Dow recovered 103, advancers over decliners about 4-1 & NAZ jumped 59. The MLP index gained 1+ to 241 & the REIT index lost 2 to the 356s. Junk bond funds crawled higher & Treasuries fluctuated. Oil rose 1+ to the 52s & gold was steady at 1249.
AMJ (Alerian MLP Index tracking fund)
A painful contraction in China's auto market deepened in Nov as sales fell for a 5th month amid an economic turndown & consumer anxiety over a tariff fight with the US. Sales of SUVs, sedans & minivans in the global industry's biggest market plunged 16% from a year ago to just under 2.2M, the China Association of Automobile Manufacturers reported. Sales for the 11 months thru Nov were down 2.8% from a year earlier at 21.5M. That puts annual sales on track to shrink for the first time in 3 decades. The slump is a setback for global automakers that look to China to drive revenue & are spending heavily to meet gov targets to develop electric vehicles. It adds to challenges for communist leaders as they try to shore up cooling economic growth & fight a tariff war with Pres Trump over Beijing's campaign for state-led creation of global champions in robotics & other technology industries. China's economy is forecast to grow by about 6.5% this year, down slightly from 2017's 6.7%. But that is propped up by higher gov spending on public works construction that helps to mask weakness in real estate sales & other areas that weighs on consumer confidence. The downturn in auto demand has accelerated steadily. The Nov sales decline was worse than Oct's 13% contraction, which was sharper than Sep's 12% decline. Demand was expected to weaken after Beijing tightened lending controls last year to cool a debt boom. But the slump is sharper than forecast, fueling expectations regulators will cut sales taxes or take other steps to shore up demand. Sales of SUVs, normally a bright spot for the industry, fell 16% from a year earlier in Nov to 910K vehicles. YTD sales were up just under 1% at 9M & sedan sales were off 12% at just under 1.1M units. Sales of gasoline-electric hybrid & pure-electric cars & SUVs, which Beijing is promoting aggressively with subsidies & sales quotas, rose 37.6% to 169K. YTD sales were up 68% at just over 1M. China is a top market for General Motors (GM), Volkswagen & other industry majors that look to increasingly prosperous Chinese customers to drive revenue growth. They are spending B$ to develop models to appeal to local tastes. They face rising competition from young but ambitious Chinese rivals including electric brand BYD Auto, Geely Auto & SUV maker Great Wall Motor. Total sales by Chinese brands fell 23.3% to 909K vehicles, worse than Oct's 18% contraction.
Pres Trump hinted at "important announcements" regarding his administration's high-stakes trade talks with China. "Very productive conversations going on with China! Watch for some important announcements!" he tweeted. Trump's optimistic tweet came soon after it was reported that China's gov would consider slashing tariffs on US car imports to 15% from 40%. Auto stocks jumped on the news in premarket trading. Trump tweeted last week that China had agreed to slash the tariffs, although the Chinese gov did not confirm or deny it at the time. In Jul, China cut tariffs on auto imports to 15% from 25%, but then soon hiked duties on US-made cars to 40% as retaliation for the Trump administration's aggressive trade moves. Other signs of potential progress emerged today. Chinese officials, Chinese Pres Xi Jinping has told senior members of his gov to follow thru on his recent agreement with Trump. Treasury Secretary Steve Mnuchin & Trade Representative Robert Lighthizer are the main US negotiators in calls with Chinese negotiators. The US & China have restarted trade negotiations after Trump & Xi reached a truce in the escalating trade war. The 2 leaders spoke during a working dinner at the G-20 summit in Argentina on Dec 1. As part of the truce, the US & China agreed to a 90-day window to negotiate some significant sticking points between the world's 2 largest economies. As part of the interim agreement, Trump said he would hold off on boosting tariffs on $200B in Chinese goods to 25% from 10%. Trump's tweet today also came during the battle over a Chinese exec who was arrested in Canada, the same day Trump & Xi dined in Argentina, & faces extradition to the US. Meng Wanzhou, CFO of Chinese telecom giant Huawei, is being held by Canadian authorities in a case related to the company's alleged sale of equipment containing US components to Iran in violation of intl sanctions on the Islamic Republic. There are concerns that the Huawei case could upset the delicate but broad trade talks between the US & China, although the renewed talks & Trump's claims indicate it has yet to disrupt the negotiations.
Trump teases 'important announcements' as he touts 'very productive' China trade talks
Oil prices rose, clawing back some of the previous day's hefty losses as a modest show of strength in global stocks, a slightly weaker $ & an unplanned supply outage in OPEC member Libya lent support. Brent crude oil futures rose 84¢ (1.4%) to $60.81 a barrel, having fallen 3% the previous day. US crude futures rose $1.14 (2.2%) to $52.14 a barrel. Global stocks have fallen by more than 5% so far this month, under pressure from concern about the impact of the US trade dispute with China on economic growth, & oil has been caught in the down-draft. The $, which has gained 5% in 2018 thanks to rising US interest rates, has also created a headwind for oil & other industrial commodities, which tend to benefit from a slide in the currency. A modest boost for the oil price came from a shutdown in production in Libya, where the National Oil Company (NOC) declared force majeure on yesterday on exports from the El Sharara oilfield, the country's biggest, which was seized last weekend by a militia group. NOC said the shutdown would result in a production loss of 315K barrels per day (BPD), & an additional loss of 73K bpd at the El Feel oilfield. OPEC, together with non-members such as Russia & Oman, last week agreed to cut crude output by a joint 1.2M bpd from Jan to help balance supply & demand. Russia said it plans to cut its oil output by 50-60K bpd in Jan, as part of a gradual means of meeting its commitment under the deal to cut by 220K bpd. In physical markets, Kuwait & Iran this week both reduced their Jan crude oil supply prices to Asia. Analysts & investors are not yet convinced that the supply cut will be effective in warding off a repeat of 2014, when rapidly rising global production overtook growth in demand & led to a huge overhang of unwanted fuel.
Oil rises as equities rally, Libyan supply outage continues
There is a bit of a bounce back in the stocks market after recent selling. However, the Dow has pulled back a large 250 from its opening levels. Even with good news, the markets are very jittery. The Dow is down YTD, about 250 (1%), as traders & investors are nervous.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 52.12 | +1.12 | +2.2% |
| GC=F | Gold | 1,250.90 | +1.50 | +0.1% |
Stocks opened higher on fresh optimism
over trade talks between the US & China & word that Beijing will
cut tariffs on American cars. The news about tariffs lifted US auto stocks. Shares of auto parts suppliers were also higher. A
proposal to cut China tariffs on American cars to the 15% that
other nations pay, instead of the 40% now levied on US autos, has been submitted to China's cabinet. Meanwhile, a phone call was held today between Chinese Vice Premier
Liu He & US Treasury Secretary Steve Mnuchin & Trade
Representative Robert Lighthizer. This comes after a day that saw the Dows fall more than 500 & yet end the day in the green. On
the economic front the producer price index (PPI), which gauges what
wholesalers pay for their goods, rose slightly in Nov. The
index came in at a seasonally adjusted 0.1%, topping
expectations. The figure slowed from Oct's 0.6% gain. Backing out food & energy, the core PPI rose 0.3%. Asian stocks closed higher. Hong Kong stocks
clawed back early losses to end up as Beijing confirmed that it is still
in trade talks with DC & rhe Hang Seng index ended 0.1% higher. China's Shanghai Composite index closed up 0.4%. Japan's Nikkei index closed down 0.3%. In
Europe, London's FTSE traded up 1.7% after the £ stabilized
following yesterday's Brexit-related slide to 20-month lows after Prime
Minister Theresa May postponed a key vote on how Britain will leave the
EU. Germany's DAX jumped 2%. France's
CAC gained 2%, after French pres Emmanuel Macron pledged
late yesterday to raise the minimum wage & cut taxes in a bid to
prevent more violent protests.
US stocks up on optimism China to cut tariffs, restarted trade talks
A painful contraction in China's auto market deepened in Nov as sales fell for a 5th month amid an economic turndown & consumer anxiety over a tariff fight with the US. Sales of SUVs, sedans & minivans in the global industry's biggest market plunged 16% from a year ago to just under 2.2M, the China Association of Automobile Manufacturers reported. Sales for the 11 months thru Nov were down 2.8% from a year earlier at 21.5M. That puts annual sales on track to shrink for the first time in 3 decades. The slump is a setback for global automakers that look to China to drive revenue & are spending heavily to meet gov targets to develop electric vehicles. It adds to challenges for communist leaders as they try to shore up cooling economic growth & fight a tariff war with Pres Trump over Beijing's campaign for state-led creation of global champions in robotics & other technology industries. China's economy is forecast to grow by about 6.5% this year, down slightly from 2017's 6.7%. But that is propped up by higher gov spending on public works construction that helps to mask weakness in real estate sales & other areas that weighs on consumer confidence. The downturn in auto demand has accelerated steadily. The Nov sales decline was worse than Oct's 13% contraction, which was sharper than Sep's 12% decline. Demand was expected to weaken after Beijing tightened lending controls last year to cool a debt boom. But the slump is sharper than forecast, fueling expectations regulators will cut sales taxes or take other steps to shore up demand. Sales of SUVs, normally a bright spot for the industry, fell 16% from a year earlier in Nov to 910K vehicles. YTD sales were up just under 1% at 9M & sedan sales were off 12% at just under 1.1M units. Sales of gasoline-electric hybrid & pure-electric cars & SUVs, which Beijing is promoting aggressively with subsidies & sales quotas, rose 37.6% to 169K. YTD sales were up 68% at just over 1M. China is a top market for General Motors (GM), Volkswagen & other industry majors that look to increasingly prosperous Chinese customers to drive revenue growth. They are spending B$ to develop models to appeal to local tastes. They face rising competition from young but ambitious Chinese rivals including electric brand BYD Auto, Geely Auto & SUV maker Great Wall Motor. Total sales by Chinese brands fell 23.3% to 909K vehicles, worse than Oct's 18% contraction.
China's auto sales fall in November for fifth month
Pres Trump hinted at "important announcements" regarding his administration's high-stakes trade talks with China. "Very productive conversations going on with China! Watch for some important announcements!" he tweeted. Trump's optimistic tweet came soon after it was reported that China's gov would consider slashing tariffs on US car imports to 15% from 40%. Auto stocks jumped on the news in premarket trading. Trump tweeted last week that China had agreed to slash the tariffs, although the Chinese gov did not confirm or deny it at the time. In Jul, China cut tariffs on auto imports to 15% from 25%, but then soon hiked duties on US-made cars to 40% as retaliation for the Trump administration's aggressive trade moves. Other signs of potential progress emerged today. Chinese officials, Chinese Pres Xi Jinping has told senior members of his gov to follow thru on his recent agreement with Trump. Treasury Secretary Steve Mnuchin & Trade Representative Robert Lighthizer are the main US negotiators in calls with Chinese negotiators. The US & China have restarted trade negotiations after Trump & Xi reached a truce in the escalating trade war. The 2 leaders spoke during a working dinner at the G-20 summit in Argentina on Dec 1. As part of the truce, the US & China agreed to a 90-day window to negotiate some significant sticking points between the world's 2 largest economies. As part of the interim agreement, Trump said he would hold off on boosting tariffs on $200B in Chinese goods to 25% from 10%. Trump's tweet today also came during the battle over a Chinese exec who was arrested in Canada, the same day Trump & Xi dined in Argentina, & faces extradition to the US. Meng Wanzhou, CFO of Chinese telecom giant Huawei, is being held by Canadian authorities in a case related to the company's alleged sale of equipment containing US components to Iran in violation of intl sanctions on the Islamic Republic. There are concerns that the Huawei case could upset the delicate but broad trade talks between the US & China, although the renewed talks & Trump's claims indicate it has yet to disrupt the negotiations.
Trump teases 'important announcements' as he touts 'very productive' China trade talks
Oil prices rose, clawing back some of the previous day's hefty losses as a modest show of strength in global stocks, a slightly weaker $ & an unplanned supply outage in OPEC member Libya lent support. Brent crude oil futures rose 84¢ (1.4%) to $60.81 a barrel, having fallen 3% the previous day. US crude futures rose $1.14 (2.2%) to $52.14 a barrel. Global stocks have fallen by more than 5% so far this month, under pressure from concern about the impact of the US trade dispute with China on economic growth, & oil has been caught in the down-draft. The $, which has gained 5% in 2018 thanks to rising US interest rates, has also created a headwind for oil & other industrial commodities, which tend to benefit from a slide in the currency. A modest boost for the oil price came from a shutdown in production in Libya, where the National Oil Company (NOC) declared force majeure on yesterday on exports from the El Sharara oilfield, the country's biggest, which was seized last weekend by a militia group. NOC said the shutdown would result in a production loss of 315K barrels per day (BPD), & an additional loss of 73K bpd at the El Feel oilfield. OPEC, together with non-members such as Russia & Oman, last week agreed to cut crude output by a joint 1.2M bpd from Jan to help balance supply & demand. Russia said it plans to cut its oil output by 50-60K bpd in Jan, as part of a gradual means of meeting its commitment under the deal to cut by 220K bpd. In physical markets, Kuwait & Iran this week both reduced their Jan crude oil supply prices to Asia. Analysts & investors are not yet convinced that the supply cut will be effective in warding off a repeat of 2014, when rapidly rising global production overtook growth in demand & led to a huge overhang of unwanted fuel.
Oil rises as equities rally, Libyan supply outage continues
There is a bit of a bounce back in the stocks market after recent selling. However, the Dow has pulled back a large 250 from its opening levels. Even with good news, the markets are very jittery. The Dow is down YTD, about 250 (1%), as traders & investors are nervous.
Dow Jones Industrials
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