Dow soared 326, advancers over decliners almost 5-1 & NAZ gained 133. The MLP index recovered 2 to the 241s & the REIT index was steady in the 356s. Junk bond funds rose & Treasuries slid lower. Oil inched higher in the 51s & gold added 4 to 1251.
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 according to lelakers. 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 the plan at press conferences. 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.
China planning to give foreign companies more market access: Report
US consumer prices were unchanged in Nov, held back by a sharp decline in the price of gasoline, but underlying inflation pressures remained firm amid rising rents & healthcare costs. The Labor Dept said that last month's flat reading in its Consumer Price Index (CPI) followed a 0.3% increase in Oct (the weakest reading in 8 months). In the 12 months thru Nov, the CPI rose 2.2%, slowing from Oct's 2.5% rise. Excluding the volatile food & energy components, the CPI increased 0.2%, matching Oct's gain. In the 12 months thru November, the CPI increased 2.2% after climbing 2.1% in Oct. The forecast called for the CPI to be unchanged & core CPI gaining 0.2%. While core prices remain firm, the inflation outlook is benign amid falling oil prices & signs of slowing economic growth both in the US & overseas. A report yesterday showed producer prices edging up 0.1% in Nov after accelerating 0.6% in Oct. The Federal Reserve's preferred inflation measure, the core PCE price index excluding food & energy, increased 1.8% year-on-year in Oct, the smallest gain since Feb, after rising 1.9% the prior month. It hit the central bank's 2% target in Mar for the first time since Apr 2012. The Fed is expected to raise interest rates for the 4th next Wed. Minutes of the Fed's Nov meeting showed nearly all officials agreed another rate hike was "likely to be warranted fairly soon," but also opened debate on when to pause further monetary policy tightening. In Nov, gasoline prices tumbled 4.2% after rebounding 3.0% in Oct. With oil prices falling sharply since Oct on signs of an economic slowdown, gasoline could become even cheaper. Brent crude oil prices have already dropped almost 3%. Food prices rose 0.2% after dipping 0.1% in Oct. Food consumed at home gained 0.2% in Nov after dropping for 2 straight months. Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3% after a similar gain in Oct. Healthcare costs jumped 0.4% last month after rising 0.2% in Oct. There were strong increases in the costs of hospital services & prescription medication. Apparel prices dropped 0.9% after ticking up 0.1% in Oct. There were also decreases in the prices of wireless telephones services, airline fares & motor vehicle insurance.
US consumer prices unchanged in November, amid decline in gasoline prices
OPEC's oil production dips in November as Iranian output plunge offsets Saudi surge
Out of the gate stocks shot up as the bulls have returned. With all that is happening, starting in DC, it's not known how long that enthusiasm will last. The Dow is about even YTD. That's good or bad depending on who is viewing the data. Meanwhile, demand for gold, the classic safe haven investment, remains strong.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 52.45 | +0.80 | +1.6% |
| GC=F | Gold | 1,250.90 | +3.70 | +0.3% |
Stocks opened higher on news that Trump would
be willing to intervene in the case of a Huawei exec arrested in
Canada, if it would help a trade deal with China. Shares also gained from a report that China is preparing a plan to give foreign companies greater access to local markets. In
addition, worries about geopolitical uncertainty eased after a report
from the BBC that British Prime Minister Theresa May will survive a
no-confidence vote. China is preparing a plan to give foreign companies greater access to local markets. London's FTSE gained 1.3% after May said she will fight the leadership challenge.
Germany's DAX added 1.2% France's CAC added 2%. Chinese & Hong Kong stocks edged higher after Huawei's CFO was granted bail by a Canadian court & as
Pres Trump sounded upbeat about a trade deal with China. The Shanghai Composite ended the day up 0.3% & Hong Kong's Hang Seng index closed higher by 1.6%. Japan's Nikkei soared to finish the session higher by 2.2%. On
the economic calendar, Nov consumer prices came in unchanged,
which was in line with expectations. When food &
energy are back out, core-CPI rose 0.2%, also matching expectations. The
Dow closed lower on yesterday after a volatile
session that saw it rise more than 300 points before plunging more than
500 points over investor fears of a gov shutdown. The blue-chip index fell 53. The S&P 500 also fell, while NAZ rose slightly. Shares
initially climbed today's trading on word that Beijing will cut
American auto tariffs & that trade talks between the US & China
had restarted. A stunning, on-camera clash yesterday in the White House between the pres, Nancy Pelosi & Chuck
Schumer, the Dem leaders in the House & Senate,
respectively, over border wall funding & a gov shutdown raised
the prospect of worsening gridlock. That exchange sent stocks lower.
Easing US-China trade tensions push Dow higher
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 according to lelakers. 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 the plan at press conferences. 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.
China planning to give foreign companies more market access: Report
US consumer prices were unchanged in Nov, held back by a sharp decline in the price of gasoline, but underlying inflation pressures remained firm amid rising rents & healthcare costs. The Labor Dept said that last month's flat reading in its Consumer Price Index (CPI) followed a 0.3% increase in Oct (the weakest reading in 8 months). In the 12 months thru Nov, the CPI rose 2.2%, slowing from Oct's 2.5% rise. Excluding the volatile food & energy components, the CPI increased 0.2%, matching Oct's gain. In the 12 months thru November, the CPI increased 2.2% after climbing 2.1% in Oct. The forecast called for the CPI to be unchanged & core CPI gaining 0.2%. While core prices remain firm, the inflation outlook is benign amid falling oil prices & signs of slowing economic growth both in the US & overseas. A report yesterday showed producer prices edging up 0.1% in Nov after accelerating 0.6% in Oct. The Federal Reserve's preferred inflation measure, the core PCE price index excluding food & energy, increased 1.8% year-on-year in Oct, the smallest gain since Feb, after rising 1.9% the prior month. It hit the central bank's 2% target in Mar for the first time since Apr 2012. The Fed is expected to raise interest rates for the 4th next Wed. Minutes of the Fed's Nov meeting showed nearly all officials agreed another rate hike was "likely to be warranted fairly soon," but also opened debate on when to pause further monetary policy tightening. In Nov, gasoline prices tumbled 4.2% after rebounding 3.0% in Oct. With oil prices falling sharply since Oct on signs of an economic slowdown, gasoline could become even cheaper. Brent crude oil prices have already dropped almost 3%. Food prices rose 0.2% after dipping 0.1% in Oct. Food consumed at home gained 0.2% in Nov after dropping for 2 straight months. Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3% after a similar gain in Oct. Healthcare costs jumped 0.4% last month after rising 0.2% in Oct. There were strong increases in the costs of hospital services & prescription medication. Apparel prices dropped 0.9% after ticking up 0.1% in Oct. There were also decreases in the prices of wireless telephones services, airline fares & motor vehicle insurance.
US consumer prices unchanged in November, amid decline in gasoline prices
Oil production from OPEC nations dipped in Nov, as a sharp drop in Iranian supplies offset a surge in Saudi output to all-time highs. The group's latest monthly report comes just days after the 15-member organization reached a deal with 10 exporter nations, including Russia, to remove 1.2M
barrels per day (bpd) from the market. OPEC alone will slash output by 800K
bpd. The decision follows a
plunge in oil prices since the start of Oct, in part due to
projections that the oil market will be oversupplied next year. Slowing
economic growth & financial strain in key oil-consuming nations are
also raising concerns about energy demand in 2019. In Nov, OPEC's output slipped by about 11K bpd to 32.965M
bpd. Saudi Arabia pumped just over 11M bpd, with monthly production jumping by
377K bpd. Figures provided directly by the Saudis indicate the
kingdom pumped at nearly 11.1M bpd. That is set to plunge
over the next 2 months. Saudi Energy Minister Khalid al-Falih said he
expects output to drop to about 10.2M bpd in Jan. The Nov increase from Saudi Arabia was wiped out by a 380K bpd plunge in Iran's output, as the nation grapples with US sanctions that snapped back into place on Nov 5. Last month, Iranian production dipped below 3M bpd
for the first time since Jan 2016, when intl sanctions on
the country over its nuclear program were lifted during the Obama
administration. The UAE & Kuwait also raised output last month, but those increases were
offset by declines in Iraq, Gabon, Libya, Nigeria & Venezuela. The
remaining OPEC members held production roughly steady. OPEC left its forecast for growth in oil demand in 2019 unchanged at 1.29M bpd, after lowering it every month in its last 4 reports. In 2018, OPEC forecasts that the world's appetite for oil grew by 1.5M bpd. The group knocked down
its forecast for non-OPEC production growth in 2019 by about 80K bpd - mostly due to mandatory output cuts in Alberta, Canada & new
supply caps adopted as part of OPEC's deals with 10 nonmember nations. Still, OPEC forecasts oil
supplies from non-OPEC countries to increase by 2.16M bpd next
year, driven by rising output in the US, Brazil, Russia &
the UK. In 2018, output from these countries grew by 2.5M bpd, OPEC estimates. With the rise in supplies
outstripping the increase in demand, OPEC expects to pump 31.4M
bpd next year, about 1M bpd less than in 2018. "After a healthy start to the
year, the world economy in 2018 was marked by a rising divergence in
growth trends," OPEC warned. "Rising trade tensions,
monetary tightening and geopolitical challenges are among the issues
that skew economic risks even further to the downside in 2019."
OPEC's oil production dips in November as Iranian output plunge offsets Saudi surge
Out of the gate stocks shot up as the bulls have returned. With all that is happening, starting in DC, it's not known how long that enthusiasm will last. The Dow is about even YTD. That's good or bad depending on who is viewing the data. Meanwhile, demand for gold, the classic safe haven investment, remains strong.
Dow Jones Industrials
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