Dow jumped up 138, advancers over decliners 3-2 & NAZ gained 53. The MLP index crawled higher into the 251s & the REIT index went up 2+ to 370. Junk bond funds were mixed & Treasuries drifted lower in price. Oil fell 1+ to the 55s (more below) & gold was steady at 1333.
AMJ (Alerian MLP Index tracking fund
The US is planning to delay a menu of additional Chinese tariffs that were scheduled to begin on Mar 1, Pres Trump announced on yesterday, as the world's 2 largest economies hash out a definitive end to a wide ranging trade dispute. Trump cited “substantial progress” in bilateral talks between the US & China. As a result, the pres said he would suspend the new levies that would have taken place as early as Fri, but did not articulate a new deadline. Last week, sources said that the US & China are discussing a late Mar meeting between Trump & Chinese Pres Xi Jinping in Florida, news that Trump confirmed. The summit is scheduled to take place at Trump's Mar-a-Lago golf club in Palm Beach, Florida. Ahead of that confab, China has committed to buying up to $1.2T in US goods, though as late as last week, the 2 sides were said to be far apart on issues concerning the forced transfer of intellectual property. Speaking after his tweets, Trump said there could be “very big news over the next week or two” if trade talks go well. “China has been terrific. We want to make a deal that’s great for both countries and that’s really what we’re going to be doing,” the pres added. The US-China trade war has upended markets & cast a shadow over prospects for global growth. In recent trading sessions, investors have been slowly pricing in the prospect that the fight would be resolved.
Trump extends deadline for Chinese tariffs set to begin on March 1, citing progress on trade
Wholesale inventories in the US jumped 1.1% in Dec, according to a gov estimate long delayed by the partial federal shutdown earlier this year. The rise in inventories could prompt an increase in forecasts for Q4 GDP, but sales fell 1% in the month to reflect a softer US economy toward the end of 2018. The ratio of inventories to sales rose to 1.33 from 1.30, the highest level since mid-2016. That's how many months it would take to sell all the inventory on hand. One year earlier the ratio was a lower 1.25. The increase in wholesale inventories in Nov, meanwhile, was raised a notch to 0.4% from 0.3%.
Pres Trump revived his criticism of OPEC, as oil's price has been on a tear in recent weeks. The tweet comes as US crude-oil futures, based on the most-active contracts, have gained 32% since hitting a recent Dec 24 nadir. Ironically, those higher moves for crude have been at least partly prompted by softening US-China tensions, with Pres Trump recently signaling that he would extend a Mar deadline that would have seen tariffs on Chinese goods raised to 25% from 10%. Meanwhile, stocks have also been buoyant since that Dec skid, with the Dow gaining 20% since that Dec 24 low, while the S&P 500 index has climbed 20+% & the NAZ has climbed 24% over the same period. Oil has been swept up in swelling risk-on sentiment that fuels a stock rally that was also touted by the pres. In recent trade, crude prices were down more than 2%, in apparent reaction the Trump's tweet, analysts said, with Apr West Texas Intermediate crude off 2.4% & global benchmark Apr Brent down 2.3% today. OPEC production has been declining in part as a result of US sanctions on the oil industries of cartel members Iran & Venezuela. The cartel, including de facto leader Saudi Arabia, & 10 partner producers outside the organization, led by Russia, agreed late last year to hold back crude output by a collective 1.2M barrels a day for H1. Trump isn't the first politician to take aim at OPEC, though he is arguably the most vocally persistent. The cartel's 1973 oil embargo contributed to the stagflation & economic turmoil of the 1970s.
Traders liked to hear that the trade deadline has been extended & that is based on progress in negotiations. But more work is needed & until there is a signed deal, the news should be treated cautiously. Dow is well above 26K & just needs 600+ to top the Oct record. However, the stock market is vastly overbought & needs some type of correction to extend the current rally.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund
| CL=F | Crude Oil | 56.24 | -1.02 | -1.8% |
| GC=F | Gold | 1,333.40 | +0.60 | +0.1% |
Equities traded higher to start the week following the news that Pres Trump was putting the deadline for a new trade deal with China on hold for now. Trump
said he would delay the increase in tariffs citing “substantial
progress” on issues including intellectual property & technology
transfer after a weekend of talks. Trump tweeted that should progress
continue, the US would plan a summit with Pres Xi Jinping of
China to “conclude an agreement.” Trump said there would soon be a
signing ceremony. US tariffs on $200B of Chinese goods had been scheduled to rise to 25% from 10% on Sat. In Asian market trading, China's Shanghai jumped 5.6%,
Hong Kong's Hang Seng added 0.5% & Japan's Nikkei also added
0.5%.
Stocks jump as Trump delays tariff deadline
The US is planning to delay a menu of additional Chinese tariffs that were scheduled to begin on Mar 1, Pres Trump announced on yesterday, as the world's 2 largest economies hash out a definitive end to a wide ranging trade dispute. Trump cited “substantial progress” in bilateral talks between the US & China. As a result, the pres said he would suspend the new levies that would have taken place as early as Fri, but did not articulate a new deadline. Last week, sources said that the US & China are discussing a late Mar meeting between Trump & Chinese Pres Xi Jinping in Florida, news that Trump confirmed. The summit is scheduled to take place at Trump's Mar-a-Lago golf club in Palm Beach, Florida. Ahead of that confab, China has committed to buying up to $1.2T in US goods, though as late as last week, the 2 sides were said to be far apart on issues concerning the forced transfer of intellectual property. Speaking after his tweets, Trump said there could be “very big news over the next week or two” if trade talks go well. “China has been terrific. We want to make a deal that’s great for both countries and that’s really what we’re going to be doing,” the pres added. The US-China trade war has upended markets & cast a shadow over prospects for global growth. In recent trading sessions, investors have been slowly pricing in the prospect that the fight would be resolved.
Trump extends deadline for Chinese tariffs set to begin on March 1, citing progress on trade
Wholesale inventories in the US jumped 1.1% in Dec, according to a gov estimate long delayed by the partial federal shutdown earlier this year. The rise in inventories could prompt an increase in forecasts for Q4 GDP, but sales fell 1% in the month to reflect a softer US economy toward the end of 2018. The ratio of inventories to sales rose to 1.33 from 1.30, the highest level since mid-2016. That's how many months it would take to sell all the inventory on hand. One year earlier the ratio was a lower 1.25. The increase in wholesale inventories in Nov, meanwhile, was raised a notch to 0.4% from 0.3%.
U.S. wholesale inventories jump 1.1% in December
Pres Trump revived his criticism of OPEC, as oil's price has been on a tear in recent weeks. The tweet comes as US crude-oil futures, based on the most-active contracts, have gained 32% since hitting a recent Dec 24 nadir. Ironically, those higher moves for crude have been at least partly prompted by softening US-China tensions, with Pres Trump recently signaling that he would extend a Mar deadline that would have seen tariffs on Chinese goods raised to 25% from 10%. Meanwhile, stocks have also been buoyant since that Dec skid, with the Dow gaining 20% since that Dec 24 low, while the S&P 500 index has climbed 20+% & the NAZ has climbed 24% over the same period. Oil has been swept up in swelling risk-on sentiment that fuels a stock rally that was also touted by the pres. In recent trade, crude prices were down more than 2%, in apparent reaction the Trump's tweet, analysts said, with Apr West Texas Intermediate crude off 2.4% & global benchmark Apr Brent down 2.3% today. OPEC production has been declining in part as a result of US sanctions on the oil industries of cartel members Iran & Venezuela. The cartel, including de facto leader Saudi Arabia, & 10 partner producers outside the organization, led by Russia, agreed late last year to hold back crude output by a collective 1.2M barrels a day for H1. Trump isn't the first politician to take aim at OPEC, though he is arguably the most vocally persistent. The cartel's 1973 oil embargo contributed to the stagflation & economic turmoil of the 1970s.
Trump says oil prices are ‘getting too high,’ urges OPEC to ‘relax’ — and futures tank
Traders liked to hear that the trade deadline has been extended & that is based on progress in negotiations. But more work is needed & until there is a signed deal, the news should be treated cautiously. Dow is well above 26K & just needs 600+ to top the Oct record. However, the stock market is vastly overbought & needs some type of correction to extend the current rally.
Dow Jones Industrials
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