Friday, December 30, 2016

Markets drift lower as the year closes

Dow dropped 18, decliners a little ahead of advancers & NAZ fell 35.  The  MLP index gave back 1 to the 313s & the REIT index added 1 to the 337s.  Junk bond funds were higher & Treasuries were slightly higher.  Oil was down pennies while gold had a tiny gain.

AMJ (Alerian MLP Index tracking fund)

Crude Oil Feb 17

Gold Futures,Feb-2017

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The Trump era is marking a new age for gold as an investor safe haven.  While the precious metal has always been hoarded in times of trouble, a bevy of political & economic surprises in 2016 sparked a surge in buying that sent bullion to the first annual gain in 4 years.  Prices may rally 12% in 2017, according to a recent survey.  Fueling the bullish outlook is the risk of chaos on multiple fronts: a possible trade war from America's fraying relationship with China, the alleged Russian hack of US political parties, the UK's complicated exit from the EU & elections slated in France, Germany & the Netherlands that may see a rise of nationalist groups.  And then there are Trump's frequent Twitter posts, in which he feuded with rivals & made declarations that unsettled allies even before he takes office in 3 weeks.  Gold for immediate delivery is up 9.2% this year to $1158 an ounce, halting a 3-year slide.  More than 2/3 of the analysts & traders surveyed were bullish for 2017.  The forecast was $1300, with the year's peak seen at $1350.  That doesn't mean there aren't reasons to be bearish.  After starting 2016 with the biggest H1 in 4 decades, prices fell from their peak in Jul & investors have cut back on bullion holdings.  That was mostly because an improving US economy & higher interest rates made other assets more attractive, including equities.

The Institute for Supply Management gauge of factory activity in the Midwest region declined to 54.6 in Dec from 57.6 the month prior.  The forecast called for a slight decline to a reading of 57.0.  Readings above 50 point to expansion, while those below indicate contraction.

Midwest Manufacturing Growth Slowed in December

Trading is light with modest price swings.  After the year got off to a slow start, Dow rallied around 4K to almost 20K from its low in the middle of the year.  That is called one staggering advance.

Dow Jones Industrials


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