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Tuesday, January 5, 2016
Markets fluctuate after yesterday's sell-off
Dow gave 10, advancers ahead of decliners 4-3 & NAZ went up 8. The MLP index fell 2+ to the 289s & the REIT index added 3+ to the 323s. Junk bond funds were a little higher & Treasuries were sold. Oil is heading lower& gold was flattish.
Fiat Chrysler (FCAU) US sales rose 13% on
the back of gains for Jeep sport utility vehicles, as carmakers report
monthly results expected to topple the annual American sales record set
15 years ago. Nissan did better than expected, while Ford (F), GM
(GM) & Toyota (TM) missed estimates. FCAU sales reached 217K
cars & light trucks, for a 69th straight monthly gain. While a record total for the
month, that increase fell short of the 19% average estimate. Jeep deliveries increased 42% from a year earlier, led by the Cherokee & Grand
Cherokee.
Americans
renewed love of pickups & SUVs, spurred by low gasoline prices, cheap
credit, rising discounts & a strengthening labor market, boosted
demand for Jeep’s growing lineup. Full-year Jeep sales rose 25% to 865K. Nissan, which reported a 19% jump
that beat the 16% estimate. The biggest automakers were all expected to report gains of at least 10%, but
Ford & GM missed the mark. Ford light-vehicle sales rose
8.3%, compared with the 11% estimate, while GM grew 5.7%, missing the 10% forecast.
TM. sales rose 11%, just shy of the 12%
average. Industrywide
sales are expected to exceed an 18M sales rate for a record 4th straight month, helping make 2015 the best year ever for
automakers. FCAU projected an 18.3M pace, including medium & heavy-duty
trucks, which typically account for at least 200K sales. For the industry, 2015 record results would mark a 6th straight year of growing US sales, the longest streak since World War II. The surge is owed in part to buyers who were
soothed by job & wage growth, falling gasoline prices & carmakers
who upgraded their lineups & used discounts & cut-rate financing to
draw shoppers to showrooms.
At almost any other time, an escalating diplomatic conflict between
OPEC members Iran & Saudi Arabia would mean a spike in oil prices. That
the rally this time couldn't be sustained shows just how abnormal
things are in the oil market. Brent crude is little changed this week as
a global supply glut & the slowest Chinese growth in a generation
trumped mounting strife between the nations on either side of the
world's busiest waterway for oil tankers.
There
was little more than a blip in crude futures when Saudi Arabia severed
diplomatic ties with Iran, as investors focused instead on record stockpiles & rising supply.
As Kuwait & the UAE lined up to support Riyadh, the
internal divisions that prevented OPEC from making production cuts even as prices plunged
to an 11-year low appeared more entrenched than ever. Saudi
Arabia gave Iran’s ambassador 48 hours to leave after protesters set
its embassy in Tehran on fire following the execution of a Saudi cleric, a critic of the kingdom’s treatment of its Shiite minority. It was the worst clash between the nations since the 1980s, adding to proxy wars they were
already fighting from Syria to Yemen in a quest to gain influence in the
MidEast.
China struggled to shore up shaky sentiment after
its stock indices & yuan currency tumbled, rattling markets worldwide,
but analysts warned investors to buckle up for more wild price swings
in the months ahead. Both the central bank & the stock regulator reacted quickly, & major indices recouped most of their initial early losses Tues despite a late
afternoon scare. The People's Bank of China (PBOC) poured nearly $20B into
money markets, its largest cash injection since Sep, & traders
suspected it was using state banks to prop up the yuan at the same time. The China Securities Regulatory Commission (CSRC) announced it was planning new rules to further restrict share sales by
major stakeholders in listed companies & said it would further tweak
the circuit breaker mechanism amid criticism that it had fueled the Mon
sell-off. The blue-chip CSI300 index ended up 0.3% at 3478
after bouncing in a 4% range, while the Shanghai Composite Index
dipped 0.3% to 3287. How long any reprieve will last is still in question. Keeping China's notoriously volatile and speculative stock markets
stable will be a trick. Some market watchers say the gov
interventions have kept stock valuations excessively high given the
cooling economy & falling profits.
The Chinese & American stock markets have settled down after a wild day yesterday. These are not bullish times. Economies around the world are sputtering, not turning in positive numbers. Then there is political chaos highlighted by growing tensions in the MidEast. The Dec jobs report will be announced on Fri & that should have similar data to recent monthly employment reports. Jan is shaping up as a tough month for the stock market.
0.37 (1.0%)
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