Dow rebounded 111, advancers over decliners 2-1 & NAZ pulled back 30. The MLP index rose 3+ to the 267s & the REIT index gained 1+ to the 349s, approaching record levels in the 360s. Junk bond funds crawled higher & Treasuries drifted lower. Oil shot up over 2 to the 267s (more below) & gold was about even at 1271 (6 month low).
AMJ (Alerian MLP Index tracking fund)
Stocks were mixed, with the NAZ trending lower, but the Dow jumped, putting in on track to snap its recent losing streak. The Dow has closed down for 8 consecutive sessions, with concerns of a trade war spooking investors. Meanwhile, all eyes were on the OPEC meeting. According to an OPEC source, the oil ministers agreed in principle to a production increase of about 1M barrels per day (bpd), around 1% of global supply & US crude jumped up in trading. Economic data included the IHS Markit flash services purchasing managers' index (PMI), which dipped to 56.5 in Jun from 56.8 while IHS Markit flash manufacturing PMI fell to 54.6 in Jun from 56.4. A reading over 50 signals expansion.
Dow leads markets
Chinese media says US has 'delusions' as impact of trade war spreads
Stocks recovered, led by the oversold Dow, while profits in NAZ tech stocks were taken. But the chart for the Dow below does not look impressive with more dark clouds from higher tariffs in the sky. REITs have had a good run (for them) in the last couple of months. They are thought to be little affected by the battle of tariffs & the court ruling yesterday, which will let states collect tax on internet sales, should help REITs owning store properties.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 67.24 | +1.70 | +2.6% |
| GC=F | Gold | 1,270.70 | +0.20 | +0.0% |
Oil prices rose as much as 2% as
OPEC neared a deal to increase output to compensate for losses in
production at a time of rising global demand. Benchmark
Brent crude jumped $1.68 a barrel (2.3%) to a high of $74.73
before slipping to $74.30 & US light crude was $1.00
higher at $66.54. OPEC with non-OPEC oil
producers, agreed to raise production by around 1M
barrels per day (bpd) from Jul for the group & its allies, an OPEC
source said. But this figure would be nominal,
with the real increase smaller because several countries that recently
under-produced oil will struggle to return to full quotas while other
producers will not be allowed to fill the gap. The deal looked to be in line with many forecasts. Analysts
had expected OPEC to announce an increase in production of 500-600K barrels per day (bpd), which would help ease tightness in the
oil market but would not create a glut. Oil
prices have been on a roller-coaster ride over the last few years, with
the intl marker, Brent, trading above $100 a barrel for several
years until 2014, dropping to almost $26 in 2016 & then recovering to
over $80 last month. The most recent price rally followed an OPEC decision to restrict supply in an effort to drain global inventories. The
group started withholding supply in 2017 & this year, amid strong
demand, the market tightened significantly, triggering calls by
consumers for higher supply. Falling production
in Venezuela & Libya, as well as the risk of lower output from Iran
as a result of US sanctions, have all increased market worries of a
supply shortage. Another big uncertainty for
oil is the escalating dispute between the US & its trading
partners, which could hit US crude oil exports to China. Asian shares hit a 6-month low on today as tariffs & the US-China trade battle start taking their toll. If
a 25% duty on US crude imports is implemented by Beijing,
American oil would become uncompetitive in China, forcing it to seek
buyers elsewhere. Chinese buyers are already starting to scale back orders, with a drop in supplies expected from Sep.
Oil pops on OPEC production boost
Stocks were mixed, with the NAZ trending lower, but the Dow jumped, putting in on track to snap its recent losing streak. The Dow has closed down for 8 consecutive sessions, with concerns of a trade war spooking investors. Meanwhile, all eyes were on the OPEC meeting. According to an OPEC source, the oil ministers agreed in principle to a production increase of about 1M barrels per day (bpd), around 1% of global supply & US crude jumped up in trading. Economic data included the IHS Markit flash services purchasing managers' index (PMI), which dipped to 56.5 in Jun from 56.8 while IHS Markit flash manufacturing PMI fell to 54.6 in Jun from 56.4. A reading over 50 signals expansion.
Dow leads markets
A major investment is kickstarting America's steel industry. JSW
Steel USA plans to invest $500M to build a new factory in the
US. Combined with a previous announcement that JSW will modernize an
existing plant, the Indian-owned company is making a total investment of
$1B after Pres Trump's tax reform and tariffs on imported
steel. “The Trump administration was the driver
behind giving us in the U.S. the ability to compete for capital,” CEO John Hritz said. JSW Steel has agreed to acquire an Acero Junction facility in Mingo Junction, Ohio, for $80.9M. Thru its parent company, JSW Group, it's
investing upwards of $500M in the old Ohio steel plant that was
built in 1929, instead of constructing a new facility in India. The
project is expected to generate an estimated 300 permanent jobs in a
town of just 3400. “We are going to revitalize that facility and that entire community,” Hritz said. The company says it was forced to compete for
investment funds within its own company to become the lowest cost &
highest quality steel producer in the country. “We have demonstrated that the return on investment that we can gather in this country is going to be outstanding,” Hritz said. Trump's
efforts to enforce a number of measures aimed at preventing steel &
aluminum dumping by China are intended to create a level playing field
for America's steel industry. “It’s what the
president did and [Commerce] Secretary [Wilbur] Ross about making a fair
playing field regarding stopping the dumping of steel from countries
that were dumping illegally,” Hritz said. In Mar, JSW Steel announced plans to invest $500M in its existing plant in Baytown, Texas. Hritz said that the company currently has 500 people on site & is expected to hire 500 new employees in high-tech jobs. “We need a lot of great craftsmen,” he said in Mar. “We need every facet of people that you can imagine.”
Steel maker building new plant in US instead of India
US protectionism is self-defeating & a "symptom
of paranoid delusions" that must not distract China from its path to
modernization, Chinese state media said today as Beijing kept up
with its war of words with DC over trade. Pres Trump threatened on Mon to hit $200B of Chinese imports with 10% tariffs if China retaliates against his previous targeting of
$50B in imports. China's commerce ministry
accused the US yesterday of being "capricious" over
bilateral trade issues & warned that the interests of US workers and
farmers would ultimately be hurt by DC's penchant for
brandishing "big sticks." The official China Daily said in
an editorial the US had failed to understand that the
business it does with China supported Ms of American jobs & that
the US approach was self-defeating. The English-language
paper cited research saying that Chinese investment
in the US declined 92% to $1.8B in the first 5 months of the year, its lowest level in 7 years. "The woes the
administration is inflicting on Chinese companies do not simply
translate into boons for U.S. enterprises and the U.S. economy," it said
in an editorial headlined "Protectionism symptom of paranoid
delusions." "The fast-shrinking Chinese investment in the U.S. reflects the damage
being done to China-U.S.-trade relations ... by the trade crusade of
Trump and his trade hawks," it added.
Chinese media says US has 'delusions' as impact of trade war spreads
Stocks recovered, led by the oversold Dow, while profits in NAZ tech stocks were taken. But the chart for the Dow below does not look impressive with more dark clouds from higher tariffs in the sky. REITs have had a good run (for them) in the last couple of months. They are thought to be little affected by the battle of tariffs & the court ruling yesterday, which will let states collect tax on internet sales, should help REITs owning store properties.
Dow Jones Industrials
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