Tuesday, December 12, 2017

Markets rise again on business executives' confidence

Dow jumped up 111 to another record, advancers over decliners 5-4  & NAZ lost chump change from its record.  The MLP index added another 3+ to the 272s & the REIT index went up 1+ to the 357s.  Junk bond funds were mixed & Treasuries retreated.  Oil slid back to the 57s & gold fell 7 to 1239.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil57.89

GC=FGold   1,242.70

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Stocks fluctuated, the $ advanced & Treasuries slipped after data showed signs of inflation in producer prices as the Federal Reserve starts its 2-day meeting.  The S&P 500 edged higher after closing at a record, while European equities pushed to a 5-week high amid a $5B deal in the tech sector.  Energy shares also rose, helped by firmer oil prices.  In Asia earlier, the Nikkei 225 retreated from a 26-year high, & Hong Kong & Chinese shares slipped.  The € weakened & most European bonds declined even as German investor confidence slid in Dec for the first time in 4 months.  Sterling fluctuated before gaining as UK. inflation unexpectedly accelerated to the highest rate in more than 5½  years.  Brent crude jumped above $65 a barrel for the first time since Jun 2015 after one of the most important pipelines in the world was shut because of a crack.  UK natural gas prices surged after a pipeline explosioni in Austria threatened to tighten flows.  Gold traded near a 5-month low while most industrial metals declined, led by nickel.   Trading remained lackluster at the beginning of the week as investors awaited the year's final central bank policy moves.  The Federal Reserve is expected to raise rates at its meeting on Wed & the ECB to reveal details of plans to taper asset purchases on Thurs.  The Bank of England & Swiss National Bank also meet.  Comments from officials on the outlook for 2018 will be in focus, as investors weigh the impact of coming policy normalization on global asset markets.

U.S. Stocks Mixed as Dollar Advances Before Fed: Markets Wrap

Optimism among small companies in the US advanced last month to the highest level in more than 34 years as owners became more upbeat about future economic conditions & sales prospects, according to a National Federation of Independent Business survey.  The Index rose by 3.7 points to 107.5 (est 104), highest in monthly data back to 1986 & highest since 1983 when looking at earlier quarterly figures.  Net 48% expect better business conditions in next 6 months, biggest share since Jan & up from 32% a month earlier.  Net 34% expect higher sales, largest share since 2005 & up from 21% in Sep.  The small-business optimism index showed all but 2 of the 10 components increased from a month earlier, including a record net 2% share of small-business owners who said they plan to add jobs.  Construction, manufacturing & professional services registered notable increases in planned hiring.  The figures indicate the recent solid pace of job growth will be sustained & help extend the economic expansion.  The share of NFIB respondents who say it’s a good time to expand rose to 27% from 23% & plans to add to inventories rose to a net 7% from 4%.

Optimism Among U.S. Small Businesses Jumps to Highest Since 1983

US wholesale prices rose more than forecast in Nov, boosted by a jump in the costs of goods that included gasoline, a Labor Dept report showed.  Producer-price index rose 0.4% (est 0.3%) for a 3rd straight month & PPI advanced 3.1% from a year earlier (the most since 2012).  Excluding food & energy, core gauge rose 0.3% from prior month & was up 2.4% from Nov 2016.  Price pressures in the production pipeline are firming up gradually, with commodity costs rising the most since Jan even as services prices cooled.  The report showed a 1% gain in the cost of goods, with more than 2/3 of the gain due to a 15.8% jump in gasoline prices that was the biggest since 2009.  Costs of light trucks, pharmaceuticals, beef & residential electric power also moved higher.  The PPI excluding food, energy & trade services, a measure some economists prefer because it strips out the most volatile components, increased 2.4% from Nov 2016, the most in records back to mid-2014.  Nonetheless, inflation at the household level remains below the Federal Reserve's goal.  Investors still expect that Fed policy makers will raise the benchmark interest rate by a qtr of a percentage point on the heels of an improving economy & a solid job market.

Stocks are flying high even though techs are lagging.  The rise in confidence by small business execs is bringing out buyers & can give the Dow is 67th record close this year.  The bulls are feeling great while they keep their fingers crossed that the guys in DC will deliver tax reform & along with other helpful legislation.  Now the Dow needs only about 500 to reach 25K.  Not that far away!!

Dow Jones Industrials


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