Dow lost 38, advancers over decliners 5-4 & NAZ gained 14. The MLP index fell 1+to 260 & the REIT index gained almost 4 to the 229s. Junk bond funds declined & Treasuries were sold, taking the yield on the 10 year Treasury up to 2.87%. Oil soared 2 to the 68s (more below) & gold was up 2 to 1351.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.36049882052983906)
New tariffs & concerns over widening trade disputes cast a shadow over the Federal Reserve's most recent survey of US businesses even as all 12 regions reported continued robust job growth with few signs of overheating. “Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture and transportation expressed concern about the newly imposed and/or proposed tariffs,” the Fed said in its Beige Book report. The report, based on anecdotal information collected by the Fed district banks in Mar & early Apr, showed companies continued to struggle to fill open jobs, particularly skilled positions. Despite that, “most districts reported wage growth as only modest.” “Businesses were responding to labor shortages in a variety of ways, from raising pay to enhancing training to increasing their use of overtime and/or automation,” according to the report. The report gives fodder to both sides of a debate among Fed policy makers over how long they can continue raising interest rates at a gradual pace without allowing a tight labor market to spark excessive inflation. Unemployment remained at 4.1% in Mar for the 6th straight month, a level that hasn't been bettered since 2000. Wages have responded only sluggishly, however. Year-on-year gains in hourly earnings rose by an average 2.7% in the year thru Mar. All 12 districts reported “modest” or “moderate” overall economic growth. Consumer spending increased in most regions, compared with the Feb report, when it was described as “mixed.” The report also reflected a “scattered” incidence of companies passing price increases on to customers. “Business generally anticipate further price increases in the months ahead, particularly for steel and building materials,” the report added. Input prices continued to rise, especially in transportation & construction, where the costs of fuel & materials rose briskly. There were also “widespread reports that steel prices rose, sometimes dramatically, due to the new tariff.” The Boston Fed provided a vivid example of the unintended consequences of the effort to reduce the trade deficit thru tariffs & new bilateral agreements. One unnamed company, hurt by levies on Chinese aluminum that caused prices to jump threefold, reported to the central bank that “these tariffs are now killing high-paying American manufacturing jobs and businesses.”
Fed Says Tariff Concerns Cloud Otherwise Solid Growth Outlook
For the 5th straight month, OPEC in Mar set a fresh record for complying with its agreed oil-production cuts, with the goal of re-balancing the market finally in sight. A parallel effort from 10 non-OPEC nations also improved even as the group's biggest producer, Russia, boosted crude output slightly. OPEC & its allies started cutting production in Jan 2017 & plan to continue their effort thru the end of this year. Key participants in the pact will meet this week to explore ways of prolonging their cooperation. 21 nations are cutting supply in an attempt to curb output by almost 1.8M barrels a day, in most cases using Oct 2016 levels as their starting point. Separately, OPEC members Libya & Nigeria agreed to limit production to a combined 2.8M barrels a day from Jan, a commitment they have met so far. Because of their massive oil-production capacity, Saudi Arabia & Russia have been the de facto leaders behind the output cuts. While the Saudis have consistently complied with agreed reductions, Russia in Mar fell below 90% compliance for the first month since Apr 2017. Among OPEC members, only Iraq & Equatorial Guinea didn't cut production as pledged last month. Venezuela's compliance with the cuts-agreement was highest by far among OPEC countries, but its output has collapsed involuntarily amid a broader economic crisis. Non-OPEC producer Kazakhstan has continued to boost output at its Kashagan field. In its most recent monthly market report, the IEA said OPEC had nearly reached “mission accomplished” in ending the oil glut. Still, US production continues to reach its own record levels, undermining the OPEC-led accord. OPEC & its allies meet in Jun to discuss what to do after 2018.
OPEC Smashes Oil Cuts Record Again. Russia Slips.
Pres Trump's tariffs on imported aluminum & steel are disrupting business for hundreds of American companies that buy those metals, & many are pressing for relief. Nearly 2200 companies are asking the Commerce Dept to exempt them from the 25% steel tariff & more than 200 other companies are asking to be spared the 10% aluminum tariff. Other companies are weighing their options. Jody Fledderman, CEO of Batesville Tool & Die in Indiana, says American steelmakers have already raised their prices since Trump's tariffs were announced last month. Fledderman says he may have to shift production to a plant in Mexico, where he can buy cheaper steel. A group of small- & medium-size manufacturers are gathering in DC to announce a coalition to fight the steel tariff.
Morgan Stanley (MS) posted a better-than-expected Q1 profit, as its trading business drew strength from increased market volatility in line with other major banks. Sales & trading revenue at the county's 6th biggest bank rose 26% in the qtr, driven by strong gains in equities trading. Strength in wealth management also helped overall profit. After a subdued 2017, volatility has returned to global financial markets, roiling stocks, bonds, currencies & commodities on fears of a trade war between the US & China as well as concerns about inflation. This has led to big revenue gains at banks with sizable trading operations such as Morgan Stanley & Goldman Sachs (GS) in the latest qtr. MS's total trading revenue was $4.40B, slightly better than GS's $4.39B. MS's bond trading revenue rose 9.3% on increased client activity after several sluggish quarters, in contrast to its rivals. Wealth management revenue rose 7.8% while pretax profit margin came in at 27%, the mid-point of CEO James Gorman's target of 26-28%. Under Gorman, MS has been relying more on businesses that generate steady fees, like wealth management, after its risk-taking nearly capsized it during the 2007-2009 financial crisis. Investment banking revenue rose 6.8%, helped by higher advisory fees, while total underwriting revenue rose 2%. Total revenue rose 13.7% to $11.08B. EPS rose to $1.45 from $1. Analysts were looking for $1.25. The stock went up 3¢.
If you would like to learn more about MS, click on this link:
club.ino.com/trend/analysis/stock/MS?a_aid=CD3289&a_bid=6ae5b6f7
Oil prices rose to their highest level since late 2014 after gov data showed US crude stockpiles fell last week & as the market continued to worry about supply disruptions in key fossil fuel-producing nations. West Texas Intermediate crude futures ended the session up $1.95 (2.9%) at $68.47, the best settle since Dec 1, 2014. Intl benchmark Brent also hit hit a new intraday high going back to Nov 2014. The contract rose $1.90 (2.7%), to end the session at $73.48 a barrel. Brent's settlement marked its best close since Nov 26, 2014, the day before OPEC refused to take steps to stop a decline in oil prices, sparking a sharp sell-off that ultimately sent oil prices to 12- year lows. OPEC has since reversed course, reaching a deal with Russia & other oil producers to cut output by 1.8M barrels a day starting in Jan 2017. The deal, which runs thru the end of this year, has nearly shrunk global oil stockpiles to their 5-year average. A committee that monitors adherence to the cuts meets in Saudi Arabia on Fri & the wider group will gather in Jun to determine whether the agreement should be adjusted. Some senior Saudi officials are reportedly targeting $80 per barrel oil & could argue for keeping the production caps in place to achieve that goal. US commercial crude inventories dropped by 1.1M barrels in the latest week, the Energy Information Administration reported. Stockpiles of gasoline also dropped by 3M barrels, while distillates fuels including diesel declined by 3.1M barrels.
Oil soars 2.9% to 3-year high, settling at $68.47, as US crude stockpiles drop
Stocks struggled to advance & there was a little selling into the close. The Dow was hurt by a 12+ decline at IBM (IBM). The outcome on trade talks is weighing on stocks, encouraging some traders to take profits after the 8 day rally of almost 1K in the Dow. Earnings should be helpful going forward but new tariffs & trade talks will make it difficult to extend this rally.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
New tariffs & concerns over widening trade disputes cast a shadow over the Federal Reserve's most recent survey of US businesses even as all 12 regions reported continued robust job growth with few signs of overheating. “Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture and transportation expressed concern about the newly imposed and/or proposed tariffs,” the Fed said in its Beige Book report. The report, based on anecdotal information collected by the Fed district banks in Mar & early Apr, showed companies continued to struggle to fill open jobs, particularly skilled positions. Despite that, “most districts reported wage growth as only modest.” “Businesses were responding to labor shortages in a variety of ways, from raising pay to enhancing training to increasing their use of overtime and/or automation,” according to the report. The report gives fodder to both sides of a debate among Fed policy makers over how long they can continue raising interest rates at a gradual pace without allowing a tight labor market to spark excessive inflation. Unemployment remained at 4.1% in Mar for the 6th straight month, a level that hasn't been bettered since 2000. Wages have responded only sluggishly, however. Year-on-year gains in hourly earnings rose by an average 2.7% in the year thru Mar. All 12 districts reported “modest” or “moderate” overall economic growth. Consumer spending increased in most regions, compared with the Feb report, when it was described as “mixed.” The report also reflected a “scattered” incidence of companies passing price increases on to customers. “Business generally anticipate further price increases in the months ahead, particularly for steel and building materials,” the report added. Input prices continued to rise, especially in transportation & construction, where the costs of fuel & materials rose briskly. There were also “widespread reports that steel prices rose, sometimes dramatically, due to the new tariff.” The Boston Fed provided a vivid example of the unintended consequences of the effort to reduce the trade deficit thru tariffs & new bilateral agreements. One unnamed company, hurt by levies on Chinese aluminum that caused prices to jump threefold, reported to the central bank that “these tariffs are now killing high-paying American manufacturing jobs and businesses.”
Fed Says Tariff Concerns Cloud Otherwise Solid Growth Outlook
For the 5th straight month, OPEC in Mar set a fresh record for complying with its agreed oil-production cuts, with the goal of re-balancing the market finally in sight. A parallel effort from 10 non-OPEC nations also improved even as the group's biggest producer, Russia, boosted crude output slightly. OPEC & its allies started cutting production in Jan 2017 & plan to continue their effort thru the end of this year. Key participants in the pact will meet this week to explore ways of prolonging their cooperation. 21 nations are cutting supply in an attempt to curb output by almost 1.8M barrels a day, in most cases using Oct 2016 levels as their starting point. Separately, OPEC members Libya & Nigeria agreed to limit production to a combined 2.8M barrels a day from Jan, a commitment they have met so far. Because of their massive oil-production capacity, Saudi Arabia & Russia have been the de facto leaders behind the output cuts. While the Saudis have consistently complied with agreed reductions, Russia in Mar fell below 90% compliance for the first month since Apr 2017. Among OPEC members, only Iraq & Equatorial Guinea didn't cut production as pledged last month. Venezuela's compliance with the cuts-agreement was highest by far among OPEC countries, but its output has collapsed involuntarily amid a broader economic crisis. Non-OPEC producer Kazakhstan has continued to boost output at its Kashagan field. In its most recent monthly market report, the IEA said OPEC had nearly reached “mission accomplished” in ending the oil glut. Still, US production continues to reach its own record levels, undermining the OPEC-led accord. OPEC & its allies meet in Jun to discuss what to do after 2018.
OPEC Smashes Oil Cuts Record Again. Russia Slips.
Prospects of the US re-joining the Trans-Pacific Partnership (TPP)
dimmed this week, after Pres Trump tweeted he didn't like
the current deal & an ambassador from Singapore expressed resistance
to renegotiation. National Economic Council Director Larry Kudlow just said that while TPP countries, of which there are 11, would
be willing to engage with the US on re-entering the pact, Trump was
not convinced on the merits of the accord. The
White House last week directed Kudlow to re-engage with TPP members,
though Trump has clearly stated he would only agree to a renegotiated
deal. Meanwhile,
the ambassador-at-large for Singapore's Ministry of Foreign Affairs said that the remaining members of the accord don't have “an
appetite to re-open it for negotiation.” Experts agree the prospects of US entry appear dim. In
Mar, the remaining 11 members of the accord agreed on new terms,
which they have begun to ratify. The new deal took over a year to iron
out, after the US exited in Jan 2017, on Trump's first full
weekday in the Oval Office. TPP members
include Japan, Vietnam, Singapore, Canada & Australia. The deal was
intended partly to safeguard against China's rising economic dominance
in Asia. Trump's interest in the TPP comes at a
time when US trade relations with China are deteriorating. While the
White House has attempted to play down talk of a trade war, the
tit-for-tat tariff escalation between the US & China has left
America's business leaders concerned that they could suffer material
harm from the loss of an important trading partner. The White House
insists discussions with Beijing are ongoing. Certain
US industries, including pharmaceuticals, manufacturing, agriculture & technology, would benefit from re-entry. The deal lowered trade
barriers & spread Western-style regulation to TPP countries.
Trump slams TPP as US re-entry prospects dim
Pres Trump's tariffs on imported aluminum & steel are disrupting business for hundreds of American companies that buy those metals, & many are pressing for relief. Nearly 2200 companies are asking the Commerce Dept to exempt them from the 25% steel tariff & more than 200 other companies are asking to be spared the 10% aluminum tariff. Other companies are weighing their options. Jody Fledderman, CEO of Batesville Tool & Die in Indiana, says American steelmakers have already raised their prices since Trump's tariffs were announced last month. Fledderman says he may have to shift production to a plant in Mexico, where he can buy cheaper steel. A group of small- & medium-size manufacturers are gathering in DC to announce a coalition to fight the steel tariff.
US manufacturers seek relief from steel and aluminum tariffs
Morgan Stanley (MS) posted a better-than-expected Q1 profit, as its trading business drew strength from increased market volatility in line with other major banks. Sales & trading revenue at the county's 6th biggest bank rose 26% in the qtr, driven by strong gains in equities trading. Strength in wealth management also helped overall profit. After a subdued 2017, volatility has returned to global financial markets, roiling stocks, bonds, currencies & commodities on fears of a trade war between the US & China as well as concerns about inflation. This has led to big revenue gains at banks with sizable trading operations such as Morgan Stanley & Goldman Sachs (GS) in the latest qtr. MS's total trading revenue was $4.40B, slightly better than GS's $4.39B. MS's bond trading revenue rose 9.3% on increased client activity after several sluggish quarters, in contrast to its rivals. Wealth management revenue rose 7.8% while pretax profit margin came in at 27%, the mid-point of CEO James Gorman's target of 26-28%. Under Gorman, MS has been relying more on businesses that generate steady fees, like wealth management, after its risk-taking nearly capsized it during the 2007-2009 financial crisis. Investment banking revenue rose 6.8%, helped by higher advisory fees, while total underwriting revenue rose 2%. Total revenue rose 13.7% to $11.08B. EPS rose to $1.45 from $1. Analysts were looking for $1.25. The stock went up 3¢.
club.ino.com/trend/analysis/stock/MS?a_aid=CD3289&a_bid=6ae5b6f7
Morgan Stanley profit jumps 40% on trading boost
Oil prices rose to their highest level since late 2014 after gov data showed US crude stockpiles fell last week & as the market continued to worry about supply disruptions in key fossil fuel-producing nations. West Texas Intermediate crude futures ended the session up $1.95 (2.9%) at $68.47, the best settle since Dec 1, 2014. Intl benchmark Brent also hit hit a new intraday high going back to Nov 2014. The contract rose $1.90 (2.7%), to end the session at $73.48 a barrel. Brent's settlement marked its best close since Nov 26, 2014, the day before OPEC refused to take steps to stop a decline in oil prices, sparking a sharp sell-off that ultimately sent oil prices to 12- year lows. OPEC has since reversed course, reaching a deal with Russia & other oil producers to cut output by 1.8M barrels a day starting in Jan 2017. The deal, which runs thru the end of this year, has nearly shrunk global oil stockpiles to their 5-year average. A committee that monitors adherence to the cuts meets in Saudi Arabia on Fri & the wider group will gather in Jun to determine whether the agreement should be adjusted. Some senior Saudi officials are reportedly targeting $80 per barrel oil & could argue for keeping the production caps in place to achieve that goal. US commercial crude inventories dropped by 1.1M barrels in the latest week, the Energy Information Administration reported. Stockpiles of gasoline also dropped by 3M barrels, while distillates fuels including diesel declined by 3.1M barrels.
Oil soars 2.9% to 3-year high, settling at $68.47, as US crude stockpiles drop
Stocks struggled to advance & there was a little selling into the close. The Dow was hurt by a 12+ decline at IBM (IBM). The outcome on trade talks is weighing on stocks, encouraging some traders to take profits after the 8 day rally of almost 1K in the Dow. Earnings should be helpful going forward but new tariffs & trade talks will make it difficult to extend this rally.
Dow Jones Industrials
No comments:
Post a Comment