Dow fell another 100, decliners modestly ahead of advancers & NAZ recovered a penny after yesterday's big loss. The MLP index lost another 4+ to the 247s & the REIT index fluctuated. Junk bond funds were mixed & Treasuries remained in demand, bringing lower yields. Oil is now down in the 55s, hard to believe, (much more below) & gold was off 2 to 1201.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.8116015171332475)
White House economic advisors clash: Kudlow says Navarro's China comments are 'way off base'
Companies should try digging in their pockets if they're looking to find workers for unfilled jobs, Minneapolis Fed Pres Neel Kashkari said. With the unemployment rate falling to its lowest level in 49 years, there are nearly 1M more job openings than available workers, according to the Labor Dept. Even though payrolls have been growing at a solid clip, complaints persist from companies that they are having a hard time finding qualified workers to fill positions because of a skills gap. Kashkari, though, said he doesn't completely buy the argument that there aren't enough bodies out there. “I oftentimes hear businesses saying I just can’t find the workers that I need,” the central bank official said. “Now, I’m not entirely sympathetic with that view, because I’ve been saying you should try paying more, and you may be able to attract more workers.” “But nonetheless, the unemployment rate is going down, and there is a question about where the workforce is going to come from,” he added. Immigration would be one answer to solving the issue, with low population & productivity growth, Kashkari said. In talking to business contacts around his district, he said, “You realize that immigration does have a role to play in helping both those problems.” Wage growth has been nudging higher lately, with average hourly earnings growth at 3.1% in Oct from the same period a year ago. That has helped the Fed stay around its 2% inflation goal as central bank officials maintain that the unemployment rate is below the long-term normal level. The Fed has been gradually raising short-term rates in an attempt to tamp down a future inflation threat.
Companies struggling to fill jobs 'should try paying more,' Fed's Kashkari says
The oil market is undergoing a stunning reversal as crude futures wipe out this year's gains after hitting their highest levels since 2014 just 6 weeks ago. The slump reflects a fundamental change in the outlook for the oil prices. A month ago, traders were concerned that a looming shortage of oil would push crude futures to $100 a barrel. Now, supply is expected to swamp demand at the start of 2019. As a result, oil prices have plunged more than $20 a barrel since the start of Oct, when Brent crude rose to nearly $87 a barrel & US crude traded just shy of $77. Both benchmarks are now trading firmly in bear market territory, having fallen more than 20% from their 52-week highs. Along the way, US crude has posted its longest losing streak since it began trading in NY more than 3 decades ago. The contract has now fallen for 12 consecutive sessions, settling at $55.69 on today, its lowest closing price since Nov 16, 2017. The roots of the pullback can be traced back to the most recent rally itself. At the peak of the run-up, many energy analysts said oil prices never should have risen so far so fast. Crude futures rose to 4-year highs on Oct 3 as the market braced for renewed US sanctions on Iran, OPEC's 3rd biggest producer. Thru Sep, the threat of sanctions wiped about 800K barrels a day off the market, fueling speculation that some oil importers would struggle to find supplies. That left oil prices vulnerable to a pullback just as the stock market was about to sell off. One week after crude futures struck their highs, 2/3 of the stocks in the S&P 500 plunged into correction territory. That kicked off a broad market rout that saw investors shed risk assets, including crude futures. Oil & stocks do not always move in tandem, but the assets were closely correlated during last month’s sell-off. Right around the same time that investors started dumping stocks & commodities, concerns about faltering oil demand sharpened. In Oct, both OPEC & the Intl Energy Agency said oil consumption would grow less than previously forecast, pointing to signs of slowing global economic growth due to trade tensions, rising interest rates & weak emerging market currencies. The $ has risen nearly 3% against a basket of currencies over the last 2 months. That makes crude oil, which is sold in $s, more expensive to holders of other currencies. Meanwhile, the world's top 3 oil producers are pumping at or near all-time highs & the 15-member OPEC cartel is in the middle of a coordinated production increase. US output has topped 11M barrels per day in recent months, while Russia is pumping at post-Soviet era highs at roughly the same level. Saudi Arabia has trailed just behind at 10.6M bpd in Oct. The rising output & weakening demand outlook now has much of the market convinced that supply will outstrip the world's appetite for oil early next year. The Trump administration's decision to allow 8 countries to continue importing Iranian crude for the next 6 months has also relieved downward pressure on oil prices. With demand growth looking shaky & oil prices collapsing, OPEC & its allies are now considering a fresh round of output cuts. The cartel, along with Russia & several other producers, began capping their output in Jan 2017 to drain a global crude glut & end a punishing oil price downturn. However, they agreed to reverse course & hike output in Jun after cutting output more than they intended. Last month, a committee representing the group said the alliance may have to once again throttle back output to prevent oversupply. The group essentially reiterated that position at its latest meeting on Sun. The following day, Saudi Arabia's energy minister said the group believes an output cut approaching 1M bpd may be in order. Still, oil prices continued to move lower today, after Pres Trump urged OPEC & Saudi Arabia to stay the course & as Russia's energy minister continues to express skepticism about the wisdom of supply cuts.
Why oil prices went from four-year highs to bear market in just six weeks
Starbucks (SBUX) is planning to cut approximately 5% of its global corp workforce, according to a leaked memo. About 350 employees in marketing, creative, product, technology & store development will be impacted. The affected divisions will undergo “significant changes” as SBUX narrows its priorities & aims to become a more nimble company. While the decisions were “incredibly difficult,” it said they were made after “very careful consideration.” The memo said impacted roles were related to work that had been “eliminated” or “deprioritized.” The news comes after SBUX said in Sep it would cut corp staff as it shuffles its organizational structure. The company has been plagued with lagging US sales for several qtrs. The coffee giant has scaled back on store growth & closed underperforming company-owned locations. While the company still sees positive same-store sales, investors have been looking for a faster pace of sales growth. As SBUX executes its plan, its results have improved. COO Roz Brewer previously said that SBUX shifted a number of “remedial tasks” that baristas were doing during the day to after closing, giving them more time to work with customers. By streamlining some of these operations, SBUX aims to encourage customers to spend more time in its locations. In its fiscal Q4, sales in the US & Americas that had been open for at least a year grew 4%, topping expectations for growth of about 2.7%. This was the company's strongest same-store-sales growth in the US in 5 qtrs. SBUX said its loyalty program grew 15% year over year, hitting 15.3M members & Starbucks Rewards members drove nearly 40% of sales in the US. The stock fell 50¢.
If you would like to learn more about SBUX, click on this link:
club.ino.com/trend/analysis/stock/SBUX?a_aid=CD3289&a_bid=6ae5b6f7
Starbucks to cut 5% of its corporate workforce
The US ran a $100B deficit in Oct, the Treasury Dept reported, wider than the $63B deficit last year as spending rose 18% while receipts increased by 7%. Adjusted for timing shifts, the deficit was nearly equal at $110B vs $111B in Oct 2017. The US spent $353B during the month while it only took in $253B. The US spent $84B on Social Security, $69B on defense & $53B on Medicare. As Oct (the first month of the gov's fiscal year), it’s still very early to project whether the annual budget deficit will reach $1T after ending fiscal 2018 at $782B. The Congressional Budget Office projects the deficit will come in just shy of $1T, at $981B, due to the impact from the Tax Cuts & Jobs Act & new spending. The deficit more generally is expected to widen as the baby boomers age, boosting entitlement spending while cutting revenue.
After yesterday's market collapse, sellers returned today. Bargain hunters returned in the last ½ hour, cutting losses for the Dow. Market breadth near break even was a good sign, but this has been a tough 5 day period for stocks. Oil has fallen for 12 straight session, very ugly. The article above tells the story well. The background story is about worries of slower global economic growth which would impact overall demand for oil. The strength of the stock market looks gloomy.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres Trump's top economic advisor, Larry Kudlow, disavowed comments from White House trade advisor Peter Navarro,
who last week lambasted Wall Street influence in US-China trade
negotiations in comments that helped weaken the stock market. “He
was not speaking for the president, nor was he speaking for the
administration,” Kudlow said. “His remarks were way off
base. They were not authorized by anybody. I actually think he did the
president a great disservice.” “I think Peter very badly misspoke,” added Kudlow, who took over as
director of the National Economic Council earlier this year. “He was
freelancing and he’s not representing the president or the
administration.” Navarro,
known for his hawkish economic views toward China, has encouraged
Trump's tough talk with Beijing throughout an escalating trade war
between the 2 countries. He doubled down on his aggressive tone last
week, saying any agreement between the 2 countries will be on Trump's
terms & not subject to Wall Street intervention. “If there is a deal — if and when there is a deal — it will be on President Donald J. Trump’s terms. Not Wall Street terms,” Navarro said Fri. “If Wall Street is involved and continues to insinuate itself into
these negotiations, there will be a stench around any deal that’s
consummated because it will have the imprimatur of Goldman Sachs and
Wall Street,” Navarro added. Both economic powerhouses have imposed & threatened tariffs on B$s worth of each other's goods. Gary
Cohn, the former top national economic adviser, argued against imposing
tariffs on China. Cohn was formerly CEO of Goldman Sachs.
White House economic advisors clash: Kudlow says Navarro's China comments are 'way off base'
Companies should try digging in their pockets if they're looking to find workers for unfilled jobs, Minneapolis Fed Pres Neel Kashkari said. With the unemployment rate falling to its lowest level in 49 years, there are nearly 1M more job openings than available workers, according to the Labor Dept. Even though payrolls have been growing at a solid clip, complaints persist from companies that they are having a hard time finding qualified workers to fill positions because of a skills gap. Kashkari, though, said he doesn't completely buy the argument that there aren't enough bodies out there. “I oftentimes hear businesses saying I just can’t find the workers that I need,” the central bank official said. “Now, I’m not entirely sympathetic with that view, because I’ve been saying you should try paying more, and you may be able to attract more workers.” “But nonetheless, the unemployment rate is going down, and there is a question about where the workforce is going to come from,” he added. Immigration would be one answer to solving the issue, with low population & productivity growth, Kashkari said. In talking to business contacts around his district, he said, “You realize that immigration does have a role to play in helping both those problems.” Wage growth has been nudging higher lately, with average hourly earnings growth at 3.1% in Oct from the same period a year ago. That has helped the Fed stay around its 2% inflation goal as central bank officials maintain that the unemployment rate is below the long-term normal level. The Fed has been gradually raising short-term rates in an attempt to tamp down a future inflation threat.
Companies struggling to fill jobs 'should try paying more,' Fed's Kashkari says
The oil market is undergoing a stunning reversal as crude futures wipe out this year's gains after hitting their highest levels since 2014 just 6 weeks ago. The slump reflects a fundamental change in the outlook for the oil prices. A month ago, traders were concerned that a looming shortage of oil would push crude futures to $100 a barrel. Now, supply is expected to swamp demand at the start of 2019. As a result, oil prices have plunged more than $20 a barrel since the start of Oct, when Brent crude rose to nearly $87 a barrel & US crude traded just shy of $77. Both benchmarks are now trading firmly in bear market territory, having fallen more than 20% from their 52-week highs. Along the way, US crude has posted its longest losing streak since it began trading in NY more than 3 decades ago. The contract has now fallen for 12 consecutive sessions, settling at $55.69 on today, its lowest closing price since Nov 16, 2017. The roots of the pullback can be traced back to the most recent rally itself. At the peak of the run-up, many energy analysts said oil prices never should have risen so far so fast. Crude futures rose to 4-year highs on Oct 3 as the market braced for renewed US sanctions on Iran, OPEC's 3rd biggest producer. Thru Sep, the threat of sanctions wiped about 800K barrels a day off the market, fueling speculation that some oil importers would struggle to find supplies. That left oil prices vulnerable to a pullback just as the stock market was about to sell off. One week after crude futures struck their highs, 2/3 of the stocks in the S&P 500 plunged into correction territory. That kicked off a broad market rout that saw investors shed risk assets, including crude futures. Oil & stocks do not always move in tandem, but the assets were closely correlated during last month’s sell-off. Right around the same time that investors started dumping stocks & commodities, concerns about faltering oil demand sharpened. In Oct, both OPEC & the Intl Energy Agency said oil consumption would grow less than previously forecast, pointing to signs of slowing global economic growth due to trade tensions, rising interest rates & weak emerging market currencies. The $ has risen nearly 3% against a basket of currencies over the last 2 months. That makes crude oil, which is sold in $s, more expensive to holders of other currencies. Meanwhile, the world's top 3 oil producers are pumping at or near all-time highs & the 15-member OPEC cartel is in the middle of a coordinated production increase. US output has topped 11M barrels per day in recent months, while Russia is pumping at post-Soviet era highs at roughly the same level. Saudi Arabia has trailed just behind at 10.6M bpd in Oct. The rising output & weakening demand outlook now has much of the market convinced that supply will outstrip the world's appetite for oil early next year. The Trump administration's decision to allow 8 countries to continue importing Iranian crude for the next 6 months has also relieved downward pressure on oil prices. With demand growth looking shaky & oil prices collapsing, OPEC & its allies are now considering a fresh round of output cuts. The cartel, along with Russia & several other producers, began capping their output in Jan 2017 to drain a global crude glut & end a punishing oil price downturn. However, they agreed to reverse course & hike output in Jun after cutting output more than they intended. Last month, a committee representing the group said the alliance may have to once again throttle back output to prevent oversupply. The group essentially reiterated that position at its latest meeting on Sun. The following day, Saudi Arabia's energy minister said the group believes an output cut approaching 1M bpd may be in order. Still, oil prices continued to move lower today, after Pres Trump urged OPEC & Saudi Arabia to stay the course & as Russia's energy minister continues to express skepticism about the wisdom of supply cuts.
Why oil prices went from four-year highs to bear market in just six weeks
Starbucks (SBUX) is planning to cut approximately 5% of its global corp workforce, according to a leaked memo. About 350 employees in marketing, creative, product, technology & store development will be impacted. The affected divisions will undergo “significant changes” as SBUX narrows its priorities & aims to become a more nimble company. While the decisions were “incredibly difficult,” it said they were made after “very careful consideration.” The memo said impacted roles were related to work that had been “eliminated” or “deprioritized.” The news comes after SBUX said in Sep it would cut corp staff as it shuffles its organizational structure. The company has been plagued with lagging US sales for several qtrs. The coffee giant has scaled back on store growth & closed underperforming company-owned locations. While the company still sees positive same-store sales, investors have been looking for a faster pace of sales growth. As SBUX executes its plan, its results have improved. COO Roz Brewer previously said that SBUX shifted a number of “remedial tasks” that baristas were doing during the day to after closing, giving them more time to work with customers. By streamlining some of these operations, SBUX aims to encourage customers to spend more time in its locations. In its fiscal Q4, sales in the US & Americas that had been open for at least a year grew 4%, topping expectations for growth of about 2.7%. This was the company's strongest same-store-sales growth in the US in 5 qtrs. SBUX said its loyalty program grew 15% year over year, hitting 15.3M members & Starbucks Rewards members drove nearly 40% of sales in the US. The stock fell 50¢.
If you would like to learn more about SBUX, click on this link:
club.ino.com/trend/analysis/stock/SBUX?a_aid=CD3289&a_bid=6ae5b6f7
Starbucks to cut 5% of its corporate workforce
The US ran a $100B deficit in Oct, the Treasury Dept reported, wider than the $63B deficit last year as spending rose 18% while receipts increased by 7%. Adjusted for timing shifts, the deficit was nearly equal at $110B vs $111B in Oct 2017. The US spent $353B during the month while it only took in $253B. The US spent $84B on Social Security, $69B on defense & $53B on Medicare. As Oct (the first month of the gov's fiscal year), it’s still very early to project whether the annual budget deficit will reach $1T after ending fiscal 2018 at $782B. The Congressional Budget Office projects the deficit will come in just shy of $1T, at $981B, due to the impact from the Tax Cuts & Jobs Act & new spending. The deficit more generally is expected to widen as the baby boomers age, boosting entitlement spending while cutting revenue.
U.S. budget deficit widens to $100 billion in October
After yesterday's market collapse, sellers returned today. Bargain hunters returned in the last ½ hour, cutting losses for the Dow. Market breadth near break even was a good sign, but this has been a tough 5 day period for stocks. Oil has fallen for 12 straight session, very ugly. The article above tells the story well. The background story is about worries of slower global economic growth which would impact overall demand for oil. The strength of the stock market looks gloomy.
Dow Jones Industrials
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