Monday, August 14, 2017

Markets rise on easing North Korea tensions

Dow shot up 149, advancers over decliners about 5-1 & NAZ gained 74.  The MLP index added 2+ to 281 & the REIT index recovered 3+ to the 348s.  Junk bond funds fluctuated & Treasuries were weak.  Oil went up (more below) & & gold pulled back as stocks were being purchased.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil48.96

GC=FGold   1,287.90

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Stock benchmarks rallied, as a recent aversion to assets considered risky on the back of fears about tensions between the US & North Korea receded somewhat.  The Dow rose & the S&P 500 index advanced 0.9% at 2,461, buoyed by a 1.1% surge in the financials & technology sectors & the tech-heavy NAZ rose 1% at 6319.  The rebound in equities follows a one of the worst weeks in stock benchmarks in months & also comes after a weekend of violence in Charlottesville, Va.

Dow Jumps 130 Points As North Korea Tensions Ease

China's economy showed further signs of entering H2, as curbs on property, excess borrowing & industrial overcapacity began to bite.  Industrial output rose 6.4% from a year earlier in Jul, versus a projection of 7.1% & 7.6% in Jun.  Retail sales expanded 10.4% from a year earlier, compared with a projection of 10.8 % &11 percent in Jun.  Fixed-asset investment in urban areas rose 8.3% from a year earlier in the first 7 months, versus a forecast 8.6% rise.  The world's 2nd-largest economy faces some headwinds this year as the effects of deleveraging & industrial capacity cuts kick in, & those factors are beginning to show up in the hard data.  With cooling property markets & uncertainty in the trade outlook, policy makers may refrain from tightening too aggressively to keep growth humming, especially with the political transition entailed in the 19th Party Congress looming.

China's Economic Growth Dials Back

Oil prices edged down, depressed by a strong $ & concerns that reduced global appetite for crude might frustrate efforts by major producers to cut supply.  West Texas Intermediate futures were down 0.4% at $48.61 a barrel.  The appreciating $ helped push down crude futures.  As oil is priced in $s, the commodity becomes more expensive for holders of other currencies when the greenback appreciates.  Last week, the International Energy Agency published revised figures for global crude demand.  At the end of 2017, demand is now seen at 33M barrels a day, compared with a previous estimate of 33.6M barrels.   Since 2016, OPEC & a handful of nations outside the cartel have cut global oil supply by about 2% in an attempt to rebalance the market.  While global inventories have declined, stockpiles remain above the 5-year average, the level to which OPEC wants to return & oil prices have moved little.  Investors have grown concerned about a flood of crude coming from OPEC members Algeria, Iraq & the UAE.--all of which have fallen short of their pledges to rein in their output.  Moreover, Libya, which was exempt from the agreement to cut output, is ramping up production.  Another major drag on the market has been US oil production, which has slowed but continues to rise.  In the latest weekly count the number of active US oil rigs climbed by 3 to 768 rigs.

Oil prices pushed lower by strong dollar

It's not clear where the stock buying is coming from today.  It looks like the North Korea situation is easing & excitement in Va has quieted.  But the economic backdrop is pretty much the same as it has been since the Nov election.  Bulls are happy to see the Dow around 22K.

Dow Jones Industrials

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