Dow gained 31, advancers over decliners better than 3-2 & NAZ was up 9. The MLP index went up 3+ to the 216s & the REIT index fell 3+ to the 391s (pulling back 6% from its record highs 2 months ago). Junk bond funds rose & Treasuries inched higher in price. Oil climbed to about 61 & gold continued steady at 1480.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The US can unilaterally retaliate if China violates their "phase one" trade deal, White House Director of Trade & Manufacturing Policy Peter Navarro said to Ed Henry. "My favorite part of the deal is an enforcement mechanism which allows us within 90 days, Ed, to unilaterally, basically, retaliate if the Chinese violate the agreement, and they can't do anything about that," Navarro said. "So it's a strong deal in that regard. Let's see if they buy the $200 billion worth of farm products, energy services and manufacturing goods that they promised. That'll be the one that's most easily monitored — what you see, what you get." Navarro reminded viewers that the US still has tariffs on $370B worth of Chinese goods. "This is a defense for our technological crown jewels as well as an insurance policy that they'll keep talking," Navarro added. Trade Rep Robert Lighthizer made the same point earlier on Sun AM, describing the deal as having "real, real enforcement." "Ultimately, whether this whole agreement works is going to be determined by who's making the decisions in China, not in the United States," Lighthizer said. "If the hardliners are making the decisions, we're going to get one outcome. If the reformers are making the decisions, which is what we hope, then we're going to get another outcome. This is the way to think about this deal, is this is a first step in trying to integrate two very different systems to the benefit of both of us." Any reaction would be "proportionate," he added. The US & China agreed to a "phase one" trade deal Fri that would reduce tariffs on some Chinese goods & could be a boon to American farmers who have been hard hit by the 19-month tit-for-tat trade war. China's gov says it will postpone planned punitive tariffs on US-made automobiles & other goods following an interim trade deal with DC. Beijing had planned to impose 25% duties on American-made autos, which would have raised the total charge to 40%. Hardest hit were Germany's BMW AG & Daimler AG's Mercedes unit, which ship US-made SUVs & other cars to China.
China may resume purchases of US ethanol to meet its spending commitments under an initial trade deal with the US according to people familiar with the matter. The Phase One deal, announced last week, includes an agreement from Beijing to import up to $200B of US goods, including $40-50B of agricultural products, according to the Trade Representative's Office. Some analysts have questioned the feasibility of such a large purchase of agricultural products, considering China only bought about $24B in agricultural goods in 2017, the year before the trade war began. The purchase of US ethanol, however, could help bridge the gap. While the ethanol industry was on the verge of a boom before the trade war, it has since been devastated by tariffs, Todd Becker, CEO of Green Plains -- the US' 4th-largest ethanol producer -- said in Jul. As production & inventory have increased, demand for ethanol has significantly decreased, he explained. "Some plants will slow down, some will shut down, some will shut down forever," Becker added. China also may reroute trade to the mainland so that US goods don't have to pass through Hong Kong. That would enable China to count about $10B more in shipments toward its targets since the US doesn't include goods going to Hong Kong as part of its trade with Beijing. Leaders are also discussing how the rerouting could be arranged without further damage to Hong Kong's economy, which has been hurt by pro-democracy protests that started in Jun.
The House passed a $1.4T spending package, sending it to the Senate as Congress rushes to prevent a govt shutdown. The chamber easily approved 2 measures to fund the gov thru Sep 30. The Senate needs to pass the legislation, & Pres Trump has to sign it by Fri to keep federal depts running. Trump is not expected to create much drama around the funding plan. The pres is “poised” to sign the appropriations bills when they reach his desk, White House advisor Kellyanne Conway said. The House passed the sprawling legislation less than a day after lawmakers released it. It not only boosts domestic & military spending, but also makes several significant, unrelated changes. One measure the House approved contained 8 appropriations bills, the other had 4. The first passed by a 297-120 margin. The 2nd cleared the chamber in a 280-138 vote. The legislation scraps some tools used to fund the Affordable Care Act such as the “Cadillac” tax on high-cost plans. It also raises the federal tobacco buying age to 21. The spending package also includes:
House passes $1.4 trillion spending plan to prevent shutdown, sending it to Senate
Fears of a looming recession in the US are overblown, & underlying forces point to a strong consumer & continued growth in the coming year, Boston Fed Pres Eric Rosengren said. “My own view is that it is unlikely we will have an economic downturn in the coming year, given the generally positive financial conditions and the continued accommodative monetary and fiscal policies,” Rosengren said. The savings rate & household net worth are trending upward simultaneously, meaning that consumers are well-positioned to spend, he added. “Plentiful jobs and growth in income have provided improvements in confidence and bode well for holiday sales and beyond,” he noted. “Fortunately for the economy, many consumers seem to be in a buying mood.” The Boston Fed pres voted against all 3 of the Fed’s interest-rate cuts this year. Despite this opposition, he didn’t call for the central bank to reverse course. Instead, Rosengren said he wanted the Fed to move to the side lines next year. “My view is that it is appropriate to take a patient approach to considering any policy changes, unless there is a material change in the outlook,” he said. Earlier today, Dallas Fed Pres Robert Kaplan, a centrist on the central bank, said he sees interest rates staying steady next year. Rosengren said he thought the current level of the Fed's benchmark interest rates, of 1.5-1.75%, was now much lower than the central bank's estimate of the “neutral” level of rates. Rates below that level would give the economy support, or be “accommodative” in the Fed's terminology. But he quickly added that the true value of the neutral interest rate remains uncertain & estimates have been declining for years. “With the recent positive economic news, and with monetary and fiscal policy already accommodative, I see no need to make the current stance of monetary policy more accommodative in the near term,” Rosengren added.
US factory production, home building & the job market showed signs of a pickup, offering additional signals that the US economy is firming. Factory production rebounded strongly in Nov as auto-industry output picked up after the General Motors (GM) strike ended, the Federal Reserve said. Industrial production, a broader measure of factory, mining & utility output, increased a seasonally adjusted 1.1% in Nov from the prior month.
Stocks are digesting gains in last week. Gains have been modest while investors wait for more definite word on the trade deals. The popular averages reached new records with the Dow advancing 10K since the election. This year, the Dow will have an advance around 5K, because it started at a depressed level. Election year markets are generally good ones for stocks. With so much going on in DC, trade deals & the economy, predictions for 2020 don't mean much!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US can unilaterally retaliate if China violates their "phase one" trade deal, White House Director of Trade & Manufacturing Policy Peter Navarro said to Ed Henry. "My favorite part of the deal is an enforcement mechanism which allows us within 90 days, Ed, to unilaterally, basically, retaliate if the Chinese violate the agreement, and they can't do anything about that," Navarro said. "So it's a strong deal in that regard. Let's see if they buy the $200 billion worth of farm products, energy services and manufacturing goods that they promised. That'll be the one that's most easily monitored — what you see, what you get." Navarro reminded viewers that the US still has tariffs on $370B worth of Chinese goods. "This is a defense for our technological crown jewels as well as an insurance policy that they'll keep talking," Navarro added. Trade Rep Robert Lighthizer made the same point earlier on Sun AM, describing the deal as having "real, real enforcement." "Ultimately, whether this whole agreement works is going to be determined by who's making the decisions in China, not in the United States," Lighthizer said. "If the hardliners are making the decisions, we're going to get one outcome. If the reformers are making the decisions, which is what we hope, then we're going to get another outcome. This is the way to think about this deal, is this is a first step in trying to integrate two very different systems to the benefit of both of us." Any reaction would be "proportionate," he added. The US & China agreed to a "phase one" trade deal Fri that would reduce tariffs on some Chinese goods & could be a boon to American farmers who have been hard hit by the 19-month tit-for-tat trade war. China's gov says it will postpone planned punitive tariffs on US-made automobiles & other goods following an interim trade deal with DC. Beijing had planned to impose 25% duties on American-made autos, which would have raised the total charge to 40%. Hardest hit were Germany's BMW AG & Daimler AG's Mercedes unit, which ship US-made SUVs & other cars to China.
US may unilaterally retaliate if China breaks 'phase one' deal
China may resume purchases of US ethanol to meet its spending commitments under an initial trade deal with the US according to people familiar with the matter. The Phase One deal, announced last week, includes an agreement from Beijing to import up to $200B of US goods, including $40-50B of agricultural products, according to the Trade Representative's Office. Some analysts have questioned the feasibility of such a large purchase of agricultural products, considering China only bought about $24B in agricultural goods in 2017, the year before the trade war began. The purchase of US ethanol, however, could help bridge the gap. While the ethanol industry was on the verge of a boom before the trade war, it has since been devastated by tariffs, Todd Becker, CEO of Green Plains -- the US' 4th-largest ethanol producer -- said in Jul. As production & inventory have increased, demand for ethanol has significantly decreased, he explained. "Some plants will slow down, some will shut down, some will shut down forever," Becker added. China also may reroute trade to the mainland so that US goods don't have to pass through Hong Kong. That would enable China to count about $10B more in shipments toward its targets since the US doesn't include goods going to Hong Kong as part of its trade with Beijing. Leaders are also discussing how the rerouting could be arranged without further damage to Hong Kong's economy, which has been hurt by pro-democracy protests that started in Jun.
China may resume ethanol purchases from US under 'skinny' trade deal
The House passed a $1.4T spending package, sending it to the Senate as Congress rushes to prevent a govt shutdown. The chamber easily approved 2 measures to fund the gov thru Sep 30. The Senate needs to pass the legislation, & Pres Trump has to sign it by Fri to keep federal depts running. Trump is not expected to create much drama around the funding plan. The pres is “poised” to sign the appropriations bills when they reach his desk, White House advisor Kellyanne Conway said. The House passed the sprawling legislation less than a day after lawmakers released it. It not only boosts domestic & military spending, but also makes several significant, unrelated changes. One measure the House approved contained 8 appropriations bills, the other had 4. The first passed by a 297-120 margin. The 2nd cleared the chamber in a 280-138 vote. The legislation scraps some tools used to fund the Affordable Care Act such as the “Cadillac” tax on high-cost plans. It also raises the federal tobacco buying age to 21. The spending package also includes:
- $1.375B for fencing on the U.S.-Mexico border, no change from the prior year but less than Trump desires for a political priority
- $25M for gun violence research — the first time Congress has funded it in 20 years
- A 3.1% raise for both military service members & federal civilian employees
- A $22B increase in defense spending
- $425M for election security grants
- $1.5B for state grants to address to the opioid crisis
House passes $1.4 trillion spending plan to prevent shutdown, sending it to Senate
Fears of a looming recession in the US are overblown, & underlying forces point to a strong consumer & continued growth in the coming year, Boston Fed Pres Eric Rosengren said. “My own view is that it is unlikely we will have an economic downturn in the coming year, given the generally positive financial conditions and the continued accommodative monetary and fiscal policies,” Rosengren said. The savings rate & household net worth are trending upward simultaneously, meaning that consumers are well-positioned to spend, he added. “Plentiful jobs and growth in income have provided improvements in confidence and bode well for holiday sales and beyond,” he noted. “Fortunately for the economy, many consumers seem to be in a buying mood.” The Boston Fed pres voted against all 3 of the Fed’s interest-rate cuts this year. Despite this opposition, he didn’t call for the central bank to reverse course. Instead, Rosengren said he wanted the Fed to move to the side lines next year. “My view is that it is appropriate to take a patient approach to considering any policy changes, unless there is a material change in the outlook,” he said. Earlier today, Dallas Fed Pres Robert Kaplan, a centrist on the central bank, said he sees interest rates staying steady next year. Rosengren said he thought the current level of the Fed's benchmark interest rates, of 1.5-1.75%, was now much lower than the central bank's estimate of the “neutral” level of rates. Rates below that level would give the economy support, or be “accommodative” in the Fed's terminology. But he quickly added that the true value of the neutral interest rate remains uncertain & estimates have been declining for years. “With the recent positive economic news, and with monetary and fiscal policy already accommodative, I see no need to make the current stance of monetary policy more accommodative in the near term,” Rosengren added.
Fed’s Rosengren says he isn’t worried about a recession
US factory production, home building & the job market showed signs of a pickup, offering additional signals that the US economy is firming. Factory production rebounded strongly in Nov as auto-industry output picked up after the General Motors (GM) strike ended, the Federal Reserve said. Industrial production, a broader measure of factory, mining & utility output, increased a seasonally adjusted 1.1% in Nov from the prior month.
U.S. Factory Production Rebounds in November
Stocks are digesting gains in last week. Gains have been modest while investors wait for more definite word on the trade deals. The popular averages reached new records with the Dow advancing 10K since the election. This year, the Dow will have an advance around 5K, because it started at a depressed level. Election year markets are generally good ones for stocks. With so much going on in DC, trade deals & the economy, predictions for 2020 don't mean much!
Dow Jones Industrials
No comments:
Post a Comment