Dow lost 15, advancers slighlty ahead of decliners & NAZ was off pennies. The MLP index fell 1+ to the 285s & the REIT index added 1 to the 355s (nearing recent record levels). Junk bond funds hardly budged & Treasuries crawled higher. Oil dropped (more below) & gold went up 5 to 1295 (above recent lows in the mid 1200s).
Dow Jones Inudstrials
OPEC expects its efforts to clear the surplus in oil inventories to finally succeed by the end of Q3 of next year. OPEC along with allies including Russia have been cutting oil production this year to bring fuel inventories in industrialized nations back in line with the 5-year average. They hope to end an unprecedented build-up that sent prices plunging from above $100 a barrel in 2014 to around $50 currently, but the process has taken longer than expected & the deal has already been extended beyond its initial Jun expiry. It estimated that stockpiles in developed nations were still about 171M barrels above that average in Aug, but expected trends in supply & demand will eliminate the surplus in about a year. The forecasts assume that Libya & Nigeria's production will remain at current levels & US shale output will expand by no more than 500K barrels a day next year. Although the current production curbs are due to expire at the end of Mar, OPEC's estimates suggest producers will have to extend them to achieve their long-stated objective. It has been estimated that they would need to maintain output around current levels in order to create a supply deficit next year big enough to erode stockpiles. OPEC & allies will hold a meeting in Vienna on Nov 30 where they may decide whether to prolong the measures. Russian Pres Putin signaled earlier this month that he's prepared to keep the accord going until the end of next year. OPEC's projections align with those of the Energy Information Administration, the statistical arm of the Dept of Energy. The Intl Energy Agency estimated in its monthly report that the decline in inventories this year will halt in 2018 due to rising supplies from the US & elsewhere. Even if stockpiles remain stable, they could continue to converge with the 5-year average, which is steadily rising following years of oversupply.
Applications for unemployment benefits declined last week to the lowest level since late Aug, before major hurricanes sent jobless claims soaring, Labor Dept figures showed. Jobless claims decreased 15K to 243K (est. 250K). Continuing claims dropped by 32K to 1.89M in week ended Sep 30, the lowest since 1973. The 4-week average of initial claims, a less-volatile measure than the weekly figure, fell to 257.5K from 267K. Jobless claims have returned to levels seen before hurricanes Harvey & Irma slammed into the southern US in late Aug & early Sep that eventually caused a spike in applications. While the Labor Dept said the latest data still reflect the impacts of the Atlantic hurricane season, the number of filings for jobless benefits is consistent with a robust labor market. Employers remain reluctant to dismiss people amid a shortage of qualified workers, which has kept claims hovering near the lowest level in more than 4 decades. Unemployment rate among people eligible for benefits fell to 1.3% from 1.4%.
House Speaker Paul Ryan said that lawmakers may be required to forego Christmas recess in order to complete tax reform before year's end. “We’re going to keep everybody here through Christmas if we have to,” Speaker Ryan said. “I mean, I don’t care, we have got to get this done … it’s just that important.” He added that the GOP is actually on schedule to meet its Dec deadline, after the House & a Senate committee passed the budget resolution last week. The measure is expected to move thru the wider Senate next week, according to Ryan & is a critical piece of the tax reform puzzle because it contains the “revenue line” for tax reform, as well as the reconciliation mandate. After the budget resolution is adopted, the House Ways & Means Committee can introduce the tax reform bill & the GOP expects to move that over to the Senate in Nov. Despite divisions within Reps over specific proposals in the bill, such as the elimination of state & local tax deductions & how it will be paid for, Ryan said conservatives are “as unified about this” as they have been about “anything else [he’s] ever seen.” Though the Speaker also noted he had no “illusions” about how challenging tax reform would be. Some experts & investors are skeptical about Reps ability to pass a tax plan in the wake of its failure to coalesce around one of various proposed efforts to repeal & replace ObamaCare Act this summer. Ryan said he expected tax reform to be simpler because the entire bill can be approved thru reconciliation, while only pieces of health care could be pushed thru using the fast-track process due to regulatory constrictions. “This is a ‘one and done’ effort,” he said.
Stocks are churning, looking for direction. Earnings will come out in full force nest week, which will move the markets. Those guys in DC are under pressure & seem like they want to make tax reform happen. That should be the main driver for stocks going forward.
Dow Jones Inudstrials
Dow Jones Inudstrials
| CL=F | Crude Oil | 50.33 | -0.97 | -1.9% |
| GC=F | Gold | 1,292.70 | +3.80 | +0.3% |
OPEC expects its efforts to clear the surplus in oil inventories to finally succeed by the end of Q3 of next year. OPEC along with allies including Russia have been cutting oil production this year to bring fuel inventories in industrialized nations back in line with the 5-year average. They hope to end an unprecedented build-up that sent prices plunging from above $100 a barrel in 2014 to around $50 currently, but the process has taken longer than expected & the deal has already been extended beyond its initial Jun expiry. It estimated that stockpiles in developed nations were still about 171M barrels above that average in Aug, but expected trends in supply & demand will eliminate the surplus in about a year. The forecasts assume that Libya & Nigeria's production will remain at current levels & US shale output will expand by no more than 500K barrels a day next year. Although the current production curbs are due to expire at the end of Mar, OPEC's estimates suggest producers will have to extend them to achieve their long-stated objective. It has been estimated that they would need to maintain output around current levels in order to create a supply deficit next year big enough to erode stockpiles. OPEC & allies will hold a meeting in Vienna on Nov 30 where they may decide whether to prolong the measures. Russian Pres Putin signaled earlier this month that he's prepared to keep the accord going until the end of next year. OPEC's projections align with those of the Energy Information Administration, the statistical arm of the Dept of Energy. The Intl Energy Agency estimated in its monthly report that the decline in inventories this year will halt in 2018 due to rising supplies from the US & elsewhere. Even if stockpiles remain stable, they could continue to converge with the 5-year average, which is steadily rising following years of oversupply.
OPEC Sees Oil Inventory Glut Finally Gone in One Year
Applications for unemployment benefits declined last week to the lowest level since late Aug, before major hurricanes sent jobless claims soaring, Labor Dept figures showed. Jobless claims decreased 15K to 243K (est. 250K). Continuing claims dropped by 32K to 1.89M in week ended Sep 30, the lowest since 1973. The 4-week average of initial claims, a less-volatile measure than the weekly figure, fell to 257.5K from 267K. Jobless claims have returned to levels seen before hurricanes Harvey & Irma slammed into the southern US in late Aug & early Sep that eventually caused a spike in applications. While the Labor Dept said the latest data still reflect the impacts of the Atlantic hurricane season, the number of filings for jobless benefits is consistent with a robust labor market. Employers remain reluctant to dismiss people amid a shortage of qualified workers, which has kept claims hovering near the lowest level in more than 4 decades. Unemployment rate among people eligible for benefits fell to 1.3% from 1.4%.
House Speaker Paul Ryan said that lawmakers may be required to forego Christmas recess in order to complete tax reform before year's end. “We’re going to keep everybody here through Christmas if we have to,” Speaker Ryan said. “I mean, I don’t care, we have got to get this done … it’s just that important.” He added that the GOP is actually on schedule to meet its Dec deadline, after the House & a Senate committee passed the budget resolution last week. The measure is expected to move thru the wider Senate next week, according to Ryan & is a critical piece of the tax reform puzzle because it contains the “revenue line” for tax reform, as well as the reconciliation mandate. After the budget resolution is adopted, the House Ways & Means Committee can introduce the tax reform bill & the GOP expects to move that over to the Senate in Nov. Despite divisions within Reps over specific proposals in the bill, such as the elimination of state & local tax deductions & how it will be paid for, Ryan said conservatives are “as unified about this” as they have been about “anything else [he’s] ever seen.” Though the Speaker also noted he had no “illusions” about how challenging tax reform would be. Some experts & investors are skeptical about Reps ability to pass a tax plan in the wake of its failure to coalesce around one of various proposed efforts to repeal & replace ObamaCare Act this summer. Ryan said he expected tax reform to be simpler because the entire bill can be approved thru reconciliation, while only pieces of health care could be pushed thru using the fast-track process due to regulatory constrictions. “This is a ‘one and done’ effort,” he said.
Ryan on tax reform: Lawmakers will work through Christmas if necessary
Stocks are churning, looking for direction. Earnings will come out in full force nest week, which will move the markets. Those guys in DC are under pressure & seem like they want to make tax reform happen. That should be the main driver for stocks going forward.
Dow Jones Inudstrials
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