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Cyclical industries such as manufacturing often drive profit cycles. That makes a comedown for the U.S. economy seem less likely. The Commerce Department on Wednesday reported that before-tax corporate profits rose 1.1% from a year earlier in the third quarter. This compares with a decline of 6% in the second quarter. Exclude the Fed, and corporate profits rose by 6.7% in the third quarter compared with a gain of 1.6% in the second.
Persons: Brian Kaiser Organizations: Bloomberg, Commerce Department, Federal Locations: U.S
That's a far-cry from where many Wall Street pros thought stocks would end the year. Others, like analysts at Bank of America, BMO, and Deutsche Bank believe the market could roar to new all-time highs . Rather than try to guess where the market is heading next, investors would be better off finding high-quality stocks to invest in for the long run. Thankfully, Morningstar's Margaret Giles recently compiled a list of the stocks to buy now, drawn from analysts' larger collection of the best companies to own. These stocks have "predictable cash flows and are run by management teams that have a history of making smart capital-allocation decisions," she wrote.
Persons: Taylor Swift, JP Morgan, Morningstar's Margaret Giles Organizations: Business, JP, Bank of America, BMO, Deutsche Bank
The October jobs report — with the economy adding just 150,000 jobs and the unemployment rate ticking up to 3.9% — was a disappointment. Of particular notice, the unemployment rate has increased by half a percentage point over the past six months. A simple way to show that things are still in balance is to look at Okun's law, a relationship between movements in the unemployment rate and economic activity. The historical record shows that once it rises half a percentage point, the unemployment rate tends to rise even more. The unemployment rate is already above the Fed's year-end forecast of 3.8% — the first time that's happened since March 2022.
Persons: Jerome Powell, it's, It's, we're, What's, what's, Neil Dutta Organizations: Federal Reserve, Fed, Macro Locations: joblessness, nonfarm payrolls
“The key thing we have to watch is housing,” Chicago Fed President Austan Goolsbee said Friday. He is shown above at The Wall Street Journal Global Food Forum in Chicago in June. Photo: Kevin Sikorski for The Wall Street JournalInflation seems on track toward the Federal Reserve’s 2% target and now the big question is what will happen with housing in 2024, a top Fed official said Friday. “It was absolutely where we wanted it to be,” Chicago Fed President Austan Goolsbee said of the government’s latest inflation data.
Persons: Austan Goolsbee, Kevin Sikorski Organizations: Chicago Fed, Wall Street, Food Forum, The Wall, Federal, Fed Locations: Chicago
Historically, November is the best month of the year for the stock market, and December is third, according to the Stock Trader's Almanac. Under the surface this week, we also saw signs of a possible market rotation in the works. Rotation watch : We must look to next week's trading for confirmation that we're in the grips of a rotation or simply a head fake. Signs of the former were on display this week as the two of the biggest sector winners of the year, communication services and technology , trailed the market. Jobs, jobs, jobs : The most important release of the week comes Friday in the form of the November nonfarm payrolls report.
Persons: Jerome Powell, That's, Locker, it's, Hock Tan, We'll, Joann, JOAN, JM Smucker, OLLI, Campbell Soup, Brown, Forman, LULU, Smith, Jim Cramer's, Jim Cramer, Jim, Spencer Platt Organizations: Wall, Dow, Nasdaq, Federal, Broadcom, Marvell Technology, Cisco Systems, VMWare, Club, PMI, Labor, Signet Jewelers, SIG, Brands, Toll, Thor Industries, Natural Foods, GameStop, Vail Resorts, MTN, Smith & Wesson, Jim Cramer's Charitable, CNBC, New York Stock Exchange, Getty Locations: Asana, ASAN, New York City
In the final run-up to the late-July peak in stocks this column surveyed the rally , and asked, "Enough for now? .SPX YTD line The S & P 500's year-to-date performance Yes, the market is overbought by various technical measures. Meanwhile, Wells Fargo and Barclays are seeing the S & P 500 as dead money next year, at best. The virtues of owning the S & P 500 passively have always been low cost, tax efficiency, low turnover and broad exposure to the asset class. While 2021 was a Nasdaq 100 melt-up year, 2022 was the mirror image: Big Tech got blasted and the equal-weight S & P 500 held up better.
Persons: Goldman Sachs, Morgan Stanley, Wells, Jack Bogle, Alan Greenspan's Organizations: Federal, Deutsche, Deutsche Bank and Bank of America, Barclays, Hamas, Nasdaq, Nvidia, Meta, Apple, Microsoft, Big Tech, matchless, Treasury Locations: Wells Fargo, Israel
After a year of steady, resilient growth, the US economy will finally slip into a recession in 2024. Deutsche Bank is also calling for double-digit profit growth in a weaker economic backdrop. "For 2024, the house economics view with a mild short US recession implies $250 (+10%)," Chadha wrote in reference to S&P 500 earnings. Deutsche Bank also foresees earnings growth next year. "We remain overweight the financials as well as consumer cyclicals as they are already priced for a recession and the biggest beneficiary of an eventual recovery," Chadha wrote.
Persons: That's, , Chris Grisanti, Brian Belski, Chadha, Belski, Financials, BMO's Organizations: Wall, Business, BMO Capital Markets, Deutsche Bank, MAI Capital Management, CNBC, BMO, Deutsche, Labor, Investors, Tech Locations: Chadha
Inflation’s Cooldown Gives the Fed Leeway
  + stars: | 2023-12-01 | by ( Justin Lahart | )   time to read: 1 min
The personal-consumption expenditures price index is one of the Fed’s most closely watched gauges of inflation. Markets are betting the new data puts the Fed on pace to cut rates in 2024. That was its slimmest year-over-year gain since March 2021. Core prices, which exclude food and energy items in an effort to better track inflation’s underlying trend, rose 0.2% from September. That put them 3.5% above their year-earlier level for the smallest gain since April 2021.
Persons: Dion Rabouin, Rucosky Sit Organizations: The Commerce Department
It has been nearly half a century since The Love Boat promised “something for everyone.” These days, it’s actually true. Before the hit TV show helped popularize them, cruises were derided as being for the “newly wed and nearly dead,” and were a lot more expensive than they are today. Those not quite rich enough for their own yacht can still splurge on intimate, luxurious trips or high-octane adventures to places like Antarctica. But most cruisers these days are middle-class Americans or Europeans looking to be fed, pampered and entertained on a floating version of home. The hyper-efficient industry has made that possible by building megaships that resemble floating theme parks, and even its own islands.
Persons: it’s Locations: Antarctica
A pedestrian carrying an umbrella walks along the River Thames in view of City of London skyline in London, Britain, July 31, 2023. Finance executives, consultants and headhunters interviewed by Reuters predict subdued deal flows, modest bonuses for most and heavy job cuts in 2024. "2023 will ultimately be one of the lowest corporate finance fee pools in modern history," said Fabrizio Campelli, head of Corporate Bank and Investment Bank at Deutsche Bank. JOB CUTSBanks have already turned to cost cuts to try to weather the downturn, which in a people-intensive business means job losses. And although some bankers expect a tough 2024, others sense an opportunity for European banks from the Basel Endgame.
Persons: Hollie Adams, Fabrizio Campelli, Banks, Ronan O'Kelly, Oliver Wyman, O'Kelly, Dominic Hook, Goldman Sachs, Vis Raghavan, JP Morgan, Morgan McKinley's, Stephane Rambosson, headhunter, Rambosson, Ana Botin, Morgan's Raghavan, there's, Oliver Wyman's O'Kelly, Deutsche's Campelli, Anousha Sakoui, Carolyn Cohn, Jesus Aguado, Alexander Smith Organizations: REUTERS, LONDON, Finance, Reuters, Corporate Bank, Investment Bank, Deutsche Bank, Organisation for Economic Cooperation, Development, Barclays, Lloyds, Challenger Metro Bank, UBS UBSG.S, Citi, Workers, Global Investment Banking, Employment, European Union, Santander, Global, Basel, Thomson Locations: City, London, Britain, Europe, Middle East, Africa, Ukraine, West, China, United States, India, Madrid
While Powell and other officials say they’re not even thinking about cutting rates just yet, some investors expect cuts to begin around the middle of next year. With Treasury yields sliding in recent weeks, so have mortgage rates, and rate cuts next year would help that along. Inflation, spending and mortgagesConsumer spending and inflation both eased in October, the Commerce Department reported Thursday. What Fed officials are sayingFed officials have broadly acknowledged that economic conditions are setting the stage for inflation to continue its descent. While some Fed officials have expressed optimism, others remain unconvinced that the Fed’s job is done.
Persons: Jerome Powell, ” Powell, , Powell, they’re, Freddie Mac, Christopher Waller, John Williams, “ We’ve, Michelle Bowman, Organizations: DC CNN — Investors, Federal, Spelman College, Treasury, Fed, December’s Fed, Commerce Department, , Washington . New York Fed, New York Fed Locations: Washington, Atlanta, September’s, America, doldrums, Washington . New, Salt Lake City
"Having come so far so quickly, the (Federal Open Market Committee) is moving forward carefully, as the risks of under- and over-tightening are becoming more balanced." But his remarks also reflected increased confidence that the current 5.25%-5.50% policy rate may well be adequate to complete the job. The Fed meets on Dec. 12-13 and is expected to leave its benchmark rate unchanged for the third meeting in a row. "The pace at which the economy is creating new jobs remains strong, and has been slowing toward a more sustainable level ... Shortly before Powell delivered his remarks, a key reading on the health of the U.S. manufacturing sector showed activity there remained subdued and factory employment declined.
Persons: Jerome Powell, Kevin Lamarque, Powell, Helene Gayle, Lisa Cook, Howard Schneider, Paul Simao Organizations: Monetary Fund's, REUTERS, Rights, Federal Reserve, Spelman College, Fed, Spelman, Institute, Supply Management's, Thomson Locations: Washington , U.S, Atlanta
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWe want the yield curve to do the talking, not the Fed, says Jim Cramer'Mad Money' host Jim Cramer looks at possible market movers scheduled to report earnings next week.
Persons: Jim Cramer
The benchmark index closed at 4,594.63, nearly 6 points above its previous closing high for 2023 set in late July. The S&P 500 is up over 19% year-to-date after posting its biggest monthly rise in over a year in November. The S&P 500 reached its previous 2023 closing high on July 31, also spurred in part by excitement over developments in artificial intelligence technology. The megacaps' outperformance has increased their combined weight to well over one-fourth of the entire S&P 500, meaning the stocks' moves have outsized influence on the benchmark index. The S&P 500 currently trades at roughly 19 times forward earnings estimates, compared to a historical average of 15.6 times.
Persons: Mike Segar, Jerome Powell, Stocks, Lewis Krauskopf, Noel Randewich, Saqib Iqbal Ahmed, Ira Iosebashvili, Nick Zieminski Organizations: New York Stock Exchange, REUTERS, Federal, Valley Bank, Citigroup, Microsoft, Nvidia, Thomson Locations: Lower Manhattan, New York, U.S
Gold set for 3rd weekly gain as cooler data cements Fed cut bets
  + stars: | 2023-12-01 | by ( )   time to read: +2 min
Gold bars and gold coins of different sizes lie in a safe on a table at the precious metal dealer Pro Aurum. Gold prices were set to mark a third straight weekly rise on Friday, after data showing cooling inflation cemented bets for a rate cut in the U.S., with traders looking forward to comments from Federal Reserve's Chair Powell later in the day. Spot gold rose 0.2% at $2,039.42 per ounce by 0427 GMT, after marking an over $60 rise in November — its second straight monthly rise. Data on Thursday showed U.S. consumer spending rose moderately in October, while the annual increase in inflation was the smallest in more than 2-1/2 years. "However, month-end flow may have also been a factor, and seasonality tends to favor gains for gold between November and December," City Index's Simpson added.
Persons: Powell, Matt Simpson, CME's, Index's Simpson, Hugo Pascal Organizations: Aurum, Traders, U.S Locations: U.S, InProved
Periods of high inflation would offset those when inflation was low as occurred between the financial crisis and the pandemic. Those concerns may not matter anymore if the pandemic has driven inflation and interest rates chronically higher. Speaking at a Boston Fed labor market conference in November, Kohn said the new framework showed the risks of not keeping inflation at bay to begin with. "Probing" for maximum employment "can't ignore...inflation risks," Kohn said, calling for a return to a strategy disavowed in the last review. "I think preemptive tightening is best-practice central banking, and I hope they return to allowing that."
Persons: Joshua Roberts, Jerome Powell, There's, Miesha Williams, Powell, Charles Evans, Evans, Fed, Loretta Mester, Austan Goolsbee, Goolsbee, Donald Kohn, Kohn, Howard Schneider, Dan Burns, Andrea Ricci Organizations: Federal Reserve, REUTERS, Rights, U.S, Federal, Spelman College, Reuters, Chicago Fed, Chicago, Cleveland Fed, Boston Fed, Thomson Locations: Washington , U.S, Atlanta
A protest that disrupted a speech by Jerome H. Powell, the Fed chair, at the Economic Club of New York this fall generated extensive coverage. All three upheavals were caused by the same group, Climate Defiance, which a now-30-year-old activist named Michael Greenberg founded in the spring. Mr. Greenberg had long worked in traditional climate advocacy, but he decided that something louder was needed to spur change at institutions like the Fed. “I realized there was a big need for disruptive direct action,” he explained in an interview. “It just gets so, so, so, so, so much more attention.”
Persons: Jerome H, Powell, Michael Greenberg, Greenberg, , Organizations: Federal, Economic, of New, International Monetary Fund Locations: Jackson, Lodge, Wyoming, of New York
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailGoldman Sachs expects the Bank of Korea to start cutting interest rates before the FedGoohoon Kwon of Goldman Sachs discusses the Bank of Korea's decision to hold interest rates at 3.5%. He expects a recovery in exports to prompt the BOK to start cutting rates ahead other Asian central banks.
Persons: Goldman Sachs, Goohoon Kwon, BOK Organizations: Bank of Locations: Bank of Korea
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailFormer Dallas Fed Pres. Richard Fisher: The Fed pulled this off without destroying the economyFormer Dallas Fed President Richard Fisher joins 'Squawk Box' to discuss the Fed's next move, state of inflation, 2024 outlook, and more.
Persons: Richard Fisher Organizations: Former Dallas Fed, Fed
Morning Bid: Markets wary Powell may undermine rate-cut bets
  + stars: | 2023-12-01 | by ( )   time to read: +3 min
Federal Reserve Chair Jerome Powell answers a question during a press conference at the Federal Reserve in Washington, U.S., November 1, 2023. The disconnect between financial markets and central banks has only deepened as central banks push back against talk of rate cuts while markets take in the relatively more benign inflation data of recent weeks. That helped to embolden markets to take on rate-cut bets. Markets are now pricing in a 46% chance of the central bank cutting rates in March, the CME FedWatch tool showed. Speakers: Bank of England MPC member Megan Greene, ECB President Christine Lagarde, Fed Chair Jerome Powell.
Persons: Jerome Powell, Kevin Lamarque, Ankur Banerjee, Christopher Waller, Powell, Elon Musk, Megan Greene, Christine Lagarde, Edmund Klamann Organizations: Federal Reserve, REUTERS, Ankur, Fed, ECB, Reuters Graphics Reuters, Reuters, Bank of England, Thomson Locations: Washington , U.S, Europe, Asia, France, UK, Germany, Singapore
Yields on the U.S. benchmark 10-year Treasury , which move inversely to prices, saw their steepest decline in more than a decade. The Fed chair reiterated that the fight against inflation was far from finished and said the central bank was ready to further tighten monetary policy if necessary. Investors see a strong chance of the central bank delivering a rate cut as early as March 2024, LSEG data show. In late 2022, for example, many expected a recession would hit this year, forcing the Fed to loosen monetary policy. The economy proved resilient while monetary policy stayed tight.
Persons: Jerome Powell, Brendan McDermid, Powell, Paul Nolte, Christopher Waller, “ Powell, that’s, , Ed Al, James St . Aubin, David Randall, Lewis Krauskopf, Saqib Iqbal Ahmed, Ira Iosebashvili, Daniel Wallis Organizations: New York Stock Exchange, REUTERS, Federal, Fed, Treasury, Murphy, Sylvest Wealth Management, Columbia Threadneedle Investments, Sierra Investment Management, Thomson Locations: New York City, U.S
Spot gold rose 0.3% at $2,042.58 per ounce by 0621 GMT on Friday, and is up about 2% for the week so far. The metal rose $60 in November in its second straight monthly gain. Data on Thursday showed U.S. consumer spending rose moderately in October, while the annual increase in inflation was the smallest in more than 2-1/2 years. "However, month-end flow may have also been a factor, and seasonality tends to favour gains for gold between November and December," City Index's Simpson added. Spot silver and platinum edged up 0.1% to $25.29 and $927.44 per ounce, respectively, while palladium rose 0.4% to $1,011.65.
Persons: Alexander Manzyuk, Powell, Matt Simpson, CME's, Index's Simpson, Hugo Pascal, Harshit Verma, Nivedita Bhattacharjee, Mrigank Organizations: REUTERS, Federal, Reuters, Federal Reserve, Traders, U.S, Thomson Locations: Novosibirsk, Siberian, Russia, U.S, Bengaluru
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThere's no recession coming and the Fed is likely done, says Carson Group's Ryan DetrickHosted by Brian Sullivan, “Last Call” is a fast-paced, entertaining business show that explores the intersection of money, culture and policy. Tune in Monday through Friday at 7 p.m. ET on CNBC.
Persons: Carson Group's Ryan Detrick, Brian Sullivan, Organizations: CNBC
WASHINGTON (AP) — Inflation is slowing steadily, but it’s too early to declare victory or to discuss when the Federal Reserve might cut interest rates, Chair Jerome Powell said in prepared remarks Friday. He added, "It would be premature to conclude with confidence" that the Fed has raised its benchmark interest rate high enough to fully defeat high inflation. Nor is it time to “speculate on when policy might ease," Powell said, referring to the possibility of cuts in the Fed's benchmark interest rate, which affects many consumer and business loans. Political Cartoons View All 1274 ImagesThe Fed's policymakers are expected to leave interest rates alone when they next meet Dec. 12-13. Beginning in March 2022, the Fed raised its key rate 11 times from near zero — to about 5.4%, the highest level in 22 years.
Persons: Jerome Powell, Powell, That's Organizations: WASHINGTON, Federal Reserve, Spelman College Locations: Atlanta
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailCan't make a case for a reccesion, Fed cuts could come in May, says 3Fourteen's Warren PiesDavid Zervos, Jefferies chief market strategist and Warren Pies, 3Fourteen Research co-founder, join 'Closing Bell Overtime' to talk the day's market action.
Persons: Warren, David Zervos Organizations: Jefferies, 3Fourteen Research
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