Key Takeaways
- Federal Reserve's Beth Hammack expressed significant concern over a bifurcated U.S. economy where lower-income households struggle while wealthier Americans drive consumption, noting monetary policy's limitations in addressing this divide.
- Inflation remains "too high," according to Hammack, who stated the Fed's biggest error has been on the inflation side, and it could take a couple of years to return to the 2% target. She also opposed recent rate cuts, viewing current policy as "barely restrictive, if at all."
- ConocoPhillips (COP) announced its total company capital break-even is declining, now in the mid-$40s per barrel, and plans a steady drilling program with approximately 24 rigs in the Lower 48 states.
- The average US 30-year fixed mortgage rate rose to 6.22% in the week of November 6th, up from 6.17% previously, according to Freddie Mac.
- Former President Donald Trump announced a deal with Eli Lilly (LLY) and Novo Nordisk (NVO) for a three-year tariff exemption in exchange for significant discounts on commonly used medicines, claiming Americans have a right to the lowest global prices.
Fed's Hammack on Economic Disparity and Monetary Policy Challenges
Cleveland Federal Reserve President Beth Hammack highlighted a significant challenge facing the U.S. economy: a bifurcated performance where lower-income households are struggling, while consumption is largely driven by wealthier Americans. Hammack emphasized that monetary policy is a "blunt" tool and cannot easily address this economic split. She regularly hears about this divided economy, noting the difficulties faced by those with lower incomes.
Hammack described the current period as a "challenging time for monetary policy making." She expressed concern about current policies due to persistent inflation, stating that inflation is "too high" and goes beyond just tariff pressure. In her view, the Federal Reserve's biggest error has been on the inflation side, rather than employment. She projected it would take "a couple of years" to return to the Fed's 2% inflation target. Hammack also indicated that some money market volatility is acceptable and supports an ample reserves framework.
Regarding interest rates, Hammack believes the Fed has done an excellent job managing the federal funds rate, though she noted it is a small market. She suggested that while it is good for the Fed to debate its interest rate target, changing it would likely not have a broader policy impact given the "increasingly narrow" Fed funds market. Hammack opposed the recent rate cut, stating that monetary policy is "barely restrictive, if at all," and it is "not obvious" that further easing is needed.
AI as a Significant Economic Shift
Hammack also commented on the rise of artificial intelligence (AI), calling it a "significant economic shift" that does not respond well to traditional monetary policy adjustments. She likened the current AI boom to the rise of the internet, suggesting its transformative potential.
Stablecoins: A Promising Innovation
In the realm of digital finance, Fed's Hammack views stablecoins as a "promising innovation" and an "exciting new technology."
ConocoPhillips's Strategic Outlook
Energy giant ConocoPhillips (COP) announced that its total company capital break-even is declining and is currently in the mid-$40s per barrel. The company plans to maintain a steady drilling program, operating approximately 24 rigs across the Lower 48 states.
Rising Mortgage Rates and Trump's Healthcare Announcements
The average US 30-year fixed mortgage rate increased to 6.22% in the week of November 6th, up from 6.17% in the previous week, according to Freddie Mac.
Separately, former President Donald Trump announced that many commonly used medicines would be sold at a 60% discount. He asserted that Americans must have access to the lowest prices for medicines worldwide, claiming this as a right. Furthermore, a U.S. official announced a three-year tariff exemption for pharmaceutical companies Eli Lilly (LLY) and Novo Nordisk (NVO). This deal was confirmed by the Trump administration, linking tariff relief to lower prices for their blockbuster weight-loss drugs.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.