Monday, May 20, 2019

Markets extend losses, led by selling in tech stocks

Dow fell 83, decliners over advancers 2-1 & NAZ tumbled 113 on worries over the lack of a trade deal with China.  The MLP index was off 1 to the 252s (extending the flattish trend line for months as shown below) & the REIT index sank 5+ to the 378s.  Junk bond funds fluctuated & Treasuries were sold.  Oil rose to the 63s & gold crawled up 2 to 1277.

AMJ (Alerian MLP Index tracking fund)

Interest rates should not be decided robotically or on autopilot because the data available about the economy is far too imprecise, a Federal Reserve policymaker said.  “To operate monetary policy mechanically, we’d need a level of accuracy that just isn’t possible,” Federal Reserve Bank of Philadelphia Pres Patrick Harker said in remarks.  “We’d need a lot more data, a lot more frequently, with a lot more precision than the laws of economics allow.”  Harker told reporters last week that he sees “at most” one rate hike this year but that he is in no rush to raise rates & that he is worried about low inflation expectations.  Without the benefit of policymakers' judgment, Harker said, central banks might have raised rates in the aftermath of the 2007-2009 global financial crisis, hobbling the economy.  Harker, who does not vote on the rate-setting FOMC this year but participates in its deliberations, described the labor market as “increasingly tight.”

Fed's Harker says U.S. rates should not be on autopilot ...

Ford (F) informed employees that it would lay off about 7K salaried employees (10%) of its global workforce, in the coming months in a cost-cutting measure that officials said would save about $600M per year.  The first wave of layoffs will begin tomorrow & include 500 salaried workers in the US this week.  CEO Jim Hackett said job cuts in North America would be completed by the end of the week, with layoffs in intl markets to conclude by the end of Aug.  “Ford is a family company and saying goodbye to colleagues is difficult and emotional,” Hackett said.  “We have moved away from past practices in some regions where team members who were separated had to leave immediately with their belongings, instead giving people the choice to stay for a few days to wrap up and say goodbye. We also have a range of resources and services in place to support employees in managing this transition.”  The ongoing layoffs have included both voluntary & involuntary separations.  Aside from cutting costs, the automaker said the restructuring will streamline its decision-making process at the management level.  In total, Ford is cutting roughly 2300 jobs based in the US, about 1500 of which occurred thru voluntary severance agreements last year.  Most of the cuts are expected to impact workers at its headquarters in Dearborn, Michigan.  “As we have said, Ford is undergoing an organizational redesign process helping us create a more dynamic, agile and empowered workforce, while becoming more fit as a business,” Ford said.  “The majority of the redesign is now complete for North America and will be concluding in other regions by August. This work has resulted in some separations of salaried employees and the reassignment of others.”  The layoffs come as Ford faces calls to boost profitability, especially overseas.  The stock was off 2 pennies.
If you would like to learn more about Ford, click on this link:

Ford layoffs hit 7,000 jobs worldwide, hundreds in US

Major oil-producing nations are leaning towards keeping a lid on production throughout 2019, defying Pres Trump's calls to open the taps & cut the cost of crude.  OPEC & a group of allies led by Russia are trying to keep supply & demand in balance & stabilize prices by pumping less oil.  Over the weekend, a committee representing OPEC+ alliance strongly signaled the group will extend the policy, which has helped to boost oil prices by about $20 a barrel this year.  If OPEC+ follows that course when producers meet in Jun, it would be the 2nd time in 6 months the group ignored Trump, who lobbied against the current production cuts last fall.  So long as the production caps remain in place, oil prices are likely to remain anchored near 6-month highs around $63 a barrel.  The Saudis & Emiraties have not committed to hiking output.  Yesterday, Saudi Arabia's influential oil minister, Khalid al-Falih, warned that global crude stockpiles are rising, threatening to swamp the world in oil & cause prices to collapse.  “Overall, the market is in a delicate situation,” Falih told reporters at the committee meeting in Jeddah, Saudi Arabia.  “On the one hand, there is a lot of concern — and we acknowledge it — about disruptions and sanctions and supply interruptions,” he said.  “But on the other hand, we see inventories rising. We see plentiful supply around the world ... which means we think, all in all, we should be in a comfortable situation in the weeks and months to come.”  OPEC+ nations are currently aiming to keep a combined 1.2M barrels per day off the market.  However, supply from the group has actually fallen much further, according to the group's Joint Ministerial Monitoring Committee (JMMC).  The panel was established to monitor compliance with production quotas under the output deal, first agreed to in Dec 2016 & renewed last fall.  The JMMC met in Jeddah yesterday, but did not issue a recommendation to the larger group, which meets at OPEC's headquarters in Vienna next month.  The JMMC largely echoed Falih's comments, saying in its members need more information from their oil market analysts before deciding whether to keep the output curbs in place.

OPEC is poised to defy Trump once again by keeping a lid on oil output

Oil settled on a mixed note, with US crude gaining for the session but global benchmark prices giving up an earlier rise to finish lower.  Traders weighed signs that OPEC will decide to extend its production-cut agreement following a committee meeting over the weekend between members & nonmembers of the oil-producer group.  Worries about a slowdown in energy demand, however, continued to weigh on the market.  West Texas Intermediate crude for Jun delivery climbed 34¢ (0.5%) to settle at $63.10 a barrel, the highest finish for a front-month contract since May 1.  Prices closed up 1.8% last week.  The Jun contract will expire tomrrow.  Global benchmark Jul Brent  meanwhile, edged down 24¢ (0.3%) to end at $71.97 a barrel, its 2nd-consecutive session loss, though it had climbed 2.3% last week.

U.S. oil prices settle higher, but global crude ends lower amid supply-demand uncertainty

Sellers were in command of the stock market all day.  Early in the session the Dow sank 200.  It recovered some but sellers returned & the Dow was in the red all day with buying in the last hour limiting the loss.  Trade worries dominate the thinking of traders & those worries will be around for some time. The sexy tech stocks which have been the darlings of many are getting hit hard by selling because these companies have the most on line from the lack of progress on trade talks.

Dow Jones Industrials

No comments: