Dow shot up 336 (closing a little of the highs), advancers over decliners about 5-2 & NAZ gained 72. The MLP index recovered 2+ to 261. Junk bond funds fell & the yield on the 10 year Treasury 2 basis points to 2.88% (remaining close to the important 3% level). Oil advanced well into the 62s (more below) & gold lost 3 to 1320.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.6044921485216318)
Pres Trump declared that he won't retreat from his plan to impose tariffs on steel & aluminum imports after House Speaker Paul Ryan rejected the plan, saying the US economy could suffer. Asked about these remarks, Trump was undeterred. "No, we’re not backing down,” he told reporters at the White House, less than ½ an hour after the speaker's office aired his concerns. Ryan's office said, “We are extremely worried about the consequences of a trade war & are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.” The statement marked an unusual public break between Ryan & the pres. Ryan has supported Trump even in some of the most controversial moments of his presidency. While Trump has regularly railed about China's trade practices, the impact of the tariffs of 25% on imported steel & 10% on aluminum may be most felt by US allies, the EU, Canada & Mexico. Harley-Davidson (HOG), the motorcycle maker, is facing threats of retaliation from Europe over Trump's plans for steel & aluminum tariffs. European Commission President Jean-Claude Juncker said the EU may target imports of the company's motorcycles as well as Kentucky bourbon & Levi Strauss jeans. HOG already is being hit by a deepening slump in US motorcycle demand, which has spurred job cuts & a plant closure.
Trump Says He Won’t Back Down After Ryan Breaks With Him on Tariffs
Stocks rose & Treasuries fell as investors speculated that Trump's tough tariff talk won't translate into the most severe protectionist policies. The S&P 500 advanced for a 2nd day noe money manager called the threat of a trade war "political show" & Speaker Ryan urged the pres to reconsider tariffs on steel & aluminum. The Dow transportation average remained in the red amid the uncertainty surrounding the North American Free Trade Agreement negotiations. 10 year Treasury yields advanced for a 2nd session, while the greenback rose against most peers with the Canadian $ leading losers. West Texas crude gained to around $62 a barrel. In Europe, the broadest measure of the region's equities halted a 4-day slide after a major breakthrough on the path to a German gov. Italy's stocks & bonds were the standout losers as anti-establishment political groups surged in yesterday's election.
Stocks Rise on Speculation Trade Threat Overstated
China stepped up its push to curb financial risk, cutting its budget deficit target for the first time since 2012 & setting a growth goal of around 6.5% that omitted last year's aim for a faster pace if possible. The deficit target, released today as Premier Li Keqiang delivered his annual report to the National People's Congress in Beijing, was lowered to 2.6% of GDP from 3% in the past 2 years. The 6.5% goal is consistent with Pres Xi Jinping's promise to deliver a “moderately prosperous” society by 2020. Policy makers dropped a target for M2 money supply growth, saying it’s expected to expand at similar pace to last year. Authorities reiterated prior language saying prudent monetary policy will remain neutral this year & that they'll ensure liquidity at a reasonable & stable level. Xi has ratcheted up his drive to curb debt risk, pollution & poverty at a time when the world's 2nd-largest economy is on a long-term growth slowdown. His efforts to rein in spending contrast with an historic expansion of US borrowing under Trump during a period of economic expansion. Growth handily surpassed 2017's target with a 6.9% expansion that was the first acceleration since 2010. Economists forecast a moderation to 6.5% this year amid the ongoing deleveraging drive & trade tensions with the Trump administration & a further deceleration to 6.2% in 2019.
The US will dominate global oil markets for years to come, satisfying 80% of global demand growth to 2020 as the shale boom keeps OPEC under pressure, the International Energy Agency said. “The U.S. is set to put its stamp on global oil markets for the next five years,” IEA Exec Director Fatih Birol said. OPEC's surging rivals, which also include Brazil & Canada, will leave little space for the cartel to expand even after its production curbs expire this year. New US output will cover 80% of global oil demand growth over the next 3 years. OPEC is riding high right now, defying the skeptics by going deeper than their pledged cuts & maintaining them for long enough to deplete bloated oil inventories. However, the ensuing price recovery has “unleashed a new wave of growth from the U.S.,” said IEA, which advises most of the world's major economies. Thanks to the shale boom, new US supply will cover more than ½ the world's oil demand growth to 2023, the agency said. Production from the prolific Permian Basin will double over the period & the country's total liquid hydrocarbon output will rise to 17M barrels a day from 13.2M last year. The American surge & a slightly weaker outlook for global demand growth make uncomfortable reading for OPEC. The IEA slashed projections for the amount of crude needed from the cartel, indicating its supply cuts would need to stay in place until 2021 to avoid creating another prolonged surplus. There's a risk the wider industry may also fall short after an unprecedented drop in spending from 2015 to 2016, & little sign of a rebound in the subsequent two years, the IEA said. Constant investment is essential because the world loses about 3M barrels of output each year, equivalent to the production of the North Sea, as oil fields age & their reservoir pressure drops.
IEA Sees American Energy Dominance Squeezing OPEC Into 2020s
Crude bounced above $62 a barrel after reports of further declines in stockpiles at Cushing, Oklahoma. Futures gained over 2%, the biggest rise in more than 2 weeks. Data-provider Genscape was said to report a drop in Cushing, Oklahoma stockpiles last week, according to leakers. Inventories at the key pipeline hub are already at the lowest level since 2014. Signals that the American economy is booming are also supporting crude. US service industries expanded in Feb near the fastest pace in at least a decade, signaling the economy is on track for steady growth this qtr. The US benchmark crude has traded mostly above $61 in past weeks as OPEC works to cut output as part of their supply agreement. The International Energy Agency said that closer to 2023, global markets will start to tighten & warned that more investment is needed to meet growth in consumption & to make up for production lost to natural declines. Crude inventories in Cushing decreased 600K barrels last week, according to the latest forecast.
Once again, these are not times for timid investors. There is no shortage of confusion about where the tariff war dispute is going. Today's rise in stocks is mystifying, to say the least. Maybe it's just an oversold market short term & traders are covering their shorts. Chaos is riding high & that is never a good time for stocks. REITs, which have been under selling pressure in the last few months, continue to benefit from buying as these companies have minimal, if any, exposure to intl trade.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres Trump declared that he won't retreat from his plan to impose tariffs on steel & aluminum imports after House Speaker Paul Ryan rejected the plan, saying the US economy could suffer. Asked about these remarks, Trump was undeterred. "No, we’re not backing down,” he told reporters at the White House, less than ½ an hour after the speaker's office aired his concerns. Ryan's office said, “We are extremely worried about the consequences of a trade war & are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.” The statement marked an unusual public break between Ryan & the pres. Ryan has supported Trump even in some of the most controversial moments of his presidency. While Trump has regularly railed about China's trade practices, the impact of the tariffs of 25% on imported steel & 10% on aluminum may be most felt by US allies, the EU, Canada & Mexico. Harley-Davidson (HOG), the motorcycle maker, is facing threats of retaliation from Europe over Trump's plans for steel & aluminum tariffs. European Commission President Jean-Claude Juncker said the EU may target imports of the company's motorcycles as well as Kentucky bourbon & Levi Strauss jeans. HOG already is being hit by a deepening slump in US motorcycle demand, which has spurred job cuts & a plant closure.
Trump Says He Won’t Back Down After Ryan Breaks With Him on Tariffs
Stocks rose & Treasuries fell as investors speculated that Trump's tough tariff talk won't translate into the most severe protectionist policies. The S&P 500 advanced for a 2nd day noe money manager called the threat of a trade war "political show" & Speaker Ryan urged the pres to reconsider tariffs on steel & aluminum. The Dow transportation average remained in the red amid the uncertainty surrounding the North American Free Trade Agreement negotiations. 10 year Treasury yields advanced for a 2nd session, while the greenback rose against most peers with the Canadian $ leading losers. West Texas crude gained to around $62 a barrel. In Europe, the broadest measure of the region's equities halted a 4-day slide after a major breakthrough on the path to a German gov. Italy's stocks & bonds were the standout losers as anti-establishment political groups surged in yesterday's election.
Stocks Rise on Speculation Trade Threat Overstated
China stepped up its push to curb financial risk, cutting its budget deficit target for the first time since 2012 & setting a growth goal of around 6.5% that omitted last year's aim for a faster pace if possible. The deficit target, released today as Premier Li Keqiang delivered his annual report to the National People's Congress in Beijing, was lowered to 2.6% of GDP from 3% in the past 2 years. The 6.5% goal is consistent with Pres Xi Jinping's promise to deliver a “moderately prosperous” society by 2020. Policy makers dropped a target for M2 money supply growth, saying it’s expected to expand at similar pace to last year. Authorities reiterated prior language saying prudent monetary policy will remain neutral this year & that they'll ensure liquidity at a reasonable & stable level. Xi has ratcheted up his drive to curb debt risk, pollution & poverty at a time when the world's 2nd-largest economy is on a long-term growth slowdown. His efforts to rein in spending contrast with an historic expansion of US borrowing under Trump during a period of economic expansion. Growth handily surpassed 2017's target with a 6.9% expansion that was the first acceleration since 2010. Economists forecast a moderation to 6.5% this year amid the ongoing deleveraging drive & trade tensions with the Trump administration & a further deceleration to 6.2% in 2019.
China Turns Fiscal Screws While Maintaining 6.5% Red Line on GDP
The US will dominate global oil markets for years to come, satisfying 80% of global demand growth to 2020 as the shale boom keeps OPEC under pressure, the International Energy Agency said. “The U.S. is set to put its stamp on global oil markets for the next five years,” IEA Exec Director Fatih Birol said. OPEC's surging rivals, which also include Brazil & Canada, will leave little space for the cartel to expand even after its production curbs expire this year. New US output will cover 80% of global oil demand growth over the next 3 years. OPEC is riding high right now, defying the skeptics by going deeper than their pledged cuts & maintaining them for long enough to deplete bloated oil inventories. However, the ensuing price recovery has “unleashed a new wave of growth from the U.S.,” said IEA, which advises most of the world's major economies. Thanks to the shale boom, new US supply will cover more than ½ the world's oil demand growth to 2023, the agency said. Production from the prolific Permian Basin will double over the period & the country's total liquid hydrocarbon output will rise to 17M barrels a day from 13.2M last year. The American surge & a slightly weaker outlook for global demand growth make uncomfortable reading for OPEC. The IEA slashed projections for the amount of crude needed from the cartel, indicating its supply cuts would need to stay in place until 2021 to avoid creating another prolonged surplus. There's a risk the wider industry may also fall short after an unprecedented drop in spending from 2015 to 2016, & little sign of a rebound in the subsequent two years, the IEA said. Constant investment is essential because the world loses about 3M barrels of output each year, equivalent to the production of the North Sea, as oil fields age & their reservoir pressure drops.
IEA Sees American Energy Dominance Squeezing OPEC Into 2020s
Germany says a hike in US import duties for European-made products would hurt both sides. Pres Trump has backed tariffs on foreign-made aluminum &
steel & warned European cars might be taxed more, too. A German
gov spokesman says such measures "would sorely
affect international trade flows," European industries & in particular
"workers and consumers on both sides of the Atlantic." He told reporters that in Berlin's
view comparing individual tariffs was misleading because each side sets
import duties across a range of sectors. He added Germany would consult with European partners about what steps to
take next. And he added: "It's clear we don't want things to get worse,
and we certainly don't want anything like a trade war. That can't be in
anyone's interest."
Germany: US tariffs would hit workers, consumers
Crude bounced above $62 a barrel after reports of further declines in stockpiles at Cushing, Oklahoma. Futures gained over 2%, the biggest rise in more than 2 weeks. Data-provider Genscape was said to report a drop in Cushing, Oklahoma stockpiles last week, according to leakers. Inventories at the key pipeline hub are already at the lowest level since 2014. Signals that the American economy is booming are also supporting crude. US service industries expanded in Feb near the fastest pace in at least a decade, signaling the economy is on track for steady growth this qtr. The US benchmark crude has traded mostly above $61 in past weeks as OPEC works to cut output as part of their supply agreement. The International Energy Agency said that closer to 2023, global markets will start to tighten & warned that more investment is needed to meet growth in consumption & to make up for production lost to natural declines. Crude inventories in Cushing decreased 600K barrels last week, according to the latest forecast.
Once again, these are not times for timid investors. There is no shortage of confusion about where the tariff war dispute is going. Today's rise in stocks is mystifying, to say the least. Maybe it's just an oversold market short term & traders are covering their shorts. Chaos is riding high & that is never a good time for stocks. REITs, which have been under selling pressure in the last few months, continue to benefit from buying as these companies have minimal, if any, exposure to intl trade.
Dow Jones Industrials
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