Dow sank 179, decliners over advancers 3-1 & NAZ lost 19. The MLP index dropped 5+ to the 308s on lower oil prices & the REIT index was off 2 to the 313s. Junk bond funds were weak & Treasuries rose as stocks sold off. Oil is down to the 42s & gold also fell back.
AMJ (Alerian MLP Index tracking fund)
Surplus oil inventories are at the highest level in at least a decade because of increased global production, according to OPEC. Stockpiles in developed economies are 210M barrels higher than their 5-year average, exceeding the glut that accumulated in early 2009 after the financial crisis. Slowing non-OPEC supply & rising demand for winter fuels could “help alleviate the current overhang,” enabling a recovery in prices, it said. The group’s own production slipped last month because of lower output in Iraq. “The build in global inventories is mainly the result of the increase in total supply outpacing growth in world oil demand,” OPEC’s research dept said in its monthly report. Oil prices have lost 40% in the past year as several OPEC members pump near record levels to defend their market share against rivals such as the US shale industry. While inventories peaked in early 2009 as OPEC implemented record production cuts, this time the group has signaled it won’t pare supplies to balance global markets & US production is buckling only gradually in response to the price rout. The current excess is bigger than the surplus of 180M barrels to the 5-year seasonal average that developed in the Q1-2009. The 2009 glut was the only other occasion in the past 10 years when the glut has topped 150M barrels. OPEC kept unchanged its 2015 & 2016 forecasts for global oil demand, production outside the group, & the amount OPEC will need to pump. Non-OPEC supply will contract next year for the first time since 2007, decreasing by 130K barrels a day, as $200B in spending cuts takes its toll. Projects equivalent to 5M barrels of daily output have been delayed or canceled.
Applications for unemployment benefits were unchanged in the first week of Nov, signaling employers with a healthier appetite for hiring are also holding the line on layoffs. Jobless claims held at 276K, according to the Labor Dept. The forecast called for 270K. Filings are holding just above the 255K reached in mid-Jul, which was the lowest level since 1973. Companies are limiting staffing cutbacks as steady domestic demand allays some of the concern about weaker global sales. Payrolls rose in Oct by the most in 10 months & the jobless rate fell to a 7-year low, showing firmer labor-market progress that might convince the Federal Reserve to raise its benchmark interest rate next month. The 4-week average of claims, a less-volatile measure than the weekly figure, climbed to 267K, the highest since the end of Sep, from 262K in the prior week. The number continuing to receive jobless benefits rose 5K to 2.174M & the unemployment rate among people eligible for benefits held at 1.6%, where it’s been since mid-Sep. Since the beginning of Mar, claims have held below the 300K level that economists say is consistent with a strengthening the labor market.
Home prices climbed in 87% of US metropolitan areas in Q3, with gains nationwide slowing to a healthier pace, the National Association of Realtors said. The median price of an existing single-family home rose from a year earlier in 154 of the 178 areas measured. In Q2, 93% of metropolitan areas had price increases. Price growth in much of the country is being fueled by a combination of rising employment, low borrowing costs & a tight supply of properties on the market. Sales of existing homes rebounded in Sep to the 2nd-highest level since, the Realtors group. “The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies,” Lawrence Yun, the group’s chief economist, said. “While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales.” In Q3, 21 regions had price increases of 10% or more, down from 34 metro areas in Q2 & prices declined in 24 areas. The national median single-family home price was $229K in Q3, up 5.5% from a year earlier.
More & more signals are coming which look like they will give the Fed the courage to raise interest rates next month. This is long overdue & will not cripple the economy, but stocks are taking this thought badly. Dow is down 100 in Nov & in the red YTD with a gloomy outlook going forward.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLZ15.NYM | Crude Oil Dec 15 | 41.88 |  1.05 (2.5%) |
| GCX15.CMX | Gold Nov 15 | 1,086.60 | 1.90 (0.2%) |
Surplus oil inventories are at the highest level in at least a decade because of increased global production, according to OPEC. Stockpiles in developed economies are 210M barrels higher than their 5-year average, exceeding the glut that accumulated in early 2009 after the financial crisis. Slowing non-OPEC supply & rising demand for winter fuels could “help alleviate the current overhang,” enabling a recovery in prices, it said. The group’s own production slipped last month because of lower output in Iraq. “The build in global inventories is mainly the result of the increase in total supply outpacing growth in world oil demand,” OPEC’s research dept said in its monthly report. Oil prices have lost 40% in the past year as several OPEC members pump near record levels to defend their market share against rivals such as the US shale industry. While inventories peaked in early 2009 as OPEC implemented record production cuts, this time the group has signaled it won’t pare supplies to balance global markets & US production is buckling only gradually in response to the price rout. The current excess is bigger than the surplus of 180M barrels to the 5-year seasonal average that developed in the Q1-2009. The 2009 glut was the only other occasion in the past 10 years when the glut has topped 150M barrels. OPEC kept unchanged its 2015 & 2016 forecasts for global oil demand, production outside the group, & the amount OPEC will need to pump. Non-OPEC supply will contract next year for the first time since 2007, decreasing by 130K barrels a day, as $200B in spending cuts takes its toll. Projects equivalent to 5M barrels of daily output have been delayed or canceled.
OPEC Says Oil-Inventory Surplus Is Biggest in at Least a Decade
Applications for unemployment benefits were unchanged in the first week of Nov, signaling employers with a healthier appetite for hiring are also holding the line on layoffs. Jobless claims held at 276K, according to the Labor Dept. The forecast called for 270K. Filings are holding just above the 255K reached in mid-Jul, which was the lowest level since 1973. Companies are limiting staffing cutbacks as steady domestic demand allays some of the concern about weaker global sales. Payrolls rose in Oct by the most in 10 months & the jobless rate fell to a 7-year low, showing firmer labor-market progress that might convince the Federal Reserve to raise its benchmark interest rate next month. The 4-week average of claims, a less-volatile measure than the weekly figure, climbed to 267K, the highest since the end of Sep, from 262K in the prior week. The number continuing to receive jobless benefits rose 5K to 2.174M & the unemployment rate among people eligible for benefits held at 1.6%, where it’s been since mid-Sep. Since the beginning of Mar, claims have held below the 300K level that economists say is consistent with a strengthening the labor market.
Applications for U.S. Jobless Benefits Were Unchanged Last Week
Home prices climbed in 87% of US metropolitan areas in Q3, with gains nationwide slowing to a healthier pace, the National Association of Realtors said. The median price of an existing single-family home rose from a year earlier in 154 of the 178 areas measured. In Q2, 93% of metropolitan areas had price increases. Price growth in much of the country is being fueled by a combination of rising employment, low borrowing costs & a tight supply of properties on the market. Sales of existing homes rebounded in Sep to the 2nd-highest level since, the Realtors group. “The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies,” Lawrence Yun, the group’s chief economist, said. “While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales.” In Q3, 21 regions had price increases of 10% or more, down from 34 metro areas in Q2 & prices declined in 24 areas. The national median single-family home price was $229K in Q3, up 5.5% from a year earlier.
Home Prices Climbed in 87% of U.S. Metro Areas in Third
More & more signals are coming which look like they will give the Fed the courage to raise interest rates next month. This is long overdue & will not cripple the economy, but stocks are taking this thought badly. Dow is down 100 in Nov & in the red YTD with a gloomy outlook going forward.
Dow Jones Industrials
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