Dow gave back 74, decliners barely ahead of advancers & NAZ went up 3. The MLP index rose 2+ to 291 & the REIT index fell 1+ to the 355s. Junk bond funds were steady & Treasuries advanced, bringing the yield on the 10 year Treasury down 4 basis points to 2.93%. Oil was flattish in the 66s (more below) & gold was off 1 to a depressed 1219.
AMJ (Alerian MLP Index tracking fund)
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AMJ (Alerian MLP Index tracking fund)
China's threat to slap tariffs on US natural gas
exports is injecting uncertainty into a construction boom for the
multibillion $ facilities that ship American shale gas around the
world. By the end of next year, 6 facilities
in the US are expected to be exporting liquefied natural
gas. During that same period, several companies are slated to decide
whether they'll move forward with another wave of American LNG export
terminals. Many of those projects
are looking to line up buyers in China, which is poised to surpass Japan
as the world's largest consumer of LNG, a form of natural gas
super-chilled to its liquid form for export by sea. But Beijing cast doubt on the prospect of signing deals with the developers last week when it threatened to slap a 25% tariff on US goods including LNG, firing back as the Trump administration mulled hiking tariffs on $200B of Chinese goods. To be sure, tariffs would have to remain in place for months or years
to spoil the dealmaking. But the threat comes at
a time when industry watchers say some of the terminals are already at
risk of being shelved because there's too little capital available to
finance so many projects. The US projects chasing capital include a slate of brand new terminals, most of which would be built on the Gulf Coast.
China tariffs create headache for next wave of US natural gas export projects
Oil inched up, paring some of the previous day's steep price slide, after the first round of US sanctions against Iran came into effect, although confidence in crude demand has been hit by the escalating China-US trade dispute. Brent crude futures were up 14¢ at $72.42 barrel, after having dropped by more than 3% on yesterday. US crude futures rose 8¢ to $67.02 a barrel, having closed down 3.2% the day before. The US on Tues reimposed sanctions on Iran, the 3rd-biggest producer in OPEC. The renewed sanctions won't directly target Iranian oil until Nov, although Pres Trump has said he wants as many countries as possible to cut their imports of Iranian crude to zero. As part of its most recent retaliation against DC in the mounting trade dispute, China will impose tariffs of 25% on a further $16B in US imports, which will affect trade in goods from fuel & steel products to autos & medical equipment. Crude oil will be exempt. The ongoing trade war is rattling global markets & investors fear any slowdown in the world's 2 largest economies would slash demand for commodities. On top of the impact on the broader global economy, there is growing worry in the crude oil market about Chinese demand. Crude imports picked up in Jul after 2 months of decline, but were still among the lowest this year due to a drop-off in demand from smaller independent refineries. The US Energy Information Administration, meanwhile, reported that crude inventories fell 1.4M barrels in the latest week, less than ½ the 3.3M-barrel draw that was expected. Gasoline stocks rose 2.9M barrels, compared with expectations for a drop of 1.7M-barrel drop. In another sign that exporters are preparing for slower demand from some of the big Asian buyers, Iraq cut its official selling price for Sep cargoes of Basra Light crude for its Asian customers today.
Oil regains some poise after 3 percent drop
Initial jobless claims, a tracker of sorts for layoffs in the US, fell by 6K to 213K in the latest week. That was below the 217K estimate & the first decline in 3 weeks. Until recently claims haven't been this low since the early 1970s. The more stable monthly average of claims, meanwhile, fell by a smaller 1 to 214K, the 2nd lowest reading during a 9-year-old expansion that begin in mid-2009. The number of people already collecting unemployment benefits rose by 29K to 1.76M. Known as “continuing” claims, they are almost a ¼M lower compared to the same time last year. Claims continue to trend lower, signaling the labor market is strong enough to keep the unemployment rate trending down. The unemployment rate fell to 3.9% in Jul, nearly a 2-decade low.
China tariffs create headache for next wave of US natural gas export projects
Oil inched up, paring some of the previous day's steep price slide, after the first round of US sanctions against Iran came into effect, although confidence in crude demand has been hit by the escalating China-US trade dispute. Brent crude futures were up 14¢ at $72.42 barrel, after having dropped by more than 3% on yesterday. US crude futures rose 8¢ to $67.02 a barrel, having closed down 3.2% the day before. The US on Tues reimposed sanctions on Iran, the 3rd-biggest producer in OPEC. The renewed sanctions won't directly target Iranian oil until Nov, although Pres Trump has said he wants as many countries as possible to cut their imports of Iranian crude to zero. As part of its most recent retaliation against DC in the mounting trade dispute, China will impose tariffs of 25% on a further $16B in US imports, which will affect trade in goods from fuel & steel products to autos & medical equipment. Crude oil will be exempt. The ongoing trade war is rattling global markets & investors fear any slowdown in the world's 2 largest economies would slash demand for commodities. On top of the impact on the broader global economy, there is growing worry in the crude oil market about Chinese demand. Crude imports picked up in Jul after 2 months of decline, but were still among the lowest this year due to a drop-off in demand from smaller independent refineries. The US Energy Information Administration, meanwhile, reported that crude inventories fell 1.4M barrels in the latest week, less than ½ the 3.3M-barrel draw that was expected. Gasoline stocks rose 2.9M barrels, compared with expectations for a drop of 1.7M-barrel drop. In another sign that exporters are preparing for slower demand from some of the big Asian buyers, Iraq cut its official selling price for Sep cargoes of Basra Light crude for its Asian customers today.
Oil regains some poise after 3 percent drop
Initial jobless claims, a tracker of sorts for layoffs in the US, fell by 6K to 213K in the latest week. That was below the 217K estimate & the first decline in 3 weeks. Until recently claims haven't been this low since the early 1970s. The more stable monthly average of claims, meanwhile, fell by a smaller 1 to 214K, the 2nd lowest reading during a 9-year-old expansion that begin in mid-2009. The number of people already collecting unemployment benefits rose by 29K to 1.76M. Known as “continuing” claims, they are almost a ¼M lower compared to the same time last year. Claims continue to trend lower, signaling the labor market is strong enough to keep the unemployment rate trending down. The unemployment rate fell to 3.9% in Jul, nearly a 2-decade low.
U.S. jobless claims decline for first time in three weeks
2 weeks after reaching a handshake agreement to calm trade talks & back off new tariffs, the US & EU are beginning to lay the formal groundwork underpinning any deal. On Tues, the State Dept sent a cable to US embassies across Europe, directing them to
identify business areas ripe for lowering of tariffs or cutting of red
tape. The
communication placed particular emphasis on deals that would increase
US energy & soybean exports, 2 areas highlighted in a joint
statement the US & the EU put out following the Jul 25 meeting. One of the ideas that had
been discussed is potential American involvement in a Russian natural
gas pipeline into Germany that Pres Trump had criticized.
European Commission President Jean-Claude Juncker told Trump at the
White House last month that "most" EU countries disagreed with German
Chancellor Angela Merkel's decision to broker the deal with Russia. The move represents an effort to source deliverables
for talks set to take place when a delegation from the EU
visits DC later this month. Juncker & high-level US counterparts have been discussing additional
meetings to take place in the coming weeks. In the meantime, Juncker's senior trade advisor & an unnamed
senior EU trade official will visit DC on Aug 20 to "flesh out
the ideas that are being exchanged." Business executives dining with Trump at his NJ, property on Tues evening peppered Trump
with questions about the status of various trade negotiations. According
to attendees, he demurred on China ("It's really hard to get to a
deal," one attendee paraphrased him as saying) but pivoted to Canada,
Mexico & Europe, citing "good discussions with the EU" led by top
Trump economic advisor Larry Kudlow. Among the considerations in current talks is
potential US involvement in Germany's Nord Stream 2 pipeline, a
Russian natural gas pipeline into Germany that became the subject of
sharp criticism from Trump during this year's NATO Summit. During the expanded
bilateral meeting on Jul 25, Juncker told Trump that most EU countries
shared his concern about the deal, according to the senior
administration official, who said the 2 discussed the US potentially
getting a "piece" of the pipeline business. An EU spokesperson said
the pipeline was "briefly touched upon in the meeting, in the context of
the EU's intention to import more LNG from the U.S." & that the
project "does not contribute to the Energy Union's objectives."
Trump administration and EU build momentum toward hashing out a trade deal
Stocks were trading around breakeven all day. Tech was strong, trying to stretch its winning streak. Selling in the last hour of trading affected the entire stock market, but NAZ was able to eke out a small gain to stretch its streak to 9 days. With some traders away on holiday, volatility has to be expected. For what it's worth, trade talks are continuing in Aug.
Dow Jones Industrials
Trump administration and EU build momentum toward hashing out a trade deal
Stocks were trading around breakeven all day. Tech was strong, trying to stretch its winning streak. Selling in the last hour of trading affected the entire stock market, but NAZ was able to eke out a small gain to stretch its streak to 9 days. With some traders away on holiday, volatility has to be expected. For what it's worth, trade talks are continuing in Aug.
Dow Jones Industrials
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