lower rates many homeowners currently enjoy.” That's led to a “lock-in effect,” which has kept consumers from buying & selling. Even so, LOW has pressed ahead with its own strategy, so it is “well-positioned to capitalize on the home improvement recovery and take share when the market inflects.” Shares rose after the company’s leaders said they expected sales trends to improve, but still be roughly flat from last year. In the 3-month period that ended Jan 31, EPS was $1.99, compared with $1.77 in the year-ago period. Revenue fell from $18.6B in the year-ago qtr. Adjusted EPS figure excluded an $80M pretax gain associated with the 2022 sale of its Canadian retail business, which added 6¢ per share to 4th-qtr earnings. In the fiscal 4th qtr, trends looked better. Comparable sales rose 0.2%, boosted by online gains, high single-digit growth among home professionals & sales related to rebuilding efforts after hurricanes Milton & Helene. That slightly positive metric ended 8 consecutive qtrs of comparable sales declines. It also exceeded expectations for a 1.8% decline in comparable sales. The stock jumped 9.09 (4%).

Lowe’s beats Wall Street expectations as it starts to break out of sales slum

General Motors (GM) is raising its quarterly div & initiating a new $6B share repurchase program as the company attempts to reward investors amid slowing industry sales & profits. GM announced it is increasing its quarterly div 25% to 15¢ per share, matching that of crosstown rival Ford (F). The higher div is expected to take effect with the company's next planned payout, scheduled to be announced in Apr. Under the $6B repurchase plan, $2B in buybacks are expected to be completed during the 2nd qtr. “The GM team’s execution continues to be strong across all three pillars of our capital allocation strategy, which are to reinvest in the business for profitable growth, maintain a strong investment grade balance sheet, and return capital to our shareholders,” said CEO Mary Barra. Barra last month suggested the company would continue to return capital to shareholders this year, pending board approval. The automaker has announced $16B in stock buyback programs since 2023 that have resulted in the retiring of more than 400K shares outstanding. Despite such actions & reporting strong quarterly results, including regularly outperforming expectations, shares of GM are down more than 12% this year. The stock rose 2.46.

GM raises quarterly dividend, initiates $6 billion stock buyback

Tech stocks led the US indices higher, eyeing a comeback investors for Nvidia's (NVDA) crucial earnings & assessed the prospects for Pres Trump's deep tax cuts. Investors are looking to potentially lift stocks more broadly, given the AI bellwether's history of bullish reactions to earnings. But its stock has lagged the stock market so far this year, & the chipmaker's prospects face headwinds from Trump's tariff threats & export controls.

Markets mixed as consumer confidence data weighed on investors

noreply@blogger.com (Avi) — Tue, 25 Feb 2025 16:06:00 -0500

Dow finished up 159 in choppy trading, advancers over decliners 3-2 & NAZ dropped 260. The MLP index slid back 1+ to the 319s & the REIT index jumped 5 to 415. Junk bond funds continued to be mixed & Treasuries had heavy buying which sharply reduced yields. Oil remained weak, down 1+ to 69, & gold tumbled 39 to 2923 on profit taking (more on both below).

Dow Jones Industrials

An expensive stock market didn’t prevent traders from getting more bullish as investors increasingly bet that the bull run could keep chugging along, according to Charles Schwab's new quarterly client survey. The bulls continue to outnumber the bears among traders by 51% to 34%, said the survey, which polled 1040 active traders last month. Young traders under the age of 40 especially showed a spike in optimism, with bullishness jumping to 59%. That compares to 47% in the 4th qtr. The positive sentiment came even as 2/3 of the traders believe the market is overvalued. “It’s clear that the majority of traders believe there’s some froth in the market but on balance they also feel like there’s still more room for the bulls to run,” said James Kostulias, head of trading services at Charles Schwab. “More than half of traders plan to move additional money into stocks in Q1.” While bullishness indicates positive views on the market, it can also be seen as a contrary indicator when there are signs of excess. In terms of sectors, traders are most bullish on energy, tech, finance & utilities. These sectors are typically beneficiaries under the Trump administration due to potential deregulation. The survey also detected a significant drop in the number of traders who believe a recession will occur in the US, only a 3rd of the respondents called it “somewhat likely,” compared to 54% in the prior qtr. The majority of traders also didn’t see a reacceleration in inflation, with 2/3 of them seeing price pressures holding steady.

More traders turn bullish despite market showing signs of fatigue, Schwab survey says

US banking sector profits rose 2.3% to $66.8B in the 4th qtr of 2024, a bank regulator reported, as it also announced moves to update how so-called problem banks are tracked. In its latest quarterly report, the Federal Deposit Insurance Corporation (FDIC) said it is revising its "problem bank" list to say only how many banks have been downgraded by regulators. The FDIC will no longer disclose how many assets are held at those banks. FDIC Acting Chair Travis Hill said that the practice of disclosing how many assets are at problem banks, first established in 1990, has become problematic because the growth of large firms has made it "comparatively easier" to identify when a big bank is added to the list. Hill said disclosing assets could spur a bank run if the public saw a large jump in total assets on the list & tried to determine which large firm was deemed problematic by watchdogs. Bank supervisors may also be reluctant to downgrade a large bank, knowing the jump in total assets at problem banks could spark instability, Hill added. The FDIC reported 66 problem banks in the 4th qtr, down from 68 the prior qtr. Overall, the banking sector reported healthy numbers, posting a 5.6% increase in 2024 year-long profits to $268B. The FDIC said the boost in 4th-qtr profits was mainly due to recent short-term interest rate cuts, which helped boost net interest income by $3.8B for banks, as interest expenses shrank more than interest income. The amount of funds banks set aside for potential losses was also down, dipping 5.5% from the prior qtr to $22B & unrealized losses on securities held by banks jumped 32.5%, & now total $482B. However, that level is only 1% higher than levels seen 1 year prior.

US bank profits climb as regulator adjusts 'problem bank' tracking

Nvidia (NVDA) stock continued its recent slide as investors weighed potential delays in the ramp-up of its AI Blackwell chips & a report of possible new export rules from the Trump administration. The stock dropped after a reported that the Trump administration is looking to further tighten US export rules on the chip sector in an effort to restrict China's advancement in the AI space. Trump is looking to sanction specific Chinese companies & further restrict intl companies from maintaining semiconductor gear in the country. The news comes more than a month after Chinese firm DeepSeek introduced new, cost-efficient AI models that rocked US markets. NVDA stock fell 3.65.

Nvidia drops as investors weigh Trump export rules, Blackwell delays

Gold's price has hit a new all-time high yesterday at $2956, just hours before the Trump administration issued more details on upcoming tariffs. The precious metal trades at $2940 currently, after Pres Trump's administration communicated it plans to impose more limitations on China's technological developments. A tougher stance on semiconductor restrictions & pressuring other allies to corner China is part of that strategy. The news creates a negative tone in gold markets today. Traders are fleeing into bonds as a safe haven, which is pressuring yields for more downside (inverse correlation bond price to yield). Equities are also being slaughtered, with red numbers across the board from Asia to Europe, including US equities.

Gold consolidates Tuesday's losses with markets digesting latest tariff move from President Trump

Oil prices fell 3% to a 2-month low on weak economic news from the US & Germany that fed fears of slower energy demand, along with signs from several countries that oil output was on track to increase. Brent futures fell $1.99 (2.7%) to $72.79, while US West Texas Intermediate (WTI) crude fell $1.92 (2.7%) to $68.78. Brent was on track for its lowest close since Dec 23 & WTI for its lowest since Dec 10. US data showed consumer confidence in Feb deteriorated at its sharpest pace in 3½ years, with 12-month inflation expectations surging. Analysts said Pres Trump's stated plans for higher tariffs have raised inflation worries at the US Federal Reserve. This could lead the Fed to keep interest rates higher, which in turn could slow economic growth & energy demand. Trump said tariffs against Canadian & Mexican imports scheduled to start on Mar 4 are on time & on schedule, which could actually boost oil prices by reducing supplies from both countries. Also weighing on oil prices, the German economy shrank by 0.2% in the final qtr of 2024 from the previous qtr. German election winner Friedrich Merz ruled out a quick reform to state borrowing limits known as the "debt brake," which some investors have urged to boost the economy.

Oil Hovers at 2-Month Low

Stocks fell when Pres Trump revived tariff threats & potential toughening of China curbs weighed on market optimism & the chances of interest rate cuts. Consumer confidence also plummeted in Feb, notching its biggest monthly decline in more than 4 years as 12-month inflation expectations jumped & recession fears escalated.

Markets retreat after weak consumer confidence

noreply@blogger.com (Avi) — Tue, 25 Feb 2025 12:03:00 -0500

Dow fell 67, advancers & decliners were the same & NAZ retreated 337. The MLP index dropped 4+ to the 316s & the REIT index rose 6 to 416. Junk bond funds fluctuated & Treasuries saw buying which reduced yields. Oil was off 1+ to 69 as tariff threat hurts demand outlook & gold sank 47 to 2915.

Dow Jones Industrials

Consumers grew more pessimistic about the economic outlook in Feb as worries brewed about a slowing economy & rising inflation, the Conference Board reported. The board's Consumer Confidence Index slipped to 98.3 for the month, down 7 points & below the forecast for 102.3. This was the lowest reading since Jun 2024 & the largest monthly drop since Aug 2021. "Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income," said Stephanie Guichard, the board's senior economist for global indicators. "Pessimism about future employment prospects worsened and reached a ten-month high." The decline in consumer confidence comes with Pres Trump threatening additional tariffs against US trading partners. Trump said that duties against Canada & Mexico "will go forward" in Mar after a delay in Feb. Economists worry that the tariffs could spark another round of inflation at a time when the Federal Reserve is weighing whether to lower interest rates further or hold steady as policymakers weigh the impact of Trump's aggressive fiscal & trade policy moves. Though most economic indicators reflect continued growth, the Conference Board gauge matches other recent surveys showing waning confidence. Last week, the University of Michigan reported a larger-than-expected monthly decrease of nearly 10% in Feb while the 5-year inflation outlook among respondents hit its highest level since 1995. Along with the overall drop in confidence, the Expectations Index tumbled 9.3 points to a 72.9 reading, the first time since Jun 2024 that the measure has fallen below the level consistent with recession. However, the current conditions measured improved somewhat, with 19.6% saying conditions are "good," up 1.1 percentage point from Jan.

February consumer confidence posts biggest drop since 2021in latest sign of slowing economy

Home Depot (HD), a Dow stock, on topped Wall Street's quarterly sales expectations, even as elevated interest rates & housing prices dampened consumer demand for large remodels & pricier projects. For the full year ahead, the company expects total sales to grow by 2.8% & comparable sales, which take out the impact of 1-time factors like store openings & calendar differences, to increase by about 1%. HD projected adjusted EPS will decline about 2% compared with the prior year. CFO Richard McPhail said "housing is still frozen by mortgage rates." Yet he added HD saw broad-based growth, as sales increased in about ½ of its merchandise categories & 15 of its 19 US geographic regions. HD anticipates consumers will stop putting off projects as they gradually get used to higher interest rates, rather than waiting for them to fall. "They tell us their lives are moving on," he said. "Their families are growing. They're moving for a new job. They're upsizing their home. They want to upgrade their standard of living. Home improvement always persists, and so the question, I think, will be around the mindset of whether long-term rates have gotten to a new normal." In the 3-month period that ended Feb 2, EPS was $3.02, up from $2.82 & revenue rose 14% from $34.8B in the year-ago period. Comparable sales, a metric also known as same-store sales, increased 0.8% across the company. Those results ended 8 consecutive qtrs of falling comparable sales. They also exceeded expectations of a decline of 1.7%. Comparable sales in the US increased 1.3% year over year. Regions hit by hurricanes Helene & Milton contributed about 0.6% to comparable sales, McPhail added. The stock soared 13.41 (2%).

Home Depot earnings beat estimates, as comparable sales losing streak ends

Eli Lilly (LLY) released higher doses of its weight loss drug Zepbound in single-dose vials at as much as ½ its usual monthly list price to reach more patients without insurance coverage for the blockbuster injection, such as those with Medicare. It expands its effort to boost the US supply of Zepbound as demand soars, & to ensure eligible patients are safely accessing the real treatment instead of cheaper compounded versions. LLY is now offering higher doses of Zepbound in single-dose vials through a “self-pay pharmacy” section on its direct-to-consumer website, LillyDirect, which began make more of the medication available in vials in Aug. Eligible patients diagnosed by a health-care provider with obesity alone or along with obstructive sleep apnea, Zepbound's newly approved use, can pay for those vials themselves on the site. The company is selling 7.5 milligram & 10 milligram vials of Zepbound for $499 per month when patients fill their first prescription, & any time they refill within 45 days of their previous delivery. Otherwise, those 2 doses will cost $599 & $699, respectively. Also, LLY is lowering the price of both of the lower-dose vials of Zepbound by $50. The 2.5 milligram vial will now cost $349 & the 5 milligram vial will now be priced at $499. Those vials will make more of the medication available because they are easier to manufacture than autoinjector pens, which cost roughly $1,000 per month before insurance. “We are, in the absence of full coverage for people suffering from obesity like other chronic diseases, we are just trying to fill that room and provide a more affordable solution, particularly for the Medicare population because none of our affordability solutions can be applied to them,” said Patrik Jonsson, pres of LLY diabetes & obesity. The stock soared 19.88 (2%).

Eli Lilly offering more cheaper vials of Zepbound weight loss drug

Stocks fell across the board as Pres Trump's revived tariff threats & potential toughening of China curbs weighed on market optimism & the chances of interest rate cuts. The biggest move in markets, however, came from the cryptocurrency markets, where the price of bitcoin tumbled below $90K for the first time since Nov.

Markets tick higher as stocks attempt a rebound

noreply@blogger.com (Avi) — Mon, 24 Feb 2025 16:12:00 -0500

Dow went up 140, advancers slightly ahead of decliners & NAZ slid back 152. The MLP index was off 1 to the 322s & the REIT index added 2+ to the 411s. Junk bond funds remained weak & Treasuries were purchased, lowering yields. Oil remained pennies higher but still below 71 & gold advanced 11 to 2964 (more on both below).

Dow Jones Industrials

Investors & economists expect the central bank to respond "strongly and systematically" to changes in inflation & the labor market, according to research published today by the San Francisco Fed that underscores the current sensitivity of financial markets to US economic data. The Fed's perceived responsiveness to economic data picked up notably in 2022, driven first by inflation data &, last year, by labor market data, based on the analysis of perceptions embedded in professional forecasts & in bond market moves published in the regional Fed bank's latest Economic Letter. The findings are in line with the Fed's actual response to inflation, which rose in 2021 but did not trigger any interest rate hikes until 2022. They also track with the Fed's reaction to labor market data, which weakened notably in the middle of last year & helped drive the Fed's decision to cut the policy rate by a full percentage point starting last Sep. The Fed's target policy rate is currently 4.25%-4.50%. Recent weaker economic readings, including a survey released on Fri showing business activity fell to a 17-month low this month, have helped firm up market bets on 2 qtr-percentage-point reductions to the policy rate this year. Worries about stalling economic growth appear to be outweighing fears of a resurgence in inflation, also evident in recent surveys, at least as far as market bets on how the Fed will react with monetary policy. Interest rate futures contracts are currently priced for the first Fed rate cut this year to come in Jun, with the 2nd to happen as early as Oct.

Fed expected to respond strongly to inflation, job market conditions, research shows

Tesla (TSLA) is recalling more than 376K of its Model 3 & Model Y electric vehicles in the US over a potential power steering issue. The recalled Model 3s & Model Ys could face a loss of power steering assistance "when the vehicle reaches a stop and then accelerates again" if they experience an "overstress condition" in the printed circuit board for electronic power-assisted steering (EPAS), TSLA said in a report submitted last week to the National Highway Traffic Safety Administration (NHTSA). All the potentially affected vehicles feature EPAS & used a software release prior to 2023.38.4, the report added. They belong to the model year 2023. "A loss of power steering assist can require greater steering effort, especially at low speeds, increasing the risk of a crash," NHTSA continued. TSLA said it designed the vehicles in a way that steering "will not be affected" if they suffer the "overstress condition" while driving above 0 miles per hour. "Tesla’s design avoids any unreasonable risk to safety by preventing a loss of EPAS while the vehicle is in motion," the automaker said. "In addition, Tesla does not believe that loss of EPAS when the vehicle reaches 0 mph is an unreasonable risk to safety because manual steering remains available." TSLA said it decided to recall the affected vehicles in all markets to "avoid confusion for our customers" after a "determination by regulator in a non-US market that loss of EPAS at 0 mph should be remedied through a recall." The stock fell 7.27.

Tesla recalls over 376K vehicles over potential power steering issue

Microsoft (MSFT), a Dow stock, has canceled an unspecified number of data center leases amid the AI spending boom. The development comes as investors are closely watching whether Big Tech hyperscalers will continue to spend heavily on AI infrastructure. MSFT operates data centers equipped with thousands of servers housing advanced computing chips such as Nvidia’s (NVDA) to power its Azure cloud & AI applications. A typical data center operated by a Big Tech "hyperscaler" firm like Microsoft uses over 100 megawatts of power. A MSFT spokesperson said, "While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions." The spokesperson added, "[O]ur plans to spend over $80B on infrastructure this FY remains on track as we continue to grow at a record pace to meet customer demand." MSFT, the largest backer of OpenAI, has said it plans to spend $80 billion in capital expenditures in its fiscal year 2025, driven by its push in the artificial intelligence market. MSFT stock fell 4.21.

Microsoft said to be canceling leases for AI data centers

Gold's price is higher, trading near $2947, supported by a weaker $ softer US yields in a reaction to the recent German federal election outcome. Although the far-right party Alternative for Germany (AfD) has gained 20% of votes, the Christian Democratic Union of Germany (CDU) is comfortable in the lead with 208 seats against AfD's 152. US yields dropped off & the CME Federal Reserve (Fed) Futures are now favoring a 25 basis points (bps) rate cut in Jun, where last week odds were rather for no rate cut in Jun. Meanwhile, traders will watch the US GDP release for the 4th qtr of 2024 later this week. Given the recent slowdown in US activity & economic data (for example, the softer Services Purchase Managers Index (PMI) reading on Fri, another drop in US yields could be triggered, with markets anticipating the Federal Reserve lowering its monetary policy rate to boost the economy & demand.

Gold positive after Germai election result rules out far right participation

Oil prices steadied as investors awaited clarity on talks to end the war in Ukraine & weighed up the prospect of a resumption in crude exports from northern Iraq. Brent futures were down 6¢ at $74.37 barrel while US West Texas Intermediate (WTI) crude futures declined 14¢ to $70.26. Both Brent & WTI dropped by more than $2 on Fri, registering weekly declines of 0.4% & 0.5% respectively. All eyes remain on efforts to end Russia's war on Ukraine, which enters its 4th year today. Officials said yesterday that EU leaders will meet for an extraordinary summit on Mar 6 to discuss additional support for Ukraine & European security guarantees. Ukrainian president Volodymyr Zelenskiy said that he was willing to step down if it meant peace for his country. Pres Trump has initiated talks with Russia without inviting Ukraine or the EU to the table. A senior Russian diplomat said Russian & USteams plan to meet for further discussions this week. Sanctions imposed by the US & EU on Russian oil exports have disrupted seaborne oil supply flows, but an end to the war in Ukraine would not necessarily increase Russian supplies to the market because the country is a member of the OPEC+ group that has curbed production. However, oil prices could still drop because of a decrease in geopolitical risk.

Oil prices steady as traders await progress on push for Ukraine peace deal

Stocks staged a modest comeback to kick off the week as investors largely shrugged off the worst trading action of the year on Fri when fears over inflation & economic uncertainty dragged down the major indices. Multiple factors fueled the decline last week including WalMart's (WMT), Walmart's (WMT) soft guidance as consumer spending fears came into focus, along with the potential economic impact of tariffs & MSFT'S reported decision (above)to cancel leases for data center capacity. While there are merits to these concerns, these concerns may only be flesh wounds to the positive for these equities, laying out multiple catalysts in the week ahead.

Markets wobble as they try to comeback after Friday's selling

noreply@blogger.com (Avi) — Mon, 24 Feb 2025 11:54:00 -0500

Dow rose 164, advancers & decliners were even & NAZ fell 85. The MLP index dropped 5 to 318 & the REIT index gained 3+ to the 411s. Junk bond funds slid lower & Treasuries had limited buying with yields slightly lower (more below). Oil inched higher but stayed under 71 & gold went up 4 to 2958.

Dow Jones Industrials

Apple (AAPL) is committing $500B to the US economy in a historic initiative, marking "an extraordinary new chapter in the history of American innovation." AAPL's 11-figure commitment will roll out over the next 5 years. It will involve building an advanced AI server manufacturing factory near Houston, as well as doubling the company's Advanced Manufacturing Fund from $5-10B. The tech giant also plans to establish an Apple Manufacturing Academy in Detroit, as well as hire 20K new employees with focuses on research & development, silicon engineering, artificial intelligence & machine learning. "This new pledge builds on AAPL's long history of investing in American innovation and advanced high-skilled manufacturing, and will support a wide range of initiatives that focus on artificial intelligence, silicon engineering, and skills development for students and workers across the country," the company said. AAPL also plans to expand teams & facilities in numerous states, including Michigan, Texas, California, Arizona, Nevada, Iowa, Oregon, North Carolina & Washington. CEO Tim Cook said that his company is "bullish on the future of American innovation." "We're proud to build on our long-standing U.S. investments with this $500 billion commitment to our country’s future," he added. "From doubling our Advanced Manufacturing Fund, to building advanced technology in Texas, we’re thrilled to expand our support for American manufacturing." "And we’ll keep working with people and companies across this country to help write an extraordinary new chapter in the history of American innovation." The announcement comes 2 days after Pres Trump to the tech giant's plans, saying that the company planned to invest "hundreds of billions of dollars" in the US. The stock rose 2.53.

Apple announces historic US investment in bet on American innovation

Starbucks (SBUX) CEO Brian Niccol announced that the company is laying off over 1000 corp employees as it works to simplify operations. Specifically, it is eliminating 1100 current support partner roles & closing several hundred additional open & unfilled positions. "We are simplifying our structure, removing layers and duplication and creating smaller, more nimble teams," Niccol said. "Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration. All with the goal of being more focused and able to drive greater impact on our priorities." Niccol informed employees about the layoffs in Jan, stating that they were part of the "Back to Starbucks" strategy – a series of changes aimed at enhancing the in-store customer experience while improving efficiency. Niccol, who became CEO in Sep with plans to return the company to its coffeehouse roots, is working to boost profitability & improve the work environment after the company faced years of growing pressure from unionization campaigns nationwide & consecutive disappointing fiscal qtrs as traffic declined. Niccol said that the layoffs were "a necessary change to position Starbucks for future success." The stock rose 2.01.

Starbucks to lay off over 1,000 corporate workers

Treasury yields ticked down as investors looked to a busy week ahead, with a flurry of economic data due including a key inflation reading & insights on housing. The 10-year Treasury yield was more than 2 basis points lower at 4.394% & the 2-year Treasury yield fell 1 basis point at 4.183%. 1 basis point is equal to 0.01% & yields & prices move in opposite directions. Investors are expecting a packed week of economic data starting today with the Chicago Fed National Activity Index for Jan & the Dallas Fed Manufacturing Index. Earlier this month, Fed Chair Jerome Powell indicated that after a hotter-than-expected CPI report in Jan, the Fed doesn't “need to be in a hurry” to lower interest rates further. Markets have interpreted the recent messaging as indications that the Fed will be on hold with rates, probably into the summer, after cutting its benchmark borrowing level by a full percentage point in the latter part of 2024.

Treasury yields inch higher as investors await a flurry of economic data

Stocks were mixed as tech stocks faltered, with investors weighing the prospects for AI ahead of this week's economic reports. Stocks were attempting to rebound after Fri's steep declines capped a losing week, which was marked by data showing American consumers & businesses are getting concerned about Trump's tariff plans.

Markets nosedive as consumers start to sour on US economy

noreply@blogger.com (Avi) — Fri, 21 Feb 2025 16:06:00 -0500

Dow plunged 748 (near session lows), decliners over advancers about 3-1 & NAZ dropped 438. The MLP index fell 5 to the 322s & the REIT index slid 2+ to 409. Junk bond funds were flattish & Treasuries had heavy buying which sharply reduced yields. Oil fell 2+ to 70 & gold pulled back 8 to 2947 (more on both below).

Dow Jones Industrials

ConocoPhillips (COP) said it would sell its interests in the Ursa & Europa Fields to Shell (SHEL) for $735M, as part of the shale producer's plan to streamline its portfolio. The company has been looking to offload non-core assets to help lower debt after its $22.5B takeover of rival Marathon Oil. Earlier this month, COP said it was divesting its non-core Lower 48 assets for $600 million. "This (Shell) transaction reflects our ongoing commitment to further strengthen our portfolio by divesting non-core assets and shows significant progress toward our $2 billion disposition target," COP said. The transaction is expected to close by the end of the 2nd qtr of 2025 after which Shell's working interest in Ursa would increase to 61.35% from 45.4%. SHEL said the acquisition expands its ownership in an established long-producing asset that "generates robust free cash flow, while also providing more options for growth." COP stock fell 4.11 & SHEL stock finished down 1.67.

ConocoPhillips to sell interests in Ursa and Europa Fields to Shell for $735 million

Facebook parent company Meta (META) recently announced that it approved bonuses of up to 200% for its exec. In a filing with the SEC, META said that its Compensation, Nominating & Governance Committee (CNGC) approved an increase in the target bonus percentage for named execs other than CEO Mark Zuckerberg. The change increases bonuses from 75% of the named exec officer's base salary to 200% of their salary, & would start taking effect with the company's 2025 annual performance period. "In approving this increase, the CNGC considered that the target total cash compensation for the named executive officers (other than the CEO) was at or below the 15th percentile of the target total cash compensation of executives holding similar positions at the peer group of companies that the Company benchmarks against for executive compensation purposes," Meta said. With the change, the total cash compensation for the non-CEO exec at META "falls at approximately the 50th percentile of the Peer Group Target Cash Compensation." The stock sank 11.29.

Meta approves bonuses of up to 200% for company execs as it lays off workers

In a recent report, the Services PMI (Purchasing Managers' Index), a key indicator of economic health in the private sector, was recorded at 49.7. This figure, published monthly by Markit Economics, is significantly lower than the forecast of 53.0, indicating a potential slowdown in the economy. The PMI index is based on surveys of over 400 execs in private sector service companies, including sectors such as transport & communication, financial intermediaries, business & personal services, computing & IT, hotels & restaurants. An index level of 50 denotes no change since the previous month, while a level above 50 signals an improvement, & below 50 indicates a deterioration. The recent 49.7 reading is not only lower than the forecast but also shows a slight dip compared to the previous month's figure of 52.9. This could be a sign of a potential economic slowdown, as a reading below 50 indicates a contraction in the services sector, which could have ripple effects on the broader economy. The PMI is a significant indicator, as it is one of the most closely watched business surveys in the world, often moving markets & influencing economic policy. A reading that is stronger than forecast is generally supportive (bullish) for the$, while a weaker than forecast reading is generally negative (bearish) for the $. The lower-than-expected PMI reading could potentially impact the $ negatively.

US Manufacturing PMI exceeds expectations, indicating sector expansion

Gold prices eased as investors booked profits from the previous session's record high, but were set for an 8th straight weekly gain, driven by strong safe-haven demand amid concerns over Pres Trump's tariff plans. Spot gold shed 0.1% to $2939 an ounce. Bullion has gained around 1.9% this week after rising to a record $2954 yesterday. US gold futures settled 0.1% lower at $2953. It's just a classical movement of new all-time highs & profit-taking, but the fundamentals for gold remain solid. Prices have shattered 2 record highs this week to trade above $2950 an oz, as uncertainties surrounding global economic growth & political instability have underscored investor appetite for bullion, which has risen 11.5% so far in 2025.

Gold eases from record high on profit-taking, eyes eighth weekly gain

Oil fell after the breach of a key technical level accelerated losses driven by the possibility of increased flows from Iraq, weakening the prospects of supply constraints that have gripped the market recently. West Texas Intermediate slid more than 2% to trade below $71 a barrel, with the drop deepening after prices dipped below their 100-day moving average of about $71.51. The decline puts oil at risk of its 5th straight weekly loss, which would be the longest streak in more than a year. Crude has been trapped in a roughly $5 range for the past 3 weeks because of an uncertain outlook for supply, including increasing expectations that OPEC+ will delay a planned production increase & a drone attack that threatened Kazakh pipeline flows. At the same time, Pres Trump's rapid-fire tariff actions & other policy decisions have dimmed the outlook for demand & boosted US consumers' expectations for long-term inflation. OPEC+ postponing its 120K barrel-a-day output hike, a move delegates are flagging as a possibility, would mark the 4th time the group delayed plans to revive production halted in 2022. At present, the alliance aims to restore a total of 2.2M barrels a day in monthly increments, starting in Apr.

Oil Falls After Weak Technicals Accelerate Supply-Driven Losses

Stocks fell as all 3 major indices looked set to record losing weeks. There are signs that the uncertainty is starting to weigh on consumers. Sentiment took a hit this month as Americans anticipate tariff-induced price hikes. Additional economic data hinted at fading optimism. US business activity growth came close to stalling in Feb, according to flash PMI survey data published today. Business expectations for the year ahead slumped, weighed down by uncertainty related to federal gov policies. Dow gave back a significant 418 last week.

Markets fall after weaker-than-expected consumer sentiment

noreply@blogger.com (Avi) — Fri, 21 Feb 2025 11:49:00 -0500

Dow dropped 356, decliners over decliners 3-2 & NAZ retreated 123. The MLP index slid 1+ to the 325s & the REIT index fell 1+ to the 409s. Junk bond funds inched higher & Treasuries were purchased which lowered yields. Oil was off 1+ to 71 & gold pulled back 12 to 2943.

Dow Jones Industrials

The US housing market continues to weaken, as potential buyers face stubbornly high mortgage rates, high prices & limited supply of listings. Sales of previously-owned homes fell 4.9% in Jan from the prior month to 4.08M units on a seasonally-adjusted, annualized basis, according to the National Association of Realtors (NAR). The forecast was expecting a 2.6% decline. Sales were 2% higher than Jan 2024, but are still running at a roughly 15-year low. This read is based on closings, so contracts likely signed in Nov & Dec when mortgage rates came down from over 7% to the 6% range. "Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve," said Lawrence Yun, chief economist for the NAR. "When combined with elevated home prices, housing affordability remains a major challenge." There were 1.18M homes for sale at the end of Jan, an increase of 3.5% from Dec & 17% from Jan 2024. Although inventory is gaining, it is still at a 3.5-month supply at the current sales pace & a 6-month supply is considered balanced between buyer & seller. The average home for sale last month spent 41 days on the market, the longest since Jan 2020, pre-Covid. Tight supply continues to pressure prices. The median price of a home sold in Jan was $397K, up 4.8% from the year before & the highest price ever for the month of Jan. All 4 regions tracked by NAR saw price gains. About 15% of homes sold above list price, virtually unchanged from 16% in both the pervious month & the year-earlier period. "More housing supply allows strongly qualified buyers to enter the market," Yun added. "But for many consumers, both increased inventory and lower mortgage rates are necessary for them to purchase a different home or become first-time homeowners." All-cash offers made up 29% of sales, which is historically high but down from 32% the year before. First-time buyers are still struggling, accounting for 28% of sales. That share is unchanged from a year ago, but is well below historical averages of about 40%.

Home sales drop sharply as prices hit an all-time high for January

Inflation is picking up again & Pres Trump said this week it’s all his predecessor’s fault. But no matter who Trump blames for inflation, America's economic mood is now souring, Trump is getting the heat for it. The University of Michigan's latest survey showed that US consumer sentiment declined in Feb for the 2nd consecutive month, according to a final reading, down by a steep 10% from Jan. That was double the decline initially reported earlier this month. It's a stunning about-face after American consumers & businesses grew hopeful about the economy's future following Trump’s election in Nov. The latest decline in consumer sentiment was driven by worries over Trump's tariffs potentially jacking up prices. A new poll yesterday similarly showed pessimism on the rise because of prices: Nearly 2/3 of US adults nationwide, 62%, said they feel Trump’s isn't doing enough to address inflation. The Michigan survey showed that Americans are now fearful of higher inflation on the horizon. On the campaign trail, Trump promised to “bring down prices, starting on Day One.” Clearly, that didn't happen. In Jan, consumer prices climbed at the fastest monthly pace since Aug 2023, increasing 0.5% from Dec. Joanne Hsu, the Michigan survey's director, said that the broad decline was “in large part due to fears that tariff-induced price increases are imminent.” But changes in sentiment are beginning to diverge based on political affiliation. “While sentiment fell for both Democrats and Independents, it was unchanged for Republicans, reflecting continued disagreements on the consequences of new economic policies,” she said.

US consumer sentiment plunges over tariff and inflation fears

A trio of Federal Reserve officials said that while they still think inflation will cool over time to pave the way for more interest rate cuts as the most likely scenario, uncertainty surrounding Pres Trump's trade, immigration & other policies could lead to a different outcome. Atlanta Fed Pres Raphael Bostic said that his "baseline expectation" is that central bank policymakers will be able to proceed with two 25 basis point cuts later this year, but "the uncertainty around that is pretty significant… There's a lot that could happen that could influence that in both directions." Bostic isn't a voting member of the Federal Reserve's monetary policy-setting committee this year but told reporters he didn't think the US economy is facing a new burst of inflation & noted that with the unemployment rate at 4%, the labor market is healthy. However, he added there is both enthusiasm & "widespread apprehension" among businesses about how new import taxes, immigration rules & regulatory changes will impact the economic outlook. Pres Trump has issued several tariff threats against key trading partners like China, Canada & Mexico since taking office, as well as on imported automobiles, pharmaceuticals & semiconductors. "In a nutshell, contacts are concerned that tariffs could increase costs," Bostic said. "Many feel confident that if that happens, then they can pass along higher costs in their prices." Stubborn inflation has kept the pace of price growth above the Fed's 2% target rate. Consumer prices were up 3% on an annual basis in Jan, which was the fastest pace since last Jun. Amid the economic uncertainty, the Fed left its benchmark federal funds rate at 4.25% - 4.50% at its last policy meeting & is expected to do so again at its next meeting on Mar 18-19 as policymakers look for clarity about the economic impact of Trump's policies. Chicago Fed Pres Austan Goolsbee said that before the uncertainty surrounding economic policy & geopolitics increased, the overall inflation outlook "looked pretty good" compared to its 2022 peak. He noted that the tariffs imposed by Pres Trump during his first term didn't have a material impact on inflation, in part because they were narrowly tailored & included enough exemptions that supply networks weren't affected. But with Trump currently developing more broad-based & higher tariffs, Goolsbee said the inflation impact "depends on how many countries they are going to apply to and how big they are going to be. And the more it looks like a COVID-sized shock, the more nervous you should be about that."

Fed officials flag rising inflation risks amid uncertainty over Trump policies, tariffs

Stocks were sold even as 2 of the major indices are booking record wins for the week. Pres Trump's tariffs continue to leave retailers & consumers stumped by what will be impacted in the coming months. Walmart's (WMT) warning on its 2025 outlook sparked a broad market downturn yesterday & the company cited tariff uncertainty as 1 factor. Also comments on consumer sentiment & Fed officials (above) stocked inflation fears.

Markets slide as Walmart's caution spoils the bullish mood

noreply@blogger.com (Avi) — Thu, 20 Feb 2025 16:08:00 -0500

Dow dropped 450, decliners over advancers 4-3 & NAZ pulled back 93. The MLP index wavered in the 325s & the REIT index gained 2+ to the 411s. Junk bond funds were mixed & Treasuries saw more buying which lowered yields. Oil edged higher in the 72s & gold rose 16 to 2952 (more on both below).

Dow Jones Industrials

Federal Reserve Bank of St Louis Pres Alberto Musalem said policy should remain “modestly restrictive” until it’s clear inflation is on track to the central bank’s 2% target, & that he sees increased risks that progress may stall or even reverse. Musalem emphasized his baseline scenario is for inflation to continue to move toward 2% amid a solid labor market. He noted, however, that upcoming changes in gov policy could have a material impact on the path of the economy. “This baseline scenario requires that monetary policy remains modestly restrictive until inflation convergence is assured, at which point the policy rate can be gradually reduced toward the neutral level as convergence progresses,” Musalem added. The neutral level refers to a policy stance that neither hinders nor promotes economic growth. “Around this baseline scenario, the risks of inflation stalling above 2% or moving higher seem skewed to the upside,” he continued & added the risk that inflation could stall is greater than that of a significant weakening in the labor market. Speaking to reporters after his speech, Musalem said he'd like to see inflation making downward progress “consistently.” Fed officials held the central bank's benchmark interest rate steady at their Jan meeting & have signaled a willingness to remain on hold until they see inflation cool further. Minutes of that meeting also showed policymakers are considering the potential for changing government policies to hinder inflation progress. Pres Trump is implementing an economic agenda that aims to make drastic changes to US trade & immigration policy.

Fed’s Musalem Sees Increased Risk of Inflation Stalling Above 2%

Mortgage rates fell for a 5th consecutive week, hitting the lowest level since Dec but remaining elevated near 7%. Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage edged down to 6.85% from last week's reading of 6.87%. The average rate on a 30-year loan was 6.9% a year ago. "The 30-year fixed-rate mortgage has stayed just under 7% for five consecutive weeks and in that time has fluctuated less than 20 basis points," said Sam Khater, Freddie Mac's chief economist. "This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season." The average rate on the 15-year fixed mortgage fell to 6.04% from 6.09% last week. 1 year ago, the rate on the 15-year fixed note averaged 6.29%.

Mortgage rates fall for fifth week in a row, hover near 7%

Amazon (AMZN) has dethroned Walmart (WMT), a Dow stock & Dividend Aristocrat, in quarterly revenue for the first time. AMZN said earlier this month that it brought in $188B in revenue during the 4th qtr. That beat out WMT's sales for the period, which came in at $181B. Since 2012, WMT has held the distinction of being the top revenue generator each qtr, a title it gained after overtaking oil giant Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat. WMT still leads the way in annual sales, though AMZN is gaining ground. WMT is projected to reel in $708B in the fiscal year ahead while AMZN's full year revenue for 2025 is expected to reach $700B. AMZN's core retail unit remains its biggest revenue generator, but its top line is also being fueled by its massive cloud computing, advertising & seller services businesses. 3rd-party seller services, which includes commissions & fees collected by AMZN on fulfillment & shipping, advertising & customer support, accounted for 24.5% of company sales last year. Amazon Web Services was responsible for nearly 17%. WMT has looked to its chief rival for ways to sustain sales growth. The company operates a 3rd-party marketplace & offers sellers fulfillment services, although both businesses are a fraction of the size of AMZN's. WMT has also launched an advertising business & a loyalty program for shoppers, called Walmart+, that competes with Amazon Prime. AMN stock fell 3.72 & WMT stock dropped 6.79 on its earnings report & guidance for its new year.

Amazon surpasses Walmart in revenue for first time

Gold climbed to a new all-time high, just a stone's throw away from the $3000 level against a backdrop of ongoing geopolitical & tariff risks, as well as indications from Pres Trump that the US intends to verify how much gold it has stored. Gold futures touched an intraday high just beyond $2973 per ounce before paring gains, while cash market gold surpassed a record $2954 an ounce. The surge comes amid concerns of an escalating trade war after Trump announced he intends to impose levies on autos, semiconductors & pharmaceutical products. Uncertainty over attempts at a deal to end the Ukraine-Russia war also helped send the price of bullion higher. Yesterday, Trump insinuated dropping support for Ukraine, saying Pres Volodymyr Zelensky "better move fast" on a peace agreement "or he is not going to have a country left." His comments about verifying how much gold the US has stored in Fort Knox may also be fueling speculation of higher gold prices. "We're going to go to Fort Knox — the fabled Fort Knox — to make sure the gold is there," Pres Trump told reporters.

Gold climbs to new high as buyers hedge against Trump tariff plans

Oil prices were little changed after rising to a near 1-week high in the previous session, as an industry report showing a buildup in US crude stockpiles pressured the market. Brent futures were up 34¢ (0.5%) at $76.38 a barrel & US West Texas Intermediate crude rose 26¢ (0.4%) to $72.51. US crude stocks rose by 3.34M barrels last week, market sources said, citing American Petroleum Institute. Oil prices edged lower today because of the stock build in the US. The market continues to lack a clear direction, with supply disruptions in Kazakhstan & the OPEC+ production increase delay being offset by global demand worries. Separately, Russia said Caspian Pipeline Consortium oil flows, a major route for crude exports from Kazakhstan, were reduced by 30%-40% on Tues after a Ukraine drone attack on a pumping station. A 30% cut would equate to the loss of 380K barrels per day of market supply. However, other factors & potential boosts to oil supply added to concerns about prices.

Oil little changed after US crude inventory build

Stocks pulled back as investors scrutinized Walmart's (WMT) outlook & assessed the impact of Pres Trump's planned tariffs & policy shifts. Worries grew about coming headwinds for corp America after WMT beat on quarterly profit, but issued cautious 2026 fiscal year guidance. Gold continue to reach new records as investors lost appetite for risk.

Markets sink after a cautious outlook from Walmart

noreply@blogger.com (Avi) — Thu, 20 Feb 2025 11:52:00 -0500

Dow tumbled 520, decliners over advancers 2-1 & NAZ lost 155. The MLP index was off 2+ to the 323s & the REIT index remained near yesterday's close at 409. Junk bond funds inched higher & Treasuries had limited buying which took yields lower (more below). Oil crawled higher in the 72s & gold rose another 17 to 2953.

Dow Jones Industrials

Walmart (WMT), a Dow stock & Dividend Aristocrat, shares fell, as the big-box retailer said profit growth will slow this fiscal year even as sales continue to climb. Holiday-qtr revenue rose 4% & e-commerce sales shot up 20% in the US, as growth in store pickup & home deliveries & gains with upper-income shoppers boosted results. In the fiscal year ahead, the discounter said it expects net sales to grow 3-4% & adjusted operating income to increase 3.5-5.5% on a constant currency basis. The company said that includes a 150 basis point (1.5 percentage point) headwind from acquiring smart TV company Vizio & following a leap year in 2024. For the just completed fiscal year, WMT posted adjusted operating income growth of 9.7% on a constant currency basis. The company expects full-year adjusted EPS of $2.50 - $2.60, which includes a 5¢ headwind from currency. That fell short of the $2.76 expected. CFO John David Rainey described consumer spending patterns as “steady” & said “there’s not any sharp changes that we’ve seen.” Yet he acknowledged “there’s far from certainty in the geopolitical landscape.” About 2/3 of sales is made, grown or assembled in the US. Yet if tariffs on imports from Mexico & Canada take effect, he said WMT is “not going to be completely immune.” “We’ve lived in a tariff environment for the last seven or eight years, and we’ll do what we know how to do,” he added. “We’ll work with suppliers. We’ll lean into our private brand. We’ll shift supply where necessary to try to take advantage of lower costs that we can then pass on to consumers.” In the 3-month period ended Jan 31, EPS fell to 65¢, compared with 68¢ in the year-ago period. Revenue rose from $173B in the year-ago qtr. Adjusted EPS figure excluded 1-time items, including opioid-related legal costs & gains & losses on equity & other investments. Comparable sales, same-store sales, increased 4.6% for its US business & 6.8% for Sam's Club, excluding fuel. WMT also hiked its div 13% to 94¢ per share, the largest increase in more than a decade. The stock dropped 7.01 (7%).

Walmart shares drop as retailer says profit growth will slow

Treasury yields were slightly lower as investors parsed further economic data & digested Pres Trump’s latest tariff plans. The 10-year Treasury yield slipped more than 2 basis points to 4.509%, while the 2-year Treasury yield pulled back about 1 basis point to 4.261%. 1 basis point is equal to 0.01% & yields move inversely to prices. Meanwhile, investors are mulling over Trump's most recent tariff suggestions, which include implementing a 25% duty on automobiles, pharmaceuticals & semiconductors. Trump said the tariffs could “go very substantially higher over a course of a year,” & could start as early as Apr 2.

Treasury yields fall slightly as investors weigh further economic data

The number of Americans filing new applications for unemployment benefits increased moderately last week, suggesting that the labor market remained on solid ground in Feb. There were no signs yet in the report from the Labor Dept of the mass layoffs of federal gov workers & deep spending cuts being pursued by Pres Trump's administration. Economists, who expect a spillover to the private sector, said it was too early for the negative effects to be felt in the broader economy. Thousands of federal gov workers from scientists to park rangers, mostly those on probation, have been laid off in recent days by Elon Musk's Dept of Gov Efficiency (DOGE) an entity created by Trump. Initial claims for state unemployment benefits rose 5K to a seasonally adjusted 219K for last week, the Labor Dept said. The forecast called for 215K claims for the latest week. Claims have been bouncing in the 203K-223K range so far this year. Historically low layoffs are keeping the labor market stable, but that could change as workers dependent on federal gov contracts or funding lose their jobs. The White House wants to slash the roughly 2.3M federal gov workforce, which excludes the military & post office, that Trump says is too bloated. Federal gov layoffs, hiring freezes & spending cuts are expected to have ripple effects on local economies, especially in DC & the adjacent states of Virginia & Maryland, & trigger private sector job cuts.

US weekly jobless claims rise more than expected

Stocks pulled back as investors scrutinized WMT earnings & trod carefully amid the fallout from Pres Trump's planned tariffs & policy shifts. Worries grew about coming headwinds for corp America after WMT put out a downbeat 2025 outlook while the retail giant's profit & revenue met high expectations. Gold hit a fresh record high as investors lost an appetite for risk. Meanwhile, the Federal Reserve's caution in light of White House policy dragged on the mood, as investors lost faith in the prospects for interest rate cuts.