Dow gained 46, advancers over decliners almost 5-4 & NAZ added 5. The MLP index recovered 5+ to go over 310 & the REIT index was flattish at 310. Junk bond funds drifted lower & Treasuries climbed higher, seen as a safe-haven investment. Oil continued weak & gold saw minimal buying.
AMJ (Alerian MLP Index tracking fund)
Business conditions in NY continued to deteriorate in Nov, declining for a 4th straight month despite recent signs of stabilization in the manufacturing sector, according to the Federal Reserve Bank of New York. The business conditions index came in at -10.7 this month, compared with -11.4 in Oct & -14.7 in Sep. Economists expected the gauge to improve to -5. A reading above zero reflects expansion; a reading below that level denotes contraction. The index is still firmly in contractionary territory & again fell short of the bounce economists expected. The US manufacturing sector remains under pressure from weaker global demand & from the stronger dollar, which makes exports more expensive. Recent reports from some pockets of the country have shown modest improvement, though producers in the northeast have continued to report unfavorable conditions. The gauge follows the gov latest employment report, which showed no change in overall manufacturing hiring activity last month but a slight improvement in the length of employees' workweek.
Japan slipped into its 4th technical recession in 5 years during Jul-Sep, spotlighting how the gov's "Abenomics" policies have struggled to drag the economy out of chronic stagnation. Data showed the world's 3rd-largest economy shrank an annual 0.8% in Q3 after a 0.7% contraction in the prior qtr, putting it firmly into recession - 2 consecutive qtrs of declines. The data highlights the need for structural reform aimed at breaking thru supply-side constraints including labor shortages in a fast-ageing society, which suffered from chronic deflation for more than 15 years. Economics Minister Akira Amari noted a shortage of labor available for public works projects to stimulate the economy, highlighting a major constraint policymakers face, not enough suitable workers to build growth. Amari nodded when asked if he saw "no need" to craft an extra budget to stimulate demand right away, despite Treasury Sec Jack Lew proposing earlier that Japan should provide more fiscal support to ensure it returns to growth, led by domestic demand. Amari urged Japanese firms to use their record cash holdings to raise wages & boost capital spending to generate a virtuous circle of growth led by the private sector, instead of simply demanding yet more stimulus when such growth remained elusive.
The average price of crude sold by OPEC fell below $40 a barrel for the first time 2009, underscoring the financial cost of the group’s strategy to defend its market share. The daily OPEC Basket Price fell to $39.21 a barrel on Fri. The basket typically trades below intl oil futures as some OPEC nations pump denser or higher-sulfur crude that’s less profitable to refine. Oil has slumped since the middle of last year as OPEC keeps output elevated to pressure rivals it sees as responsible for creating a global surplus. A decline in production among its higher-cost competitors including US shale drillers has now slowed, with output still above last year’s level. With OPEC members’ revenues diminished, the group may reconsider its approach if the price slump persists, according to the International Energy Agency. OPEC’s annual revenues may be curbed to $550B at current prices from an average of more than $1T in the last 5 years, the IEA said. Even Saudi Arabia, the group’s biggest member, faces a budget deficit this year that the IMF predicts will exceed 20% of GDP. OPEC Secretary-General Abdalla El-Badri, said this month that the global market is on track to rebalance next year.
OPEC Export Price Falls Below $40 for First Time Since 2009
All considered, the markets are behaving well. The attack in Paris was rude & major shock to the markets but there has not been significant selling, at least for the time being. Stepping up war efforts against ISIS may cause already nervous markets to sell off. Dow is significantly in the red YTD.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLZ15.NYM | ....Crude Oil Dec 15 | ...40.68 |  ...0.06 | (0.2%) |
| GCX15.CMX | ...Gold Nov 15 | .....1,087.30 | ...6.50 | (0.6%) |
Business conditions in NY continued to deteriorate in Nov, declining for a 4th straight month despite recent signs of stabilization in the manufacturing sector, according to the Federal Reserve Bank of New York. The business conditions index came in at -10.7 this month, compared with -11.4 in Oct & -14.7 in Sep. Economists expected the gauge to improve to -5. A reading above zero reflects expansion; a reading below that level denotes contraction. The index is still firmly in contractionary territory & again fell short of the bounce economists expected. The US manufacturing sector remains under pressure from weaker global demand & from the stronger dollar, which makes exports more expensive. Recent reports from some pockets of the country have shown modest improvement, though producers in the northeast have continued to report unfavorable conditions. The gauge follows the gov latest employment report, which showed no change in overall manufacturing hiring activity last month but a slight improvement in the length of employees' workweek.
New York Factory Gague Stuck in Contraction
Japan slipped into its 4th technical recession in 5 years during Jul-Sep, spotlighting how the gov's "Abenomics" policies have struggled to drag the economy out of chronic stagnation. Data showed the world's 3rd-largest economy shrank an annual 0.8% in Q3 after a 0.7% contraction in the prior qtr, putting it firmly into recession - 2 consecutive qtrs of declines. The data highlights the need for structural reform aimed at breaking thru supply-side constraints including labor shortages in a fast-ageing society, which suffered from chronic deflation for more than 15 years. Economics Minister Akira Amari noted a shortage of labor available for public works projects to stimulate the economy, highlighting a major constraint policymakers face, not enough suitable workers to build growth. Amari nodded when asked if he saw "no need" to craft an extra budget to stimulate demand right away, despite Treasury Sec Jack Lew proposing earlier that Japan should provide more fiscal support to ensure it returns to growth, led by domestic demand. Amari urged Japanese firms to use their record cash holdings to raise wages & boost capital spending to generate a virtuous circle of growth led by the private sector, instead of simply demanding yet more stimulus when such growth remained elusive.
Japan Relapses into Recession, Blow to Abenomics
The average price of crude sold by OPEC fell below $40 a barrel for the first time 2009, underscoring the financial cost of the group’s strategy to defend its market share. The daily OPEC Basket Price fell to $39.21 a barrel on Fri. The basket typically trades below intl oil futures as some OPEC nations pump denser or higher-sulfur crude that’s less profitable to refine. Oil has slumped since the middle of last year as OPEC keeps output elevated to pressure rivals it sees as responsible for creating a global surplus. A decline in production among its higher-cost competitors including US shale drillers has now slowed, with output still above last year’s level. With OPEC members’ revenues diminished, the group may reconsider its approach if the price slump persists, according to the International Energy Agency. OPEC’s annual revenues may be curbed to $550B at current prices from an average of more than $1T in the last 5 years, the IEA said. Even Saudi Arabia, the group’s biggest member, faces a budget deficit this year that the IMF predicts will exceed 20% of GDP. OPEC Secretary-General Abdalla El-Badri, said this month that the global market is on track to rebalance next year.
OPEC Export Price Falls Below $40 for First Time Since 2009
All considered, the markets are behaving well. The attack in Paris was rude & major shock to the markets but there has not been significant selling, at least for the time being. Stepping up war efforts against ISIS may cause already nervous markets to sell off. Dow is significantly in the red YTD.
Dow Jones Industrials
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