Economy Steams Ahead Under President Trump’s Deregulation Policy

Economy Steams Ahead Under President Trump’s Deregulation Policy

Economy Steams Ahead Under President Trump’s Deregulation Policy

$DIA, $SPY, $QQQ, $VXX

Fed Chairwoman Janet Yellen, in her final testimony to Congress as head of the central bank, described a steadily brightening picture for the US economy while downplaying the risks of financial instability.

“The economic expansion is increasingly broad based across sectors as well as across much of the global economy,’’ Ms. Yellen said in testimony to the bicameral Joint Economic Committee on Wednesday in Washington.

“I expect that, with gradual adjustments in the stance of monetary policy, the economy will continue to expand and the job market will strengthen somewhat further, supporting faster growth in wages and incomes.’’

Asked whether the Fed would raise interest rates at its meeting next month, Ms. Yellen declined to offer clues about her preference, saying only that it’s important the central bank maintain a gradual approach to tightening to prevent the economy from overheating.

She repeated that she expects the Fed to continue gradually raising interest rates and trimming its balance sheet. The central bank has raised the target range for the federal funds rate 4X in the past 2 years.

Ms. Yellen’s term as Chairwoman expires in early February, and President Donald Trump has nominated Fed Governor Jerome Powell to take her place. Mr. Powell is awaiting confirmation by the Senate. Ms. Yellen has announced she will leave the Fed once that happens.

With stocks trading at record highs, Ms Yellen downplayed the threat of financial instability.

“Although asset valuations are high by historical standards, overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained,” she said.

A government report Wednesday underscored how the US economy is picking up steam.

GDP (gross domestic product) expanded by 3.3% in Q-3, faster than an initially reported 3% annualized pace, Commerce Department figures showed.

Drawing attention to the milestones of the post-crisis recovery, Yellen noted that 17-M more Americans were employed compared with 8ht years ago and unemployment had dropped to 4.1%, down from a crisis-era peak of 10%.

Inflation has also bedeviled Fed officials, remaining surprisingly low in the face of a tightening labor market. While acknowledging that structural factors may be weighing down prices in a persistent manner, Ms. Yellen stuck by her expectation that inflation would gradually rebound to the Fed’s 2% target.

“In my view, the recent lower readings on inflation likely reflect transitory factors,” she said. “As these transitory factors fade, I anticipate that inflation will stabilize around 2% over the medium term.”

The Fed’s preferred gauge of inflation stood at 1.3% in the year through September, after excluding food and energy components.

“Congress might consider policies that encourage business investment and capital formation, improve the nation’s infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies,’’ Ms. Yellen said.

Wednesday, the US major stock market indexes finished at: DJIA +103.97 at 23940.68, NAS Comp -87.97 at 6824.38, S&P 500 -0.97 at 2626.07

Volume: Trade on the NYSE came in at: 922-M/shares exchanged

  • Nasdaq Composite +26.8% YTD
  • Dow Jones Industrial Average +21.1% YTD
  • S&P 500 +17.3% YTD
  • Russell 2000 +13.6% YTD

Overall the US major market indexes are Bullish to Very Bullish across the board.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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