Dow dropped 164, decliners over advancers about 5-4 & NAZ lost 21. The MLP index gained 1+ to the 263s & the REIT index went up 1+ to the 335s. Junk bond funds slid lower & Treasuries rose, taking the yield on the 10 year Treasury down to 2.87%. Oil was off 1 to the 66s & gold fell 7 to 1296.
AMJ (Alerian MLP Index tracking fund)
Despite cooling tensions between the world's 2 largest economies, the White House said it will impose a 25% tariff on $50B of imported goods from China that “contain industrially significant technology" next month. This includes products related to the “Made in China 2025” program. The final list will be announced by Jun 15 with tariffs imposed shortly after. Pres Trump signed a memorandum in late Mar announcing the administration would take steps to protect domestic technology & intellectual property from China's “discriminatory and burdensome” trade practices. The White House also said it would implement specific investment restrictions & enhanced export controls for Chinese people & entities “related to the acquisition of industrially significant technology.” These will be announced by Jun 30 & applied shortly thereafter.
Home prices continued to rise across the country in Mar, according to S&P/Case-Shillerhousing index. The 10-City Composite index of home prices increased 6.5% in Mar, compared to 6.4% in Feb, while Case-Shiller’s 20-City Composite index rose 6.8% in Mar, the same as in Feb. Home prices have increased for 12 consecutive months, with Seattle, Las Vegas & San Francisco leading the charge. In Mar, home prices in Seattle increased 13.0% year-over-year, prices in Las Vegas increased 12.4% & in San Francisco home prices experienced a 11.3% increase. 12 of the 20 cities reported greater price increases in the year ending Mar 2018 versus the year ending Feb 2018. “Looking across various national statistics on sales of new or existing homes, permits for new construction, and financing terms, two figures that stand out are rapidly rising home prices and low inventories of existing homes for sale. Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust,” David M. Blitzer, managing director & chairman of the Index Committee, said. Blitzer added that until inventories increase faster than sales or the economy slows significantly, home prices will likely continue rising.
Oil edged lower, pressured by expectations that Saudi Arabia & Russia could pump more crude to compensate for a potential supply shortfall. Brent crude futures were down 6¢ at $75.24 a barrel. The price has fallen by nearly 7% since hitting a 2014 high above $80 on May 22. West Texas Intermediate (WTI) crude fell $1.39 to $66.49 a barrel. Concerns that Saudi Arabia & Russia could boost output have exerted downward pressures on oil prices, along with rising oil production in the US. Saudi Arabia & Russia have discussed raising OPEC & non-OPEC oil production by 1M barrels per day (bpd) to counter potential supply shortfalls from Venezuela & Iran. OPEC is due to meet in Vienna on Jun 22. Volatility, a way of measuring demand for a derivative, on highly bearish Brent crude sell options that expire just after the meeting has shot to its highest since Feb. The spread between Brent & WTI stands at about $8.70 a barrel, its widest since Mar 2015 because of the depressed price of US crude compared with Brent. Meanwhile, record crude oil volumes from the US are expected to head to Asia in the coming months, nibbling away the market share of OPEC & Russia. US oil production has surged by more than 27% in the past 2 years to 10.73M bpd. That puts the US ahead of Saudi Arabia & within reach of top producer Russia, which pumps about 11M bpd.
Oil falls as investors brace for output increases
Intl concerns are spooking investors. Nobody understands what's going on in Italy making it difficult to assess the situation. More importantly is China & those talks are stuck in the mud, as expected. Economic news in the US continues to be fairly good, but that does not get a lot of attention by investors. The Dow continues to slug it out in the mid 24Ks, where it has been for months.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 67.00 | -0.88 | -1.3% |
| GC=F | Gold | 1,294.40 | -9.30 | -0.7% |
Italian Pres Sergio Mattarella decided Sun
to block the formation of a euroskeptic gov, reviving
longstanding worries about a political crisis in Italy & the broader
stability of the Eurozone. The
Dow fell on Fri as a decline in oil & concern over a scuttled
summit with North Korea made investors wary on the eve of the 3-day
Memorial Day weekend. Despite geopolitical tensions, the major averages
closed the week in positive territory. Today, economic data reports include the S&P Case-Shiller
report on home prices. Home prices increased in Mar, but the gains
were in line with the prior month’s advance. Oil futures were sharply lower as traders digested the potential for Saudi Arabia & Russia to boost oil output.
Stocks plunge on Italy's political uncertainty
Despite cooling tensions between the world's 2 largest economies, the White House said it will impose a 25% tariff on $50B of imported goods from China that “contain industrially significant technology" next month. This includes products related to the “Made in China 2025” program. The final list will be announced by Jun 15 with tariffs imposed shortly after. Pres Trump signed a memorandum in late Mar announcing the administration would take steps to protect domestic technology & intellectual property from China's “discriminatory and burdensome” trade practices. The White House also said it would implement specific investment restrictions & enhanced export controls for Chinese people & entities “related to the acquisition of industrially significant technology.” These will be announced by Jun 30 & applied shortly thereafter.
US imposing 25% tariff of Chinese goods, apply investment restrictions in June
Home prices continued to rise across the country in Mar, according to S&P/Case-Shillerhousing index. The 10-City Composite index of home prices increased 6.5% in Mar, compared to 6.4% in Feb, while Case-Shiller’s 20-City Composite index rose 6.8% in Mar, the same as in Feb. Home prices have increased for 12 consecutive months, with Seattle, Las Vegas & San Francisco leading the charge. In Mar, home prices in Seattle increased 13.0% year-over-year, prices in Las Vegas increased 12.4% & in San Francisco home prices experienced a 11.3% increase. 12 of the 20 cities reported greater price increases in the year ending Mar 2018 versus the year ending Feb 2018. “Looking across various national statistics on sales of new or existing homes, permits for new construction, and financing terms, two figures that stand out are rapidly rising home prices and low inventories of existing homes for sale. Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust,” David M. Blitzer, managing director & chairman of the Index Committee, said. Blitzer added that until inventories increase faster than sales or the economy slows significantly, home prices will likely continue rising.
Home prices show no signs of slowing down: Case-Shiller
Oil edged lower, pressured by expectations that Saudi Arabia & Russia could pump more crude to compensate for a potential supply shortfall. Brent crude futures were down 6¢ at $75.24 a barrel. The price has fallen by nearly 7% since hitting a 2014 high above $80 on May 22. West Texas Intermediate (WTI) crude fell $1.39 to $66.49 a barrel. Concerns that Saudi Arabia & Russia could boost output have exerted downward pressures on oil prices, along with rising oil production in the US. Saudi Arabia & Russia have discussed raising OPEC & non-OPEC oil production by 1M barrels per day (bpd) to counter potential supply shortfalls from Venezuela & Iran. OPEC is due to meet in Vienna on Jun 22. Volatility, a way of measuring demand for a derivative, on highly bearish Brent crude sell options that expire just after the meeting has shot to its highest since Feb. The spread between Brent & WTI stands at about $8.70 a barrel, its widest since Mar 2015 because of the depressed price of US crude compared with Brent. Meanwhile, record crude oil volumes from the US are expected to head to Asia in the coming months, nibbling away the market share of OPEC & Russia. US oil production has surged by more than 27% in the past 2 years to 10.73M bpd. That puts the US ahead of Saudi Arabia & within reach of top producer Russia, which pumps about 11M bpd.
Oil falls as investors brace for output increases
Intl concerns are spooking investors. Nobody understands what's going on in Italy making it difficult to assess the situation. More importantly is China & those talks are stuck in the mud, as expected. Economic news in the US continues to be fairly good, but that does not get a lot of attention by investors. The Dow continues to slug it out in the mid 24Ks, where it has been for months.
Dow Jones Industrials
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