Dow rose 157 (below session highs with selling into the close), advancers over decliners better than 2-1 & NAZ gained 66. The MLP index added 1+ to 241 & the REIT index was even in the 356s. Junk bond funds remained in demand & Treasuries were sold. Oil slid lower in the 51s & gold went up 3 to 1250 (near recent highs).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
In concession to Trump, China reportedly preparing to open up market
US economic growth will defy expectations again in 2019 thanks to a business investment boom & Pres Trump's trade strategy, White House economic advisor Kevin Hassett said. The chairman of the Council of Economic Advisers expressed optimism that even a slowing housing market won't hamper the overall picture. GDP has risen an average 3.3% thru the first 3 qtrs of 2018 & is expected to gain 3% in Q4. "We're definitely going to be at 3 or above 3 for next year as well," Hassett said. Most economist disagree, expecting growth to moderate to a 2-2.5% range in 2019 & the Federal Reserve is projecting 2.5%. The White House is pinning its hopes in part on business investment growth spurred by the late 2017 tax cuts that reduced the corp rate from 35% to 21%. Nonresidential fixed investment jumped 11.5% to start the year but tailed off to 2.5% in Q3, its slowest pace since Q4-2016. Hassett conceded that the "boom" in business investment "kind of leveled off a bit," but he expects it to resume as companies bring back profits stashed overseas. He also touted gains in worker pay, though he mistakenly said real wages are growing above 1% year over year. The latest Labor Dept numbers released today show that gain to be 0.8%. Average hourly earnings not adjusted for inflation rose 3.1% in Nov, tied for the best increase during the recovery. Those Nov jobs numbers showed payroll growth of 155K, below expectations but still solid in a tightening jobs market. Hassett pointed out that 73.5% of those getting jobs had been out of the labor force previously. "People are coming back into the labor market," he said. Even the slowing housing market isn't cause for concern, Hassett added, because it alleviates concerns over financial bubbles. "If you're wondering about the sustainability of the boom, the fact that we don't have this out of control housing sector with runaway price increases should actually give you comfort that we don't have to worry about our financial institutions having another housing bust, because housing is really underperforming," he said. When asked about Trump's trade strategy, Hassett said he agrees with the that stance & expects that also to yield positive economic results. "I do support his trade policy, because he's trying to push tariff and nontariff barriers lower all around the world," he added. "Uncertainty over our progress is something that's clearly having an impact on markets. That's why I think it's important that we move forward quickly, for example, with the China deal that's actually running on a clock now." Progress with China, he said, would be "very, very positive news."
Economic growth will top 3% again next year, Trump advisor Hassett says
The Energy Information Administration (EIA) reported that domestic crude supplies fell by 1.2M barrels for the latest week. Supplies had also declined the week before, marking the first weekly decline in 11 weeks. Analysts & traders, on average, expected to see a larger decline of 2.8M barrels in crude supplies while the American Petroleum Institute yesterday reported a drop of 10.2M barrels. Gasoline stockpiles climbed 2.1M barrels last week, while distillate stockpiles declined 1.5M barrels, according to the EIA. A survey had shown expectations for supply increases of 1.8M barrels in gasoline & 1.3M barrels in distillate inventories. Jan crude was up 41¢ (0.8%) at $52.06 a barrel.
CFOs at companies are pessimistic heading into 2019, with nearly ½ expecting a recession by the end of the year, according to a new survey. Duke University's look at where 212 CFOs stand showed that 48.6% think the next negative growth period is less than 12 months away. If the US manages to make it thru the year without a recession, 82% figure one will start by the end of 2020. "The end is near for the near-decade-long burst of global economic growth," John Graham, a finance professor at Duke's Fuqua School of Business & director of the survey, said. "The U.S. outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for U.S. goods." The results show 86% see a Canada recession by the end of 2019, with the figure at 67% for Europe, 54% for Asia & 42% for Latin America. Overall, respondents expect the US to grow by 2.7% for the year, with the bulk of the gains front-loaded, while there's a 1-in-10 chance of GDP rising just 0.6%. Primary risks include the inability to attract & retain qualified workers, an oft-cited issue referred to as the "skills gap." The US unemployment rate is at 3.7%, near a 50-year low, but companies in other surveys have complained about the problem filling the more than 7M job openings currently on the books. Other issues the CFOs cited were gov policies, benefit costs, economic uncertainty & rising employment costs. The results come amid the best year for GDP growth since the recovery began in mid-2009. GDP gains have averaged 3.3% thru the first 3 qtrs & are on track for another 3% or so increase in Q4. However, worries over a global slowdown have intensified & most economists expect growth to slow in 2019, though still remain above trend, then go back to the longer-term average in 2020 as the effects of fiscal stimulus wear off. Corp earnings expectations for the next 12 months among the financial officers slumped over the past qtr, going from 12.8% expected in the Sep survey to 4.5% in the most recent one. Capital spending expectations fell also, from 5.7% to 1% & inflation as measured by the costs of the individual firms' prices fell from 3% to 2.7%.
Nearly half of corporate CFOs are expecting a US recession by the end of 2019
While stocks had a winning day, the Dow is still down 1K this month. Santa Clause remains far away. YTD the Dow is in the red, slightly (shown below). This week the Dow is up 150 & more excitement will bring substantial change by Fri's close.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
China is reportedly willing to meet one of
Pres Trump's chief trade demands as negotiations to ease tensions
between the world's 2 most powerful economies continues. Beijing
is prepared to offer increased access to foreign companies in a plan
expected to be rolled out in early 2019. Beijing
is revising Pres Xi Jinping's Made in China 2025 plan, intended
to make the country dominant in high-tech manufacturing, to give
foreign companies more opportunities to participate. The reforms could include eliminating
defined targets for market share among Chinese companies, which
currently call for increasing domestic production of core components to
70% by 2025. Chinese officials have also reportedly stopped
mentioning Made in China 2025 plan at press conferences. On Mon,
officials in Beijing released a revised version of economic priorities,
which appeared to drop mention of implementing the economic plan. The move would be the latest among a string of preliminary signs the trade war between the 2 countries could be deescalating. Earlier this week, Chinese trade officials said they were planning to reduce auto tariffs & increase imports of some agricultural products, like soybeans.
Tariffs on US vehicles could be cut to 15%, from 40%. During
the G-20 summit in Buenos Aires, Trump & Xi reached a trade truce,
under which the US would hold off on raising tariffs on most imports
from China to 25%. Trump is still
putting pressure on China to reform its intellectual property
protections. He has said the country steals hundreds B$ worth of intellectual goods from the US each year.
In concession to Trump, China reportedly preparing to open up market
US economic growth will defy expectations again in 2019 thanks to a business investment boom & Pres Trump's trade strategy, White House economic advisor Kevin Hassett said. The chairman of the Council of Economic Advisers expressed optimism that even a slowing housing market won't hamper the overall picture. GDP has risen an average 3.3% thru the first 3 qtrs of 2018 & is expected to gain 3% in Q4. "We're definitely going to be at 3 or above 3 for next year as well," Hassett said. Most economist disagree, expecting growth to moderate to a 2-2.5% range in 2019 & the Federal Reserve is projecting 2.5%. The White House is pinning its hopes in part on business investment growth spurred by the late 2017 tax cuts that reduced the corp rate from 35% to 21%. Nonresidential fixed investment jumped 11.5% to start the year but tailed off to 2.5% in Q3, its slowest pace since Q4-2016. Hassett conceded that the "boom" in business investment "kind of leveled off a bit," but he expects it to resume as companies bring back profits stashed overseas. He also touted gains in worker pay, though he mistakenly said real wages are growing above 1% year over year. The latest Labor Dept numbers released today show that gain to be 0.8%. Average hourly earnings not adjusted for inflation rose 3.1% in Nov, tied for the best increase during the recovery. Those Nov jobs numbers showed payroll growth of 155K, below expectations but still solid in a tightening jobs market. Hassett pointed out that 73.5% of those getting jobs had been out of the labor force previously. "People are coming back into the labor market," he said. Even the slowing housing market isn't cause for concern, Hassett added, because it alleviates concerns over financial bubbles. "If you're wondering about the sustainability of the boom, the fact that we don't have this out of control housing sector with runaway price increases should actually give you comfort that we don't have to worry about our financial institutions having another housing bust, because housing is really underperforming," he said. When asked about Trump's trade strategy, Hassett said he agrees with the that stance & expects that also to yield positive economic results. "I do support his trade policy, because he's trying to push tariff and nontariff barriers lower all around the world," he added. "Uncertainty over our progress is something that's clearly having an impact on markets. That's why I think it's important that we move forward quickly, for example, with the China deal that's actually running on a clock now." Progress with China, he said, would be "very, very positive news."
Economic growth will top 3% again next year, Trump advisor Hassett says
The Energy Information Administration (EIA) reported that domestic crude supplies fell by 1.2M barrels for the latest week. Supplies had also declined the week before, marking the first weekly decline in 11 weeks. Analysts & traders, on average, expected to see a larger decline of 2.8M barrels in crude supplies while the American Petroleum Institute yesterday reported a drop of 10.2M barrels. Gasoline stockpiles climbed 2.1M barrels last week, while distillate stockpiles declined 1.5M barrels, according to the EIA. A survey had shown expectations for supply increases of 1.8M barrels in gasoline & 1.3M barrels in distillate inventories. Jan crude was up 41¢ (0.8%) at $52.06 a barrel.
EIA reports a fall in U.S. crude supply for a second week in a row
CFOs at companies are pessimistic heading into 2019, with nearly ½ expecting a recession by the end of the year, according to a new survey. Duke University's look at where 212 CFOs stand showed that 48.6% think the next negative growth period is less than 12 months away. If the US manages to make it thru the year without a recession, 82% figure one will start by the end of 2020. "The end is near for the near-decade-long burst of global economic growth," John Graham, a finance professor at Duke's Fuqua School of Business & director of the survey, said. "The U.S. outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for U.S. goods." The results show 86% see a Canada recession by the end of 2019, with the figure at 67% for Europe, 54% for Asia & 42% for Latin America. Overall, respondents expect the US to grow by 2.7% for the year, with the bulk of the gains front-loaded, while there's a 1-in-10 chance of GDP rising just 0.6%. Primary risks include the inability to attract & retain qualified workers, an oft-cited issue referred to as the "skills gap." The US unemployment rate is at 3.7%, near a 50-year low, but companies in other surveys have complained about the problem filling the more than 7M job openings currently on the books. Other issues the CFOs cited were gov policies, benefit costs, economic uncertainty & rising employment costs. The results come amid the best year for GDP growth since the recovery began in mid-2009. GDP gains have averaged 3.3% thru the first 3 qtrs & are on track for another 3% or so increase in Q4. However, worries over a global slowdown have intensified & most economists expect growth to slow in 2019, though still remain above trend, then go back to the longer-term average in 2020 as the effects of fiscal stimulus wear off. Corp earnings expectations for the next 12 months among the financial officers slumped over the past qtr, going from 12.8% expected in the Sep survey to 4.5% in the most recent one. Capital spending expectations fell also, from 5.7% to 1% & inflation as measured by the costs of the individual firms' prices fell from 3% to 2.7%.
Nearly half of corporate CFOs are expecting a US recession by the end of 2019
While stocks had a winning day, the Dow is still down 1K this month. Santa Clause remains far away. YTD the Dow is in the red, slightly (shown below). This week the Dow is up 150 & more excitement will bring substantial change by Fri's close.
Dow Jones Industrials
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