Tuesday, November 22, 2016

Trump rally continues as Dow briefly tops 19,000

Dow gained 22 (after topping 19K briefly), advancers over decliners  better than 2-1 & NAZ gained 8.  The MLP index went up a fraction to the 305s & the REIT index added 2+ to the 324s.  Junk bond funds were a little higher & Treasuries finally found a few buyers.  Oil  fluctuated near 48 & gold slid a little lower.

AMJ (Alerian MLP Index tracking fund)

Light Sweet Crude Oil Futures,J

Gold Futures,Feb-2017

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Stocks headed toward their highest level in almost a month as a rally in metals lifted commodity producers.  Oil fluctuated.  The MSCI All Country World Index extended this month's advance, the Dow topped 19K for the first time & emerging-market shares surged.  Gold headed for its first back-to-back increase since Trump's election.  Oil traded near $48 a barrel as OPEC members sought to reach a deal on output cuts.  European bonds rallied on bets policy makers will extend their stimulus program.  Equities rose on speculation the US economy is strong enough to withstand higher borrowing costs.  The market-implied odds of a Fed hike in Dec reached 100%.  A rate increase “could well become appropriate relatively soon,” Fed Chair Janet Yellen said last week.  The fresh stock highs also came as American companies ended a 5-qtr profit slump.

Stocks Rise With Commodities as Dow Tops 19,000; Oil Fluctuates

The China-US relationship is “too big to fail” & Trump shares an obligation to make sure ties between the world's 2 largest economies improve & never worsen, the Communist Party's People’s Daily newspaper said.  The flagship newspaper said in an editorial that the importance of China's relationship with the US was self-evident & any breakdown in ties could result in global “disaster.”  The piece reiterated pres Xi Jinping's message in a post-election telephone call with Trump last week that cooperation was the only correct choice for managing ties.

China Tells Trump That Ties With U.S. Are ‘Too Big to Fail’

Sales of previously owned US homes unexpectedly climbed in Oct to the highest level since Feb 2007, a sign of momentum in the housing market a month before a jump in borrowing costs, National Association of Realtors data showed.  Contract closings rose 2% to a 5.60M annual rate (forecast was for 5.44M).  Sales increased 0.5% from Oct 2015 before seasonal adjustment.  The median sales price rose 6% from Oct 2015 to $232K.  Inventory of available properties fell 4.3% from Oct 2015 to 2.02M, marking the 17th straight year-over-year decline.  Steady hiring, a pickup in incomes & better household finances are propelling demand in the repeat sales market, even as a shortage of available properties limits choices & pushes up prices.  Bigger advances may prove difficult after a surge in mortgage rates on speculation Trump's economic plans will spark inflation.  Higher borrowing costs could discourage first-time buyers who may already have trouble qualifying for a loan,a hurdle for further improvement in the housing recovery.

U.S. Existing Home Sales Climb to Highest Since Early 2007

In this semi-holiday week, buyers are taking command.  They are throwing caution to the wind, after giving Janet permission for a rate hike in Dec.  An improving economy is considered more important.  Despite all the civil unrest, Dow is behaving as if the sky is the limit.  But worriers are worried because emotions are driving this rally.

Dow Jones Industrials


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