Dow went up 99 (although off opening highs), decliners over advancers 4-3 & NAZ lost 14. The MLP index added 3 to 243 (still depressed level) & the REIT index dropped 6 to 350. Junk bond funds crawled higher & Treasuries were steady. Oil climbed in the 51s & gold fell 4 to 1345.
AMJ (Alerian MLP Index tracking fund)
Stocks slightly higher as trade tensions ease
US weekly jobless claims near 49-year low; import prices fall
American economic optimism took a sharp turn down in the fourth quarter from record high levels, with the CNBC All-America Economic Survey registering its biggest quarterly drop in its 12-year history. Yet the decline in optimism looks to be doing little to dissuade Americans from shopping for the holiday season. Spending plans surged to their highest level in the history of the survey, propelled by strong income & wage gains over the past year. The percentage of Americans viewing the economy as excellent or good dropped 8 points to 50%. Yet that number remains well above the long-run average for the survey. Those believing the economy will improve dropped 5 points to 31%, bringing it back down to the long-run average. The decline wiped out a big part of the gain that ensued after Pres Trump took office. “This is not the trend we have been seeing,″ said Micah Roberts, partner with Public Opinion Strategies survey. “We are on a different trajectory than we have seen since the Trump presidency.” The fall in optimism reflected on Trump's economic approval, which ticked down from 51% percent in the most recent survey, while his disapproval rose to 42% from 38%. Trump's overall job approval rating, however, did not change compared with Oct, remaining at 41% & his disapproval fell 2 points to 47%. His support rose among Reps, but dropped among Dems & strongly among independents. The nationwide poll of 802 Americans was conducted Dec 3-6 & has a margin of error of plus or minus 3.5 percentage points. That puts the change in the pres's economic approval rating inside the margin of error. Apart from politics, Americans plan to spend with some abandon this holiday season & use a bit more debt to achieve their holiday goals. Average holiday spending plans rose above $1100, the first time the holiday survey has seen an average number above $1K. The prior record was last year’s average of $907. Gains were spread across income groups, but those who approve of Trump & Reps overall showed some of the biggest increases in year-to-year spending plans. 29% said they would use credit cards or other debt in their holiday spending, up from 26% when the question was last asked in 2016, with about a ¼ of those saying they would carry that debt for longer than 3 months. Why would Americans spend so much more if their outlook has darkened? The reason may have to do with stronger wage gains & employment over the past year, compared with what people expect next year. Unemployment this year hit a 50-year low of 3.7%. Wage gains the past 2 months topped 3% year over year for the first time since the end of the financial crisis.
Economic optimism sinks, yet consumers still plan to spend big for holidays: CNBC survey
The US might have been left out from the big summit between OPEC & non-OPEC producers last week but the country's influence over global oil markets is only going to get stronger, the International Energy Agency (IEA) stated in its latest report. “While the U.S. was not present in Vienna, nobody could ignore its growing influence,” the IEA said. “Last week’s meeting reminded us that the Big Three of oil – Russia, Saudi Arabia and the United States – whose total liquids production now comprises about 40 percent of the global total, are the dominant players,” the IEA said. When OPEC & non-OPEC producers met last week to hammer out a deal to cut their oil production there was an uninvited, but unavoidable, presence at the summit: Pres Trump has repeatedly criticized OPEC for its dominance over oil prices, at times asking it to produce more oil & then telling the cartel to leave its production well alone. The US has become a dominant competitor in oil markets in its own right, however, & has taken a place among the world's largest oil producers, thanks to its shale oil revolution. On the day OPEC ministers sat down to talk in Vienna last Thurs, the IEA noted that an important piece of data was published, noting that “according to the (U.S.) Energy Information Administration, in the week to 30 November the U.S. was a net exporter of crude and products for the first time since at least 1991.” YTD, U.S. net imports have averaged 3.1M barrels a day (mb/d). 10 years ago, just ahead of the shale revolution, the figure was 11.1 mb/d., the IEA said. “As production grows inexorably, so will net imports decline and rising U.S. exports will provide competition in many markets, including to some of the countries meeting in Vienna last week.” The IEA noted that while cooperation between Russia & Saudi Arabia is now “the basis of production management” with these 2 countries having a large capacity to swing output one way or the other, the US is the 3rd, “non-playing member” of what it called the Big Three. “The United States … is now the world’s biggest crude oil producer …(it) is also the world’s biggest consumer and lower prices are welcome, although its producers will want to see them stay high enough to encourage further investment.” Last week, major oil producers meeting in Austria agreed to cut oil production by 1.2M barrels per day (bpd). OPEC producers & non-OPEC oil exporting countries including Russia agreed to make the cut, which will be done during H1-2019. The deal was aimed at putting a floor under recently volatile oil prices. Oil markets have stabilized this week on hopes that the cuts will support prices, as well as data showing a decline in US crude inventories. “Time will tell how effective the new production agreement will be in re-balancing the oil market. The next meeting of the Vienna Agreement countries takes place in April, and we hope that the intervening period is less volatile than has recently been the case,” the IEA said.
US dominance in oil markets is only going to get bigger, the IEA says
Stocks are having a taste of a Santa Clause rally this week but the Dow is still down 1K this month. Resolving trade issues with China will take time. Meanwhile problems in UK, France, Germany & a US economy which is more sluggish are weighing on traders' minds. The Dow remains slightly in the red YTD.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 50.86 | -0.29 | -0.6% |
| GC=F | Gold | 1,247.00 | -3.00 | -0.2% |
Stocks began the session higher as a basket of positive global
headlines rolled in, including encouraging news from the ECB. Pres Mario Draghi says strong domestic demand & low interest rates are supporting the economy in Europe despite a
recent moderation in growth. He spoke after the bank decided to stop
its bond-buying stimulus program, which has helped the economy emerge
from its debt crisis 4 years ago, at the end of this year. Draghi
said rising wages gave the bank confidence it would meet its goal of
keeping inflation near its target of just under 2% even after the
bond purchase stimulus ends. US-China trade tensions are easing. White House trade policy
advisor Peter Navarro said China has re-entered the US
market for soybeans. This is a positive sign for US farmers & the
broader US agriculture economy. In tech, Apple (AAPL), a Dow & NAZ stock, is making good on its promise to invest some of its Bs back into
the US. The technology giant said it will invest $1B to build a
new campus in North Austin, Texas & another $10B for new data
centers. Import prices had the biggest drop in
more than 3 years, falling 1.6%.
Stocks slightly higher as trade tensions ease
The number of Americans filing applications for
jobless benefits tumbled to near 49-year lows last week, which could
ease concerns about a slowdown in the labor market & economy. Other
data showed import prices dropping by the most in more than 3 years in Nov as the cost of petroleum products tumbled & a
strong $ weighed on prices of other goods, pointing to subdued
imported inflation. Tightening labor market
conditions bolster expectations that the Federal Reserve will raise
interest rates next week. With inflation likely
to remain tame thru H1-2019, economists see fewer rate
hikes next year. The Fed has increased borrowing costs 3 times this year. Initial claims for state unemployment benefits
dropped 27K to a seasonally adjusted 206K for the latest week, the Labor Dept said. Last week's decline in claims
was the largest since Apr 2015. Claims hit 202K in mid-Sep,
which was the lowest level since 1969. Data for the prior week was revised to show 2K more applications received than previously reported. The forecast called for claims falling to 225K. Claims shot up to an 8-month high of 235K during the week
ended Nov 24. The 4-week moving average of initial claims, considered a better measure
of labor market trends as it irons out week-to-week volatility, fell
3K to 224K last week.
US weekly jobless claims near 49-year low; import prices fall
American economic optimism took a sharp turn down in the fourth quarter from record high levels, with the CNBC All-America Economic Survey registering its biggest quarterly drop in its 12-year history. Yet the decline in optimism looks to be doing little to dissuade Americans from shopping for the holiday season. Spending plans surged to their highest level in the history of the survey, propelled by strong income & wage gains over the past year. The percentage of Americans viewing the economy as excellent or good dropped 8 points to 50%. Yet that number remains well above the long-run average for the survey. Those believing the economy will improve dropped 5 points to 31%, bringing it back down to the long-run average. The decline wiped out a big part of the gain that ensued after Pres Trump took office. “This is not the trend we have been seeing,″ said Micah Roberts, partner with Public Opinion Strategies survey. “We are on a different trajectory than we have seen since the Trump presidency.” The fall in optimism reflected on Trump's economic approval, which ticked down from 51% percent in the most recent survey, while his disapproval rose to 42% from 38%. Trump's overall job approval rating, however, did not change compared with Oct, remaining at 41% & his disapproval fell 2 points to 47%. His support rose among Reps, but dropped among Dems & strongly among independents. The nationwide poll of 802 Americans was conducted Dec 3-6 & has a margin of error of plus or minus 3.5 percentage points. That puts the change in the pres's economic approval rating inside the margin of error. Apart from politics, Americans plan to spend with some abandon this holiday season & use a bit more debt to achieve their holiday goals. Average holiday spending plans rose above $1100, the first time the holiday survey has seen an average number above $1K. The prior record was last year’s average of $907. Gains were spread across income groups, but those who approve of Trump & Reps overall showed some of the biggest increases in year-to-year spending plans. 29% said they would use credit cards or other debt in their holiday spending, up from 26% when the question was last asked in 2016, with about a ¼ of those saying they would carry that debt for longer than 3 months. Why would Americans spend so much more if their outlook has darkened? The reason may have to do with stronger wage gains & employment over the past year, compared with what people expect next year. Unemployment this year hit a 50-year low of 3.7%. Wage gains the past 2 months topped 3% year over year for the first time since the end of the financial crisis.
Economic optimism sinks, yet consumers still plan to spend big for holidays: CNBC survey
The US might have been left out from the big summit between OPEC & non-OPEC producers last week but the country's influence over global oil markets is only going to get stronger, the International Energy Agency (IEA) stated in its latest report. “While the U.S. was not present in Vienna, nobody could ignore its growing influence,” the IEA said. “Last week’s meeting reminded us that the Big Three of oil – Russia, Saudi Arabia and the United States – whose total liquids production now comprises about 40 percent of the global total, are the dominant players,” the IEA said. When OPEC & non-OPEC producers met last week to hammer out a deal to cut their oil production there was an uninvited, but unavoidable, presence at the summit: Pres Trump has repeatedly criticized OPEC for its dominance over oil prices, at times asking it to produce more oil & then telling the cartel to leave its production well alone. The US has become a dominant competitor in oil markets in its own right, however, & has taken a place among the world's largest oil producers, thanks to its shale oil revolution. On the day OPEC ministers sat down to talk in Vienna last Thurs, the IEA noted that an important piece of data was published, noting that “according to the (U.S.) Energy Information Administration, in the week to 30 November the U.S. was a net exporter of crude and products for the first time since at least 1991.” YTD, U.S. net imports have averaged 3.1M barrels a day (mb/d). 10 years ago, just ahead of the shale revolution, the figure was 11.1 mb/d., the IEA said. “As production grows inexorably, so will net imports decline and rising U.S. exports will provide competition in many markets, including to some of the countries meeting in Vienna last week.” The IEA noted that while cooperation between Russia & Saudi Arabia is now “the basis of production management” with these 2 countries having a large capacity to swing output one way or the other, the US is the 3rd, “non-playing member” of what it called the Big Three. “The United States … is now the world’s biggest crude oil producer …(it) is also the world’s biggest consumer and lower prices are welcome, although its producers will want to see them stay high enough to encourage further investment.” Last week, major oil producers meeting in Austria agreed to cut oil production by 1.2M barrels per day (bpd). OPEC producers & non-OPEC oil exporting countries including Russia agreed to make the cut, which will be done during H1-2019. The deal was aimed at putting a floor under recently volatile oil prices. Oil markets have stabilized this week on hopes that the cuts will support prices, as well as data showing a decline in US crude inventories. “Time will tell how effective the new production agreement will be in re-balancing the oil market. The next meeting of the Vienna Agreement countries takes place in April, and we hope that the intervening period is less volatile than has recently been the case,” the IEA said.
US dominance in oil markets is only going to get bigger, the IEA says
Stocks are having a taste of a Santa Clause rally this week but the Dow is still down 1K this month. Resolving trade issues with China will take time. Meanwhile problems in UK, France, Germany & a US economy which is more sluggish are weighing on traders' minds. The Dow remains slightly in the red YTD.
Dow Jones Industrials
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