The release of the minutes from the Federal Reserve’s May meeting turned markets from red to green this afternoon. The day had started off with just about everything in retreat on an avalanche of disquieting news. President Donald Trump seemed to back away from concluding a trade agreement with China. Emerging market analysts increased talk of a crisis from Argentina to Ankara. And then came the release of minutes from the Fed
In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don’t justify a full post. I’ve decided to start compiling these notes here each day in a kind of running mini blog that I’m calling Notes You Need. This post from today is a representative item: “1:40 p.m.: Capacity growth in the domestic airline sector is tracking at a 4.0% year over year increase with capacity on track for 4.5% domestic growth and 0.4% international growth, according to airline market analysts at Wolfe Research. Airlines have not put expected summer cuts in capacity into place yet, Wolfe noted, but the company expects capacity moves due to higher fuel costs to begin in the next couple of weeks. Cuts in capacity are usually good news for airline stocks.
The financial sector is up again today with the Financial Select Sector SPDR ETF (XFL) up 0.96% as of 3 p.m. New York time. This continues a strong May run for the sector that has seen the ETF climb 5.6% from May 3–after the sector spent there period from March 23 to May 3 building a base.
Just when global financial markets were ready to breathe a sign of relief at a “truce” in the U.S./China trade war, Secretary of State Mike Pompeo delivered a speech at the Heritage Foundation that included a promise to “track down Iranian operatives and their Hezbollah proxies operation around the world and crush them,” and presented a list of 12 demands that Iran must meet before the United States would be willing to end sanctions.
Remarks by Treasury Secretary Steve Mnuchin and White House economics advisor Larry Kudlow over the weekend have the market feeling that the United States and China may avert a full on trade war. The Standard & Poor’s 500 stock index was ahead 0.65% as of 2:30 p.m. in New York on Monday. The Dow Jones Industrial Average is up 1.11%.
The Federal Reserve minutes from the May meeting due for release on Wednesday at 2 p.m. will be the big scheduled news item for the pre-Memorial Day week. (Unscheduled events could involve North Korea, China, Iran, the European Union, and NAFTA.)
In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don’t justify a full post. I’ve decided to start compiling these notes here each day in a kind of running mini blog that I’m calling Notes You Need. This item from today is a representative sample: “3:40 p.m.: The U.S. Dollar Index recorded its fourth weekly gain in the past five weeks, rising nearly 4.5% during that period. It’s interesting to speculate what the price of oil would be now without that dollar advance. Since oil trades in dollars, the price of a barrel of oil falls when the value of a dollar rises against other currencies.”
It’s actually amazing to me that U.S. stock markets weren’t down more today given all the uncertainty regarding trade relations between United States and China, between the United States and its NAFTA partners Canada and Mexico, and between the United States and the European Union.
International benchmark Brent crude hit a high of $80.50 a barrel today before closing at $79.41, up 0.16%. U.S. benchmark West Texas Intermediate rose 0.1% to $71.56 a barrel. Today is the first time that Brent has closed above $80 a barrel since late 2014. The driver here is falling global and U.S. inventories.
