Dow jumped up 100, advancers over decliners 5-2 & NAZ gained 79. The MLP index added 4+ to the 279s & the REIT index did not budge in the 355s. Junk bond funds were mixed & Treasuries declined. Oil was flattish above 60 & gold added 4 to 1313, a 3+ monthly high.
AMJ (Alerian MLP Index tracking fund)
Factories across the globe warned they are finding it increasingly hard to keep up with demand, potentially forcing them to raise prices as the world economy looks set to enjoy its strongest year since 2011. A slew of Purchasing Managers Indexes published today from China, Germany, France, Italy & the UK all pointed to deeper supply constraints. Shrinking capacity may mean companies have to hire or invest more to avoid overheating, yet it could also force them to push up prices, propelling inflation enough to squeeze the expansion. In the euro area, IHS Markit said “robust intakes of new business tested capacity” & there was a jump in backlogs of work as factories found it hard to keep up. In Germany, the region's largest economy, this “poses a risk to the sector’s ability to kick on,” it said. Firms expressed discomfort as Markit's measure of euro-area manufacturing growth accelerated to a record of 60.6 in Dec, capping a solid year for industry. The monthly report showed both new orders & output were the best in 17 years as exports gained. Germany's gauge rose to a record & France improved. Global growth also got a boost from a solid reading in China's manufacturing sector. With industry at its limits, there are implications for inflation in the euro region, which remains below the ECB's target of just under 2%. Bundesbank Pres Jens Weidmann, who wants to set an end-date for monetary stimulus, recently cited regional bottlenecks as setting the stage for stronger wage growth. “The missing element has been sustained higher inflation,” said Markit. “But the near-record incidences of supply-chain delays seen toward the end of 2017 indicate that pricing power is shifting from the buyer to the seller, suggesting upward price pressures are gradually returning.” At the same time, input costs remain “elevated” across a number of economies, partly reflecting higher raw material prices.
Global Manufacturers Strain to Keep Up With Faster Economy
The $ weakened against all G-10 peers, US stocks rose & Treasuries fell in the first official day of trading in 2018. European stocks started the year in the red, failing to capitalize on a positive Asian session as the strength of the region's common currency weighed on exporters. The S&P 500 opened higher after posting its best annual returns since 2013. The Stoxx Europe 600 Index dropped, with automakers leading the decline as most industry sectors headed lower. In Asia, the MSCI Asia Pacific Index climbed to a record, though markets in Tokyo remain closed until Thurs for Japanese holidays. Chinese equities led gains as property shares soared & a gauge of the nation's manufacturing strength beat expectations. European bonds dropped & the € strengthened to near a 3-year high against the $ as the region's manufacturing activity expanded in line with estimates in Dec. The Bloomberg Dollar Index hit a 3-month low, helping propel gold to the highest since Sep. West Texas oil fluctuated as Iran said protests in the country will fade in days. Investors begin 2018 on the heels of a winning year for equities & a losing one for the greenback. Global stocks last year posted their best performance since 2009, fueled by a synchronous expansion & a go-slow approach toward monetary-stimulus withdrawal in major economies.
As automakers seal their first annual U.S. sales decline since 2009, expectations for more interest-rate hikes are bolstering the nearly unanimous view that car demand will shrink again in 2018. Few analysts anticipate sales this year will reach 17M vehicles, which was just achieved for a 3rd-straight year and only the 5th time in history. The Federal Reserve forecasts 3 rate hikes this year, crimping the free-flowing credit that’s helped fuel a record streak of demand growth that’s come to an end. The central bank, which hiked rates 3 times in 2017, raises interest rates to keep the economy from overheating & leading to high inflation. For consumers, those protective measures make it more expensive to take on new car loans or leases. The final tally for 2017 industry deliveries will be reported tomorrow when automakers announce Dec results. Analysts project that all major carmakers will report declines compared with the blowout final month of 2016, which benefited from an extra selling day. Industrywide, Dec sales probably ran at about a 17.7M annualized rate, analysts estimated, down from the nearly 18.2M pace logged the previous Dec but still among the top months of the year.
Fed Outlook for Higher Rates Dims U.S. Auto Sales View for 2018
Stocks are extending their winning ways after an outstanding year in 2017. Economic data looks to be very strong & the bulls are looking to take the Dow over 25K, only 180 away currently. The biggest impediment is dysfunctional DC where conditions remain the same as last year. Just a couple of the biggies needing work are funding the gov thru Sep & then raising the debt ceiling by roughly Mar. As stock averages are close to record highs, gold, negative bets on the stock market, continues to rise above 1300, nearing its multi year highs. This has the making of an exciting year for investors.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 60.26 | -0.16 | -0.3% |
| GC=F | Gold | 1,314.20 | +4.90 | +0.4% |
Factories across the globe warned they are finding it increasingly hard to keep up with demand, potentially forcing them to raise prices as the world economy looks set to enjoy its strongest year since 2011. A slew of Purchasing Managers Indexes published today from China, Germany, France, Italy & the UK all pointed to deeper supply constraints. Shrinking capacity may mean companies have to hire or invest more to avoid overheating, yet it could also force them to push up prices, propelling inflation enough to squeeze the expansion. In the euro area, IHS Markit said “robust intakes of new business tested capacity” & there was a jump in backlogs of work as factories found it hard to keep up. In Germany, the region's largest economy, this “poses a risk to the sector’s ability to kick on,” it said. Firms expressed discomfort as Markit's measure of euro-area manufacturing growth accelerated to a record of 60.6 in Dec, capping a solid year for industry. The monthly report showed both new orders & output were the best in 17 years as exports gained. Germany's gauge rose to a record & France improved. Global growth also got a boost from a solid reading in China's manufacturing sector. With industry at its limits, there are implications for inflation in the euro region, which remains below the ECB's target of just under 2%. Bundesbank Pres Jens Weidmann, who wants to set an end-date for monetary stimulus, recently cited regional bottlenecks as setting the stage for stronger wage growth. “The missing element has been sustained higher inflation,” said Markit. “But the near-record incidences of supply-chain delays seen toward the end of 2017 indicate that pricing power is shifting from the buyer to the seller, suggesting upward price pressures are gradually returning.” At the same time, input costs remain “elevated” across a number of economies, partly reflecting higher raw material prices.
Global Manufacturers Strain to Keep Up With Faster Economy
The $ weakened against all G-10 peers, US stocks rose & Treasuries fell in the first official day of trading in 2018. European stocks started the year in the red, failing to capitalize on a positive Asian session as the strength of the region's common currency weighed on exporters. The S&P 500 opened higher after posting its best annual returns since 2013. The Stoxx Europe 600 Index dropped, with automakers leading the decline as most industry sectors headed lower. In Asia, the MSCI Asia Pacific Index climbed to a record, though markets in Tokyo remain closed until Thurs for Japanese holidays. Chinese equities led gains as property shares soared & a gauge of the nation's manufacturing strength beat expectations. European bonds dropped & the € strengthened to near a 3-year high against the $ as the region's manufacturing activity expanded in line with estimates in Dec. The Bloomberg Dollar Index hit a 3-month low, helping propel gold to the highest since Sep. West Texas oil fluctuated as Iran said protests in the country will fade in days. Investors begin 2018 on the heels of a winning year for equities & a losing one for the greenback. Global stocks last year posted their best performance since 2009, fueled by a synchronous expansion & a go-slow approach toward monetary-stimulus withdrawal in major economies.
Dollar Extends Decline; European Stocks Slide: Markets Wrap
As automakers seal their first annual U.S. sales decline since 2009, expectations for more interest-rate hikes are bolstering the nearly unanimous view that car demand will shrink again in 2018. Few analysts anticipate sales this year will reach 17M vehicles, which was just achieved for a 3rd-straight year and only the 5th time in history. The Federal Reserve forecasts 3 rate hikes this year, crimping the free-flowing credit that’s helped fuel a record streak of demand growth that’s come to an end. The central bank, which hiked rates 3 times in 2017, raises interest rates to keep the economy from overheating & leading to high inflation. For consumers, those protective measures make it more expensive to take on new car loans or leases. The final tally for 2017 industry deliveries will be reported tomorrow when automakers announce Dec results. Analysts project that all major carmakers will report declines compared with the blowout final month of 2016, which benefited from an extra selling day. Industrywide, Dec sales probably ran at about a 17.7M annualized rate, analysts estimated, down from the nearly 18.2M pace logged the previous Dec but still among the top months of the year.
Fed Outlook for Higher Rates Dims U.S. Auto Sales View for 2018
Stocks are extending their winning ways after an outstanding year in 2017. Economic data looks to be very strong & the bulls are looking to take the Dow over 25K, only 180 away currently. The biggest impediment is dysfunctional DC where conditions remain the same as last year. Just a couple of the biggies needing work are funding the gov thru Sep & then raising the debt ceiling by roughly Mar. As stock averages are close to record highs, gold, negative bets on the stock market, continues to rise above 1300, nearing its multi year highs. This has the making of an exciting year for investors.
Dow Jones Industrials
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