Wednesday, January 4, 2017

Markets edge higher on December auto sales

Dow gained 20, advancers over decliners a surprising 4-1 & NAZ went up 24.  The MLP index was fractionally higher in the 318s & the REIT index rose 2 to the 343s.  Junk bond funds were a tad higher & Treasuries were slightly lower, extending recent weakness which has brought on higher yields.  Oil was a little higher (more below) & gold crawled higher.

AMJ (Alerian MLP Index tracking fund)

Light Sweet Crude Oil Futures,F

Gold Feb 17

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General Motors (GM) Dec deliveries beat forecasts while Ford (F) & Nissan posted surprise gains, increasing the likelihood that 2016 marked an unprecedented 7th-straight year of sales gains.  The largest US automaker said deliveries gained 10%, beating estimates for an increase of 4.4%.  Ford's light-vehicle sales increased 0.1% & Nissan's climbed 9.7%, topping estimates for declines of 2.1% & a 2.8%.  GM was the lone company among the 6 biggest sellers in the US predicted to report an increase in Dec, which had one fewer selling day than the year-earlier month.  If industrywide deliveries gain, or drop by less than about 2%, the full-year total will top last year's record of almost 17.5M.  Analysts project Dec sales will come in at a seasonally adjusted annualized rate of 17.6M & light trucks, up from last Dec's 17.5M rate.  The pace was 18M in Oct & 17.9M in Nov.  GM predicted an industry selling rate of 18.2M for Dec & a full-year total of 17.5M.  Fiat Chrysler (FCAU), which discontinued its compact & mid-size sedans, said deliveries fell 10%, better than a projected decline of 14%.

GM, Ford, Nissan Beat Estimates as U.S. Poised for Sales Record

This PM, the Federal Reserve will release the minutes from the Dec meeting when the central bank raised overnight interest rates for the 2nd time in more than 10 years.  Investors will look for any clues pointing to the future pace of increases.  The central bank, seeing an improving economic climate, could raise rates 3 times this year, up from previous plans for 2 hikes.  Those decisions are always data dependent.  Fed Chair Janet Yellen has emphasized she will take a wait-&-see approach before deciding how to respond to Trump's economic policies, including infrastructure spending & tax reform.

Fed Minutes in Focus

Oil edged higher on expectations that US crude oil inventories are falling & on signs that oil producers are willing to stick to agreed output cuts that came into effect this week.  West Texas Intermediate (WTI) crude futures were trading at $52.82 per barrel, up 49¢.  Weekly US statistics on oil stocks are expected to show a 1.7M barrel draw tomorrow.  OPEC member Kuwait also lifted expectations that producers will stick to a deal to reduce oversupply by scaling back production after its state-owned oil producer said it would cut output in Q1.  Members of OPEC in Nov agreed their first output cut since 2008 in a bid to stabilize oil prices.  As part of the deal, Kuwait has to reduce output by 131K barrels per day (bpd).  Also reflecting a tightening market, traders are expecting top oil exporter Saudi Arabia to raise the official selling price (OSP) for its crude to Asia in Feb.

Oil Prices Rise on Tighter Supply Outlook

Not much happening in the stock market.  Dow is still stuck just below 20K, a very important psychological ceiling.  The Trump rally has encountered headwinds for about 3 weeks & needs direction from the bulls.  Their eyes are watching the goings on in DC.  So far all that's come from those guys is a lot of hot air.

Dow Jones Industrials


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