Dow soared 334, advancers over decliners 5-2 & NAZ jumped up 117. The MLP index added 4+ to 250 & the REIT index went up 3+ to the 357s. Junk bond funds rose & Treasuries were a tad lower. Oil shot up 2 to the 52s & gold gained 12 to 1238 (roughly at a 4 month high).
AMJ (Alerian MLP Index tracking fund)
On the heels of Pres Trump's big announcement that he has reached a deal with China to cut import tariffs on American-made cars, he also touted the big benefits US farmers are about to receive. Today, Trump tweeted, “Farmers will be a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!” News of the agreement comes after nearly 90 days of a back-&-forth trade war between the countries resulting in B$ worth of imposed tariffs. Now Trump says that he & Pres Xi have a “very strong and personal relationship.” “He and I are the only 2 people that can bring about massive & very positive change, on trade & far beyond, between our 2 great Nations. A solution for North Korea is a great thing for China and ALL!” he added. However, the biggest news of the morning was that China has agreed to reduce & remove tariffs on cars coming into China from the US.
Sales of new Toyota & Honda cars in the US both fell in Nov, the Japanese carmakers said, pointing to an overall dip in US industry numbers last month in the face of rising car prices & interest rates. Toyota Motor (TM) sales, which rose 1.4% in Oct, fell about 0.6% to 190K units last month, due to decreased demand for its Prius & Camry sedans. Honda Motor sales fell 9.5% to 121K vehicles, more than doubling the pace of decline as it was hurt by lower volumes on passenger cars like its Civic. Overall US car sales dipped 2% last year from a record high of 17.55M in 2016 & are expected to decline further in 2018. However, a fall in Nov would be the first since 2009 in a month when dealers traditionally offer deals to clear stock ahead of the new year.
Treasury Secretary Steve Mnuchin expressed optimism about a trade pact with China, saying that the US has received commitments for concessions on several key issues. "This is the first time that we have a commitment from them that this will be a real agreement," Mnuchin said. "I'm very hopeful we can turn this into a real agreement." Markets rallied strongly, with the Dow opening more than 400 higher, on news that Pres Trump & Chinese counterpart Xi Jinping, had reached a truce in the trade battle. They agreed to a 90-day period were no new tariffs would be issued as the leaders hammer out principal differences. While the administration is optimistic that a lasting deal can get done, Mnuchin emphasized that China has to keep to its word. The White House is looking to reduce the trade deficit with China & to stop it from stealing intellectual property & technology. "They put on the table an offer of over $1.2 trillion in additional commitments. But the details of that still need to be negotiated," Mnuchin said. "This isn't just about buying things. This is about opening markets to U.S. companies and protecting U.S. technology. Those are very important structural issues to the president." In the 90-day period ahead, Trump will lead the negotiations with assistance from Agriculture & Energy dept leaders. US Trade Representative Robert Lighthizer also will be a principal, as will Commerce Secretary Wilbur Ross, Mnuchin added. The protocol that Mnuchin listed contradicted an earlier statement from White House economic advisor Peter Navarro, who said Lighthizer would take point on the negotiations. Lighthizer is "the toughest negotiator we've ever had at the USTR. And he's going to go chapter and verse and get tariffs down, nontariff barriers down, and end all these structural practices that prevent market access," Navarro had said. Among the most important issues Mnuchin listed are a regulating the flow of fentanyl, an opioid linked to thousands of overdoses in the US & the North Korea nuclear issue. "There is a very strong commitment between the two presidents to work together to make sure we have a nuclear-free Korean peninsula," Mnuchin added. White House Press Secretary Sarah Huckabee Sanders said yesterday that China agreed to classify fentanyl as a controlled substance, a key step that will result in those selling the substance in the US to be subject to "China's maximum penalty under the law." Mnuchin added that there needs to be solid progress made and that the administration won't stand for any stalling from China. "We absolutely need to have something concrete over these 90 days," he said. "There was a very significant commitment from both leaders on what needs to be done over the 90 days and instructions to both teams to negotiate and turn this into a real agreement with specific action items, deliverables and time frames."
Mnuchin hopeful that Trump-Xi talks can be turned into a 'real agreement'
After the general agreement to put trade issues on hold, buyers are continuing to support stocks at the higher levels out of the gate. But so far enthusiasm is based on talk without signed agreements. The Dow is approaching 26K which it has reached several times this year & the bulls are happy to be in command of the stock market.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 52.97 | +2.04 | +4.0% |
| GC=F | Gold | 1,239.40 | +13.40 | +1.1% |
The Dow opened more than 400 points higher on optimism that the US-China trade war may be nearing an end, or at least not intensifying. Pres Trump & Chinese Pres Xi Jinping agreed over the weekend in
Argentina at the G-20 summit to a 90-day truce in the dispute & to
intensify trade negotiations. Trump put on hold his plans to increase
tariffs on some $200B of Chinese goods. Xi vowed that China would
substantially increase its purchases of American energy, industrial &
agricultural products. Tech & vehicle shares led the broader market. Trade-sensitive issues also rode the surge higher. The trade war development energized global stocks,
with a key Chinese stock index closing up 2.5% & Japanese
stocks up 1.3%. In Europe, Germany's DAX paced indices with a 2.5% gain. Optimism also boosted the price of crude oil 4.4% to more than $53 per barrel on both the trade truce & improved
prospects for production cuts from Russia & OPEC. One
reason for the gain was the weekend announcement that China would
substantially increase its purchases of energy, industrial &
agricultural products from America, & Pres Trump would put on
hold his plans to increase tariffs on Chinese goods, including iPhones & laptops. Oil markets were also buoyed by
Canada's oil-rich province of Alberta deciding to cut production by 8.7% to support prices.
US stocks jump sharply on trade war truce
On the heels of Pres Trump's big announcement that he has reached a deal with China to cut import tariffs on American-made cars, he also touted the big benefits US farmers are about to receive. Today, Trump tweeted, “Farmers will be a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!” News of the agreement comes after nearly 90 days of a back-&-forth trade war between the countries resulting in B$ worth of imposed tariffs. Now Trump says that he & Pres Xi have a “very strong and personal relationship.” “He and I are the only 2 people that can bring about massive & very positive change, on trade & far beyond, between our 2 great Nations. A solution for North Korea is a great thing for China and ALL!” he added. However, the biggest news of the morning was that China has agreed to reduce & remove tariffs on cars coming into China from the US.
US farmers to get big boost, Trump says
Sales of new Toyota & Honda cars in the US both fell in Nov, the Japanese carmakers said, pointing to an overall dip in US industry numbers last month in the face of rising car prices & interest rates. Toyota Motor (TM) sales, which rose 1.4% in Oct, fell about 0.6% to 190K units last month, due to decreased demand for its Prius & Camry sedans. Honda Motor sales fell 9.5% to 121K vehicles, more than doubling the pace of decline as it was hurt by lower volumes on passenger cars like its Civic. Overall US car sales dipped 2% last year from a record high of 17.55M in 2016 & are expected to decline further in 2018. However, a fall in Nov would be the first since 2009 in a month when dealers traditionally offer deals to clear stock ahead of the new year.
Toyota, Honda US sales fall 9.5% in November
Treasury Secretary Steve Mnuchin expressed optimism about a trade pact with China, saying that the US has received commitments for concessions on several key issues. "This is the first time that we have a commitment from them that this will be a real agreement," Mnuchin said. "I'm very hopeful we can turn this into a real agreement." Markets rallied strongly, with the Dow opening more than 400 higher, on news that Pres Trump & Chinese counterpart Xi Jinping, had reached a truce in the trade battle. They agreed to a 90-day period were no new tariffs would be issued as the leaders hammer out principal differences. While the administration is optimistic that a lasting deal can get done, Mnuchin emphasized that China has to keep to its word. The White House is looking to reduce the trade deficit with China & to stop it from stealing intellectual property & technology. "They put on the table an offer of over $1.2 trillion in additional commitments. But the details of that still need to be negotiated," Mnuchin said. "This isn't just about buying things. This is about opening markets to U.S. companies and protecting U.S. technology. Those are very important structural issues to the president." In the 90-day period ahead, Trump will lead the negotiations with assistance from Agriculture & Energy dept leaders. US Trade Representative Robert Lighthizer also will be a principal, as will Commerce Secretary Wilbur Ross, Mnuchin added. The protocol that Mnuchin listed contradicted an earlier statement from White House economic advisor Peter Navarro, who said Lighthizer would take point on the negotiations. Lighthizer is "the toughest negotiator we've ever had at the USTR. And he's going to go chapter and verse and get tariffs down, nontariff barriers down, and end all these structural practices that prevent market access," Navarro had said. Among the most important issues Mnuchin listed are a regulating the flow of fentanyl, an opioid linked to thousands of overdoses in the US & the North Korea nuclear issue. "There is a very strong commitment between the two presidents to work together to make sure we have a nuclear-free Korean peninsula," Mnuchin added. White House Press Secretary Sarah Huckabee Sanders said yesterday that China agreed to classify fentanyl as a controlled substance, a key step that will result in those selling the substance in the US to be subject to "China's maximum penalty under the law." Mnuchin added that there needs to be solid progress made and that the administration won't stand for any stalling from China. "We absolutely need to have something concrete over these 90 days," he said. "There was a very significant commitment from both leaders on what needs to be done over the 90 days and instructions to both teams to negotiate and turn this into a real agreement with specific action items, deliverables and time frames."
Mnuchin hopeful that Trump-Xi talks can be turned into a 'real agreement'
After the general agreement to put trade issues on hold, buyers are continuing to support stocks at the higher levels out of the gate. But so far enthusiasm is based on talk without signed agreements. The Dow is approaching 26K which it has reached several times this year & the bulls are happy to be in command of the stock market.
Dow Jones Industrials
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