Dow bounced back 177, advancers over decliners better than 3-1 & NAZ gained 49. The MLP index was fractionally higher to the 198s & the REIT index went up 1+ to the 403s. Junk bond funds inched higher & Treasuries were sold while stocks were purchased. Oil shot up 2 o the 58s & gold fell 5 to 1478 (but remains close to 1500).
AMJ (Alerian MLP Index tracking fund)
Job growth stumbled in Nov, with private payrolls increasing by a mere 67K jobs, according to the latest ADP National Employment Report. The count sharply missed the 140K jobs that was expeced, casting a shadow over what's been a relatively healthy labor market. “The job market is losing its shine," Mark Zandi, Moody's chief economist, said. "Manufacturers, commodity producers and retailers are shedding jobs. Job openings are declining, and if job growth slows any further, unemployment will increase." Nov's number was a steep decline from the 121K jobs added in Oct, which was revised slightly lower than the 125K initially reported. Despite the end of the nearly 6-week General Motors (GM) strike, the goods-producing sector lost 18K jobs -- an even 6K loss across the manufacturing, construction & natural resources/mining sectors. Small businesses also had a rough month, creating just 11K jobs, as firms with fewer than 19 employees lost 15K workers. Most hiring took place in the services-producing sector, with 85K jobs created. However, trade & transportation saw a 15K loss, while information services also declined 8K. The bulk of job creation in the sector stemmed from professional & business services, which added 28K & education & health services, which saw a gain of 39K. Large companies accounted for the bulk of the job creation: Firms with 50-499 employees created 29K jobs, while those that employ more than 500 people added 27K positions. "The slowdown has been more significant than I would have thought," Zandi added. "I do think that goes to the trade war. The trade war is doing damage to the economy." He estimated that overall, the dispute between the US & China has resulted in the loss of 400K jobs from the economy & has reduced overall GDP by almost 0.5%. The data precedes the release of a more closely watched update from the Labor Dept on Fri. In Oct, the US added a stronger-than-expected 128K positions.
The US & China are moving full speed ahead with their efforts to secure a partial trade deal before tariffs are set to rise on Chinese goods on Dec 15 & stock futures rallied ahead of the opening bell. Pres Trump's comments, which downplayed the possibility of a trade deal being reached in the next couple of weeks, were “off the cuff” & should not be taken as a sign that talks are at an impasse, according to people familiar with the matter. US negotiators still expect a phase one deal to be reached before the tariff increase. The 2 sides are still in talks over the number of tariffs that will be rolled back as part of an agreement. Beijing has called on the US to roll back all of the more than $350B of tariffs placed on its goods as part of a deal. Trump has said he has no intention of doing so. Markets were roiled yesterday, posting their biggest drop in 2 months, after Trump said a phase one deal may not happen until after the 2020 election. “In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we’ll see whether the deal’s gonna be right – it’s gotta be right,” Trump told reporters in London, adding that he has “no deadline” to complete an agreement. Chinese negotiators are hoping to avoid the wrath of more tariffs on Dec 15, when the US is expected to raise levies on $156B of Chinese goods. The tariffs have been a burden on the Chinese economy, which is also struggling under the weight of growing debt levels. China's economy grew at a 6% rate in Q3, the weakest since record keeping began in 1993. Trade talks are not expected to be impacted by 2 measures recently initiated by Congress. Yesterday, the House of Representatives passed a bill that would impose sanctions on Chinese officials who were responsible for human rights abuses against Muslim minorities. In response, China has threatened to place sanctions on US companies. Last week, Trump signed a bill that would require the US placing sanctions on Chinese officials linked to human rights abuses in Hong Kong. “The China trade deal is dependent on one thing: 'Do I want to make it?'” Trump said yesterday. “Cause we’re doing very well with China right now, and we can do even better with the flick of a pen.”
Mexico's gov & business leaders are voicing opposition to a key demand of Dem lawmakers in a renegotiated North American trade pact, jeopardizing the deal's passage this year. Congressional Dems, blaming Mexico for not living up to labor promises in the current North American Free Trade Agreement, have asked the Trump administration to beef up labor rules in its new version of the deal, known as the US-Mesico-Canada Argreement (USMCA). The pact was signed by the US, Mexico & Canada in 2018, but it awaits US & Canadian legislative approval. House Dems asked Trade Representative Robert Lighthizer last year for changes to allow DC to challenge Mexican labor practices that would involve cross-border inspections at Mexican factories. House Speaker Nancy Pelosi & other Dems have been working with US labor unions & Lighthizer on a revised version of the pact. Lighthizer is seeking Mexico's approval of the changes. But Mexico's business community rejects the idea. The Trump administration is worried that Mexico won't accept the Dem proposal that would give the US gov the ability to unilaterally launch labor cases that result in the dispatch of inspectors to Mexican facilities, with only limited opportunity for bilateral consultations, says a person familiar with the matter. Pres Andrés Manuel López Obrador said yesterday that Mexico opposes such workplace inspections, but would agree to labor dispute panels under the trade agreement. He also recalled that Mexico changed its labor laws to meet new provisions of the USMCA & has allocated funds in next year's budget to ensure enforcement of the new labor laws. "We said no. That is, inspectors no," López Obrador said. "But yes to resolving disputes through the creation of what are called panels involving specialists proposed by the countries under equal conditions." The Mexican gov's trade negotiator, undersecretary for North America Jesús Seade, traveled to DC yesterday for further meetings. "We want the treaty to be approved and we don't want more time to pass because of the effects of the [U.S.] electoral process," López Obrador said. "I hope it can be resolved." Mexico's biggest business chamber, the CCE, said Mon that it finds some US proposals on labor matters to be "extreme in nature and completely unacceptable," putting at risk supply chains & the competitiveness of Mexico & its partners in the region. "It would seem that some U.S. actors are putting the agreement at risk," the CCE said.
Optimism on the US-China trade deal has returned, based on emotions which are volatile. In the meantime USMCA now has a dark cloud in DC hanging over an inability to get US approval. The first jobs report for Nov is another negative report traders have to assess. But the bulls have been able to keep the Dow near its record highs last week.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 58.17 | +2.07 | +3.7% |
| GC=F | Gold | 1,478.60 | -5.80 | -0.4% |
Job growth stumbled in Nov, with private payrolls increasing by a mere 67K jobs, according to the latest ADP National Employment Report. The count sharply missed the 140K jobs that was expeced, casting a shadow over what's been a relatively healthy labor market. “The job market is losing its shine," Mark Zandi, Moody's chief economist, said. "Manufacturers, commodity producers and retailers are shedding jobs. Job openings are declining, and if job growth slows any further, unemployment will increase." Nov's number was a steep decline from the 121K jobs added in Oct, which was revised slightly lower than the 125K initially reported. Despite the end of the nearly 6-week General Motors (GM) strike, the goods-producing sector lost 18K jobs -- an even 6K loss across the manufacturing, construction & natural resources/mining sectors. Small businesses also had a rough month, creating just 11K jobs, as firms with fewer than 19 employees lost 15K workers. Most hiring took place in the services-producing sector, with 85K jobs created. However, trade & transportation saw a 15K loss, while information services also declined 8K. The bulk of job creation in the sector stemmed from professional & business services, which added 28K & education & health services, which saw a gain of 39K. Large companies accounted for the bulk of the job creation: Firms with 50-499 employees created 29K jobs, while those that employ more than 500 people added 27K positions. "The slowdown has been more significant than I would have thought," Zandi added. "I do think that goes to the trade war. The trade war is doing damage to the economy." He estimated that overall, the dispute between the US & China has resulted in the loss of 400K jobs from the economy & has reduced overall GDP by almost 0.5%. The data precedes the release of a more closely watched update from the Labor Dept on Fri. In Oct, the US added a stronger-than-expected 128K positions.
Private sector posts big miss on hiring in November
The US & China are moving full speed ahead with their efforts to secure a partial trade deal before tariffs are set to rise on Chinese goods on Dec 15 & stock futures rallied ahead of the opening bell. Pres Trump's comments, which downplayed the possibility of a trade deal being reached in the next couple of weeks, were “off the cuff” & should not be taken as a sign that talks are at an impasse, according to people familiar with the matter. US negotiators still expect a phase one deal to be reached before the tariff increase. The 2 sides are still in talks over the number of tariffs that will be rolled back as part of an agreement. Beijing has called on the US to roll back all of the more than $350B of tariffs placed on its goods as part of a deal. Trump has said he has no intention of doing so. Markets were roiled yesterday, posting their biggest drop in 2 months, after Trump said a phase one deal may not happen until after the 2020 election. “In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we’ll see whether the deal’s gonna be right – it’s gotta be right,” Trump told reporters in London, adding that he has “no deadline” to complete an agreement. Chinese negotiators are hoping to avoid the wrath of more tariffs on Dec 15, when the US is expected to raise levies on $156B of Chinese goods. The tariffs have been a burden on the Chinese economy, which is also struggling under the weight of growing debt levels. China's economy grew at a 6% rate in Q3, the weakest since record keeping began in 1993. Trade talks are not expected to be impacted by 2 measures recently initiated by Congress. Yesterday, the House of Representatives passed a bill that would impose sanctions on Chinese officials who were responsible for human rights abuses against Muslim minorities. In response, China has threatened to place sanctions on US companies. Last week, Trump signed a bill that would require the US placing sanctions on Chinese officials linked to human rights abuses in Hong Kong. “The China trade deal is dependent on one thing: 'Do I want to make it?'” Trump said yesterday. “Cause we’re doing very well with China right now, and we can do even better with the flick of a pen.”
US, China expected to narrowly miss massive trade war escalation
Mexico's gov & business leaders are voicing opposition to a key demand of Dem lawmakers in a renegotiated North American trade pact, jeopardizing the deal's passage this year. Congressional Dems, blaming Mexico for not living up to labor promises in the current North American Free Trade Agreement, have asked the Trump administration to beef up labor rules in its new version of the deal, known as the US-Mesico-Canada Argreement (USMCA). The pact was signed by the US, Mexico & Canada in 2018, but it awaits US & Canadian legislative approval. House Dems asked Trade Representative Robert Lighthizer last year for changes to allow DC to challenge Mexican labor practices that would involve cross-border inspections at Mexican factories. House Speaker Nancy Pelosi & other Dems have been working with US labor unions & Lighthizer on a revised version of the pact. Lighthizer is seeking Mexico's approval of the changes. But Mexico's business community rejects the idea. The Trump administration is worried that Mexico won't accept the Dem proposal that would give the US gov the ability to unilaterally launch labor cases that result in the dispatch of inspectors to Mexican facilities, with only limited opportunity for bilateral consultations, says a person familiar with the matter. Pres Andrés Manuel López Obrador said yesterday that Mexico opposes such workplace inspections, but would agree to labor dispute panels under the trade agreement. He also recalled that Mexico changed its labor laws to meet new provisions of the USMCA & has allocated funds in next year's budget to ensure enforcement of the new labor laws. "We said no. That is, inspectors no," López Obrador said. "But yes to resolving disputes through the creation of what are called panels involving specialists proposed by the countries under equal conditions." The Mexican gov's trade negotiator, undersecretary for North America Jesús Seade, traveled to DC yesterday for further meetings. "We want the treaty to be approved and we don't want more time to pass because of the effects of the [U.S.] electoral process," López Obrador said. "I hope it can be resolved." Mexico's biggest business chamber, the CCE, said Mon that it finds some US proposals on labor matters to be "extreme in nature and completely unacceptable," putting at risk supply chains & the competitiveness of Mexico & its partners in the region. "It would seem that some U.S. actors are putting the agreement at risk," the CCE said.
USMCA in jeopardy after Mexico rejects 'extreme' demand from Democrats
Optimism on the US-China trade deal has returned, based on emotions which are volatile. In the meantime USMCA now has a dark cloud in DC hanging over an inability to get US approval. The first jobs report for Nov is another negative report traders have to assess. But the bulls have been able to keep the Dow near its record highs last week.
Dow Jones Industrials
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