The Supreme Court did not weigh in on the fate of the President’s tariffs. Wednesday is the next “Opinion Day” according to Bloomberg.
Market attention was then focused on the data that reinforced views that the Federal Reserve will leave interest rates on hold for the near term.
The jobs report was a mixed bag, a continuation of the trend where companies are slow to hire and slow to fire. Generally speaking, the primary takeaway in the employment report is that there is more good news than bad news
Commenting on the Consumer Sentiment data, sentiment rose more than expected on a more upbeat view of the economy as tariff concerns fade. Regarding inflationary expectations, consumers expect prices to rise at an annual rate of 4.2% over the next year, unchanged from the month earlier. And they saw costs rising at an annual rate of 3.4% over the next five to 10 years versus a 3.2% pace the month earlier.
Inflationary expectations are a major component of bond yields.
What will happen this week, the commencement of fourth quarter earnings season.
The economic calendar is comprised of both the PPI and CPI, import price index, retail sales, several housing statistics and numerous manufacturing indices.
Last night the foreign markets were mixed. London was up 0.05%, Paris down 0.08% and Frankfurt up 0.47%. China was up 1.09%, Japan up 1.61% and Hang Seng up 1.44%.
Futures are down about 0.75% as the Federal Reserve has been served grand jury subpoenas from the Justice Department threatening a criminal indictment over the ongoing renovations of the Fed’s headquarters. This is unprecedented and FRB Powell stated, “this should be seen in the broader context of the administration’s threats and ongoing pressure.”
Powell further added “this is about whether the Fed will be able to continue to set interest rates based on evidence and conditions—or whether instead monetary policy will be directed by political pressure or intimidation.”
A hallmark of our economy is the appearance of an apolitical Fed, a Fed that acts independently from political pressure. Most believe this an extremely dangerous precedence, perhaps dangerously gravitating towards monetary policy and political pressures of lesser developed countries.
The 10-year is off 10/32 to yield 4.20%. Gold and silver are trading to new highs. Banks stocks have been hit as the President has demanded credit card companies to cap interest rates at 10% for one year. Most believe this would create a massive credit contraction as banks would “call,” freeze or reduce lines of credits. Moreover, such a cap may crush profitability.
