Stocks enjoyed ANOTHER late-day rally yesterday, and they’re trading slightly higher so far this morning. Gold and silver are mixed, crude oil and Treasuries are modestly higher, while the dollar is a bit lower.
Meanwhile, investors are eagerly waiting for this afternoon. That’s when the Federal Reserve wraps up its last policy meeting of the year – and Chairman Jay Powell steps to the podium to explain what they did and why.
What they will do is...nothing. In other words, they’ll keep rates unchanged in a range of 5.25% - 5.5%. What matters is the explanation. Why they kept rates steady...and whether they foresee a decent likelihood of rate CUTS sometime next year. Interest rate futures markets are currently pricing in a solid chance of an initial cut in May 2024.
Ahead of the news, we learned the Producer Price Index (PPI) was unchanged in November on both the headline and the core. That was weaker than the +0.1% (headline) and +0.2% (core) readings economists expected. The YOY wholesale inflation rates dipped to 0.9% and 2%.
And with the hammering down of a gavel, the COP28 climate and energy conference in Dubai came to a close today. Representatives of almost 200 countries attended the United Nations conference, agreeing in the end to a pact that encourages “transitioning away from fossil fuels.”
As many of our MoneyShow speakers – and outside observers – have noted, the process will take decades. Moreover, the document isn’t legally binding and neither the UN nor an individual country can force another country to enforce its provisions. But we are likely to see more investment in green energy technology and projects over time.
For now, a host of green and renewable energy ETFs trade on US markets. Etf.com pegs total assets under management (AUM) at around $6.6 billion. iShares Global Clean Energy ETF (ICLN) is the largest, but in an ironic twist, it has greatly underperformed the Energy Select Sector SPDR Fund (XLE). ICLN is down 30% YTD, while XLE is off only 6%.
ICLN Vs. XLE (YTD % Change)
