Friday, December 29, 2017

Markets slide lower in the last trading day for 2017

Dow fell 118 with selling into the close, decliners ahead of advancers about 3-2 & NAZ gave back 42.  The MLP index did little in the 275s & the REIT index was flattish in the 355s.  Junk bond funds were mixed & Treasuries found buyers today.  Oil climbed, closing above 60, & gold went up 8 to finish the year at 1305 (not to far from multi year highs).

AMJ (Alerian MLP Index tracking fund)

stock chart

Live 24 hours gold chart [Kitco Inc.]

3 Stocks You Should Own Right Now - Click Here!

A slide in Apple  (AAPL) & Goldman Sachs (GS) pulled the Dow lower on the last trading day of 2017, in what has been a banner year for US stocks.  AAPL declined about 1% after issuing a rare apology for slowing older iPhones with flagging batteries.  GS fell more than 1% after the bank said Q4 would take a $5B hit related to the tax overhaul.  Major US indices hit a series of record highs in 2017, riding on strong economic growth, solid corp earnings & low interest rates.  The benchmark S&P 500 has surged 20% this year, while the blue-chip Dow has gained more than 25% & tech-heavy NAZ about 29%.  All had best performances since 2013.  The market has also shown surprising strength despite tensions in North Korea & political upheavals in DC.  Among sectors, the technology index has been the best performer, rising about 37% & outpacing gains in the broader S&P index.  Telecom services & energy are the only 2 sectors to end the year in the red.  The rally is widely expected to extend into 2018, boosted by gains from a new law that lowers the tax burden on US corps.

Wall Street drifts lower on last trading day of 2017

US crude oil production in Oct rose to the highest in more than 46 years, while natural gas production leaped to a new record, US Energy Information Administration data showed.  The production increases in Oct compared to a year ago come on the heels of higher energy prices, with US crude futures recently touching $60 a barrel for the first time since mid 2015.  Natural gas futures hit near 4-week highs on today & were poised for their best weekly gain since Jul last year on higher demand expectations.  Production was expected to continue rising thru 2017 & into 2018, driven by rising exports & growing oil demand.  Oct crude production rose 167K barrels per day to 9.64M bpd, according to the EIA's monthly production report.  If the figure is not revised next month, it would be the highest monthly level since 1971.  The Sep oil production figures were revised down 11K bpd to 9.47M bpd.  In North Dakota, oil output rose by 83K bpd in Oct, while it jumped 206K bpd in Texas.  Offshore in the Gulf of Mexico, production declined 200K bpd.  Meanwhile, total US natural gas production rose to a new record in Oct, hitting 93.1B cubic feet per day (bcfd), up from 91.85B bcfd, according to the EIA, which tracks data back to 2006.  It was driven by a 2.4% monthly increase from Texas, the nation's largest natural gas producer, to 22.39B & Alaska, where production rose 7.3% from a month earlier.  The overall figure surpasses the previous record set in Apr 2015, when the nation produced 91.96 bcfd.  For the lower 48 states, the 83.97 bcfd produced also stands as a record, surpassing the previous record set a month earlier.  Crude exports rose to 1.73M bpd in Oct compared with 1.47M bpd in Sep.  Total refined oil product exports rose to 3M bpd in Oct, with gasoline exports rising to 732K bpd & distillate fuel exports rising to 1.5M bpd.

U.S. crude, natural gas output at multi-year records in Oct -EIA

The US oil rig count rose by about 42% by end-2017 compared to the levels seen during the corresponding period last year, as energy companies boosted spending amid a recovery in crude prices.  Drillers held the number of oil rigs steady for a 2nd straight week at 747 in the latest week.  That was 222 more than the 525 rigs at the end of 2016, Baker Hughes said.

US oil rig count ends 2017 up over 40%

Apple, a Dow & NAZ stock, apologized to customers for software changes that reduced the performance of older iPhones to prevent unexpected shutdowns, while saying the company hadn't intentionally set out to shorten the life of the products.  Aging batteries in the older iPhones contributed to the performance issues after a software update about a year ago, the company said.  In response to customer complaints, the company is cutting the price of replacement batteries for iPhones no longer covered by warranty.  AAPL has been confronted by a slew of lawsuits over the software tweak, which had led to noticeably slower performance in iPhone 6 & iPhone 6s models.  Some accused AAPL of intentionally slowing older iPhones to encourage consumers to replace them with newer, more expensive models.  The retail price of the iPhone X, which went on sale last month, starts at $999.  “We have never -- and would never -- do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades,” AAPL said.   “We’ve always wanted our customers to be able to use their iPhones as long as possible.”  AAPL added that it introduced the software in late 2016 because phones with older batteries were prone to shutting down when more energy intensive processes created greater power demands than the batteries could handle.  That fix reduced the demand on the batteries & limited the shutdown issue, but AAPL said in recent months users found the slowness of their iPhones had become intolerable.  Anyone with an iPhone 6 or later will be able to replace the battery for $29 instead of the current $79 beginning in late Jan, the company said.  It also will roll out an update to the iOS operating system that lets users see whether their battery's condition is affecting performance.  The stock lost 1.85.
If you would like to learn more about AAPL, click on this link:

Apple Apologizes for iPhone Speed Cuts to Prevent Crashing

The bulls started their long weekend early so they could have more time to enjoy profits.  Buyers were limited today, so the averages puled back.  However, this has been one tremendous year for the stock market.  Additionally, gold did quite well by rising more than 10% driven by investors who don't like stocks.  Next year the Dow & other averages will have a major challenge to match this year.  Although there were very few forecasts that 2017 would be a stellar year.  Best wishes for all in the new year!!

Dow Jones Industrials

Markets struggle on the last day of trading in 2017

Dow lost 34, decliners just ahead of  advancers & NAZ gave back 12.  The MLP index fell 1 to the 274s & the REIT index was flattish in the 355s.  Junk bond funds were lower & Treasuries crawled higher.  Oil climbed over 60 again & gold advanced, taking it to 1305.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil60.02

GC=FGold   1,304.60

3 Stocks You Should Own Right Now - Click Here!

Stocks fluctuated in thin trading on the final market day of 2017, while the $s slump continued as the € headed for its best annual performance in 14 years.  The S&P 500 Index was little changed, leaving its gain this year just over 20%, the most since 2013, while the Dow edged to a fresh record.  The Stoxx Europe 600 Index pushed higher, on the cusp of its 5th rise in the past 6 years.  The Bloomberg Dollar Index fell for a 3rd day, heading for its worst year in more than a decade, while the € closed in on $1.20 for the first time since Sep.  The Bloomberg Commodity Index extended a record-breaking string of gains, as WTI crude held above $60 a barrel & copper declined.  With little news to drive trading ahead of the New Year holidays, investors returned to themes familiar for the year, a synchronous global expansion & go-slow approach toward monetary-stimulus withdrawal in major economies, which has been a winning recipe for equities & a loser for the greenback.

U.S. Stocks Mixed, Euro Seeks Best Year Since '03: Markets Wrap

German inflation slowed in Dec, underscoring the challenge the ECB will face next year as it gradually removes its stimulus program.  Consumer prices rose an annual 1.6%, the Federal Statistics Office said.  While that's slower than Nov's 1.8% but above the 1.4% forecast.  Inflation has remained tepid in Germany even as record-low unemployment bolsters private consumption & a recovery in global trade fuels exports & investment.  The Bundesbank this month lifted its projections for growth in Europe's largest economy thru 2019 & said it expects momentum to remain strong over the coming year.  It sees inflation accelerating to 1.9% in 2020.  The German number comes a week before data for the euro area, where consumer-price gains are expected to slow to an annual rate of 1.4%.  The ECB has already warned that inflation will slow temporarily in the coming months before accelerating again later in 2018.  Earlier this month, Pres Mario Draghi stopped short of declaring that the inflation goal will be met in 2020, although he expects underlying price pressures to rise gradually over the medium term as the euro-area economy enjoys its best growth in a decade.  The ECB will next month halve its monthly pace of asset purchases to €30B ($36B) & continue buying until at least Sep.

German Inflation Slows in December as ECB Moves to Curb Stimulus

Goldman Sachs (GS), a Dow stock, expects to take a $5B hit to profits for Q4 & year because of the tax overhaul signed into law last week.  The bank became one of the first to release details on how changes in the tax code will affect how money parked overseas is handled.  2/3 of the $5B are due to changes in repatriation taxes, when funds are returned from overseas.  The remainder includes the "effects of the implementation of the territorial tax system and the remeasurement of U.S. deferred tax assets at lower enacted corporate tax rates."  The new tax overhaul imposes a discounted one-time levy on money held overseas, 15.5% for earnings held in cash or other liquid assets & 8% for earnings held in harder-to-sell assets.  It would be a big one-time hit for GS, which had been expected to post Q4 net income of $2.07B.  US companies had found ways to legally park money overseas to avoid the higher US corp tax.  It has been expected that changes in the law would prompt many companies to return money to the US, potentially at least $2.5T.  After taking a hit on repatriated earns, GS, & other banks, will operate in a much more favorable tax environment.  Finance & insurance companies would have paid an effective corp tax rate of 26.1% next year.  Now, it will be 14.3%.  GS has estimated that the tax law will boost big-bank EPS by 13% next year.  Economists believe the overall effect on the economy will be muted, however, because of those cuts to the US corp tax rate.  Historically, repatriated profits have not had a broad effect on the US economy anyway.  The stock dropped 3.20.
If you would like to learn more about GS, click on this link:?

Goldman Sachs expects $5 billion hit from tax overhaul in 4Q

There is not a lot going on in light trading on the final day of trading this year.  But the Dow gained a massive 5K to 24.8K in 2017, making for one of its best year's in history.  That's up about 25%.  All the popular averages are very close to their record highs which were set this month.  This kind of advance will be difficult to match in 2018.

Dow Jones Industrials

Thursday, December 28, 2017

Higher markets with the Dow reaching yet another record

Dow advanced 63 (closing at the highs), advancers over decliners 3-2 & NAZ rose 10.  The MLP index added 1+ to the 275s & the REIT index was up 1+ to the 355s.  Junk bond funds were mixed & Treasuries drifted lower.  Oil was higher in the 59s (more below) & gold went up 5 to 1297, 10 week high.

AMJ (Alerian MLP index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

3 Stocks You Should Own Right Now - Click Here!

Your home may not have made the same gains as stocks, but it still was a robust year for the US housing market.  The value of the entire housing stock increased by 6.5%,or $2T, in 2017, according to a report from Zillow.  All homes in the country are now worth a cumulative $31.8T.  The gain in home values was the fastest since 2013, when real estate was in the early stages of its recovery from the recession.  Yet it still trails the surge in other assets, with the S&P 500 Index up about 19%.  Los Angeles is the most valuable US housing market at $2.7T, according to Zillow's estimate of owner-occupied & rental homes, with NY 2nd, at $2.6T.  The 10 most valuable metropolitan areas are worth $11.3T combined, 36% of the total value of the US housing stock.  A home might be a worse investment next year, as the new federal tax law reduces key benefits to ownership.  That includes a lower limit on the amount of debt eligible for the mortgage-interest deduction & a cap on state & local tax deductions.  Those changes will land hardest on homeowners in coastal markets with high property values -- & taxes -- & could lead to price declines, according to the National Association of Realtors.

Homes in U.S. Gained $2 Trillion in Value This Year, Zillow Says

On the heels of Pres Trump's first major legislative victory, the administration is turning an eye toward the New Year, with the infrastructure revamp topping the to-do list.  White House officials said that the pres will likely roll out his infrastructure principles next month, leading up to the State of the Union address.  Trump, House Speaker Paul Ryan & Senate Majority Leader Mitch McConnell are set to discuss the GOP's overarching infrastructure themes at Camp David on Jan 6 & 7.  The White House views infrastructure as three separate pieces, which include streamlining bureaucracy, funding & collapsing the agency review process.  The projected spending figures remain unchanged: a $1T package consisting of combined public-private spending.  The federal gov is looking to directly spend around $200B.  While an infrastructure revamp was widely viewed as a bipartisan proposal at the outset Trump's tenure, experts believe the outlook may be murkier after the passage of a tax reform bill that could pile on to the deficit.  His promised $1T infrastructure overhaul was supposed to be detailed within his first 100 days in office.  Transportation Secretary Elaine Chao said in Sep that states & localities will compete for gov funds, with the most innovative projects winning more federal $s.  The infrastructure revamp is expected to address everything from bridges, roads & airports to energy, broadband & even Veterans Affairs hospitals.  National Economic Director Gary Cohn said that having broadband in rural areas is a priority.  He also said that the gov needs to reimagine infrastructure based on the future, adding that the US can't keep building cities in 2050.  In addition to infrastructure, the pres has said he would like to address both health care & welfare reform in 2018.

Trump's infrastructure overhaul to be detailed next month

Oil prices traded mixed, lifted by strong data from top importer China amid thin trading activity ahead of the New Year weekend.  Heading into 2018, traders said market conditions were relatively tight due to ongoing supply cuts led by the Middle East-dominated OPEC, as well as top producer Russia.  West Texas Intermediate (WTI) crude futures were at $59.64 a barrel, unchanged from their last settlement.  WTI broke through $60 a barrel earlier this week, the first time since Jun 2015.  Brent crude futures were at $66.45 a barrel, up a penny & it broke thru $67 earlier this week, the first time since May 2015.  US crude stocks fell last week as refineries hiked output, while gasoline & distillate inventories rose, the Energy Information Administration said.  Crude inventories fell by 4.6M barrels as refineries hiked output in the week to Dec 22, compared with expectations for a decrease of 4.0M barrels.  Gasoline stocks rose 591K barrels, compared with expectations for a 1.3M-barrel gain.  Distillate stockpiles, which include diesel & heating oil, rose 1.1M barrels, versus expectations for a 584K-barrel drop, the EIA data showed.

Oil little changed after EIA data shows bigger-than-expected draw on U.S. crude reserves

On this sleepy day Dow advanced to a record high, although other popular averages were off their records set earlier in Dec.  The Dow need less than 170 to top 25K tomorrow, the last day of trading this year.  The bulls not on vacation may test that level.  With all the bullish sentiment for stocks, gold continues to be in demand by naysayers.

Dow Jones Industrials