Monday, December 19, 2016

Higher markets from year-end holiday feelings.

Dow rose 39, advancers over decliners 3-2 & NAZ added 20.  The MLP index was fractionally higher in the 305s & the REIT index climbed 3+ to the 339s.  Junk bond funds were a little higher & Treasuries finally advanced with the yield on the 10 year Treasury still above 2½%.  Oil was off pennies (more below) & gold had a modest gain.

AMJ Anes Industrials

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Federal Reserve Chair Janet Yellen said economic gains are finally raising living standards for most Americans as a healthy labor market contributes to higher wages.  “After years of a slow economic recovery, you are entering the strongest job market in nearly a decade,” Yellen told a class of graduating students at the Univ of Baltimore.  “There are also indications that wage growth is picking up, and weekly earnings for younger workers have made strong gains over the past couple of years.”  Her speech comes less than a week after Fed policy makers signaled growing confidence in the US economy by raising the Fed's benchmark lending rate by a ¼ percentage point & increasing the number of similarly sized hikes they expect in 2017 to 3 from 2.  Yellen both lauded a strong labor market & said degrees will help young people to take advantage of the opportunities the modern world presents.  “While globalization will likely continue and technology will continue to advance, we don’t know how fast the economy will grow, what new technologies will be developed, or how quickly and consistently employment will expand,” Yellen added.  “Success will continue to be tied to education, in part because a good education enhances one’s ability to adapt to a changing economy.”  The jobless rate for those with a bachelor's degree or higher is down to 2.3%, the lowest since 2008.  While overall unemployment in the US is twice that, at 4.6%, it’s at its lowest in more than 9 years.  “This is a level that has been associated with good job opportunities,” Yellen said.

Yellen Sees Economic Gains Boosting Workers in Strong Job Market

German business sentiment rose to the highest level in almost 3 years in Dec, signaling growth in Europe's largest economy picked up speed toward the end of the year.  The Ifo institute business climate index climbed to 111 from 110.4 in Nov, the strongest since Feb 2014 & compares with an estimate 110.6.  The report is the latest indication that Germany's economy may be back in the fast lane after a temporary slowdown in the summer months.  IHS Markit's Purchasing Managers’ Index showed last week that manufacturing was expanding at its strongest pace in almost 3 years in Dec, after unemployment held at a record low the previous month.  “It looks like the German economy is getting a good start next year,” Ifo President Clemens Fuest said.  “It’s looking quite good, it’s looking solid.”  The institute raised its growth projections for the next 2 years.  A measure of current economic conditions rose to 116.6 from 115.6 &  Ifo's gauge of expectations improved to 105.6 from 105.5.

German Business Confidence Improves as Growth Strengthens

General Motors will temporarily close 5 factories next month as it tries to reduce a growing inventory of cars.  The factories will close anywhere from 1-3 weeks due to the continuing US market shift toward trucks & SUVs.  Just over 10K workers will be idled.  The Detroit-Hamtramck & Kansas City, Kansas, factories will be shut down for 3 weeks, while a plant in Lansing, Michigan, will be down for 2 weeks.  Factories in Lordstown, Ohio, & Bowling Green, Kentucky, each will be idled for one week.  The factories make just about every car in the company''s lineup.  Last month, almost 62% of all US vehicle sales were trucks & SUVs.  The stock was up pennies.  If you would like to learn more about GM, click on this link:

GM to temporarily close 5 factories as car inventory builds

General Motors (GM)

Oil prices ended little changed after news that a Russian ambassador to Turkey was shot & killed in Ankara.  Traders said news of the shooting raised concerns about political risks around the globe, which can be supportive for oil futures.  Overall, crude-futures trading saw up-&-down action but in a fairly narrow range.  Investors wrestled with news that Libya's National Oil Co called a halt to the planned relaunch of production at oil fields in the country's western regions, which is supportive for prices, & lingering concerns about the effectiveness of a pact to shrink global inventories, spearheaded by OPEC.  Against, that backdrop West Texas Intermediate crude oil for Feb delivery ended up 11¢ (0.2%) at $53.06 a barrel.

Oil Settles Modestly Higher Amid Geopolitical

The world remains out of control as stock markets edge higher.  A Russian ambassador was shot dead in Turkey, 9 were killed by a truck in Berlin while Syria is a disaster where nobody knows how many have been killed.  This is an ugly backdrop for popular stock averages at record highs.  The year end rally may be motivating buyers now, but the Dow continues to be well overbought & subject to a sharp correction.

Dow Jones Industrials

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