Dow dropped 105 (session lows), advancers slightly ahead of decliners & NAZ fell 34. The MLP index rebounded 4+ to the 204s & the REIT index crawled higher in the 404s. Junk bond funds fluctuated & Treasuries continued to be modestly higher in price. Oil slid lower to 59 & gold was steady at 1464 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Trade negotiators from the US, Mexico & Canada have reached an agreement that makes changes to the enforcement of the US-Mexico-Canada Agreement, according to multiple sources. A final deal could come together in the next 24 hours, paving the way for ratification by all 3 countries. House Dems & Speaker Nancy Pelosi expressed concerns over enforcement & the need to make sure Mexico pays workers in auto plants an average of $16 an hour. Mexico has rejected such an enforcement mechanism but has said it's willing to allow a "neutral" third party to accompany US & Mexican regulators. There is also a process in case Mexico becomes noncompliant. Yesterday, Mexico's top trade negotiator, Jesus Seade, told Mexican lawmakers that US Trade Representative Robert Lighthizer wanted to change the definition of what constitutes North American steel & aluminum. Mexico, which imports all of its aluminum, is not OK with changes to its definition, but would be open to tighter rules for steel after 5 years. Seade will present Mexico's "terms" shortly. The USMCA, which overhauls the Clinton-era North American Free Trade Agreement, commonly known as NAFTA, requires 75% of automobile components be manufactured in the US, Canada & Mexico in order to avoid tariffs, & that 40-45% of automobile parts be made by workers who earn at least $16 an hour by 2023. Pres Trump signed USMCA, commonly referred to as the "new NAFTA," on Nov 30, 2018, but Pelosi has yet to put the trade agreement on the House floor due to the Dems' enforcement concerns. Mexico ratified the trade deal in Jun & Canadian Prime Minister Justin Trudeau has said he will bring it up for a vote once it passes the US House. The delay has drawn the wrath of both the Trump administration & Reps, who say not getting the deal signed before Congress adjourns for the year on Dec 20 could put it in jeopardy, with 2020 being an election year. Last month, Commerce Secretary Wilbur Ross said USMCA is "much better" on key issues than any trade deal in US history while noting its delay has "cost the economy billions of dollars."
Gold futures settled at a slight loss, finding little reason to move in either direction ahead of a mid-week policy update from the Federal Reserve & a UK general election that could roil markets. The coming 2-day Fed meeting, begins tomorrow & concludes with a monetary policy decision on Wed. Feb gold lost 20¢ to settle at $1464 an ounce, after declining 0.5% last week. Today, after sinking on the back of a hotter-than-expected US jobs report on Fri, gold initially saw some support following economic reports out of China that showed the world's 2nd-largest economy continued to be hurt by trade conflicts & a global economic slowdown. China trade data showed that exports to the US had fallen 23% year-over-year in Nov. More broadly, exports to all countries fell 1.1% year-over-year. However, prices for gold gave up earlier gains as news emerged that House Dems reached a tentative agreement over a rewrite of the US-Mexico-Canada trade deal. However, this report was attributed to an anonymous Dem aide, who’s not authorized to discuss the talks.
Oil futures fell, but settled above the session’s worst levels, as traders weighed expectations for energy demand, with some economic weakness in China raising concerns over a slowdown, but news of tentative US-Mexico-Canada trade deal offered support. The move for prices follow last week's important gathering of OPEC & allies, known as OPEC+. West Texas Intermediate crude for Jan delivery fell 18¢ (0.3%) to settle at $59.02 a barrel, after trading as low as $58.23 during the session. Prices booked a 7.3% weekly gain on Fri, marking the biggest such rise since late Jun. Feb Brent crude shed 14¢ (0.2%) to $64.25 a barrel, after the global oil benchmark logged a 6.5% weekly gain. Data out of China showed that global exports were off 1.1% from a year earlier at $221.7B, refreshing concerns about the world's 2nd-largest economy & its potential impact on oil uptake. China's exporters have been hurt by the US tariffs, as both countries attempt to resolve a yearlong dispute ahead of a Dec 15 deadline that will see annual tariffs on $156B in China goods raised to 15%. Today, however, news emerged that House Dems have reached a tentative agreement with labor leaders & the White House over a rewrite of the US-Mexico-Canada trade deal. The deal has yet to be completed & no vote has been scheduled. Mexico & Canada are among the biggest markets for US petroleum exports. Last week, crude-oil prices were influenced by negotiations between big producers in Vienna. OPEC & allies agreed to officially cut production by 500K barrels a day on top of its current reduction agreement, beginning in Jan. The additional reductions will take total output cuts for the OPEC+, to 1.7M barrels a day, including the current cuts of 1.2M barrels a day from Oct 2018 levels.
Traders have a lot to deal with & on balance leaned towards selling. The China deal is close but not close enough as the Dec 15 tariff deadline nears & USMCA may squeeze thru at the last minute this year. The report showing a sharp decline in Chinese exports to the US is weighing heavily on the authorities in China. Then there is the Fed meeting which begins tomorrow. It is widely expected that interest rates will be left alone after 3 consecutive hikes, but what they have to say about the future always gets a lot of attention. In nervous trading, the Dow finished below 28K again.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Trade negotiators from the US, Mexico & Canada have reached an agreement that makes changes to the enforcement of the US-Mexico-Canada Agreement, according to multiple sources. A final deal could come together in the next 24 hours, paving the way for ratification by all 3 countries. House Dems & Speaker Nancy Pelosi expressed concerns over enforcement & the need to make sure Mexico pays workers in auto plants an average of $16 an hour. Mexico has rejected such an enforcement mechanism but has said it's willing to allow a "neutral" third party to accompany US & Mexican regulators. There is also a process in case Mexico becomes noncompliant. Yesterday, Mexico's top trade negotiator, Jesus Seade, told Mexican lawmakers that US Trade Representative Robert Lighthizer wanted to change the definition of what constitutes North American steel & aluminum. Mexico, which imports all of its aluminum, is not OK with changes to its definition, but would be open to tighter rules for steel after 5 years. Seade will present Mexico's "terms" shortly. The USMCA, which overhauls the Clinton-era North American Free Trade Agreement, commonly known as NAFTA, requires 75% of automobile components be manufactured in the US, Canada & Mexico in order to avoid tariffs, & that 40-45% of automobile parts be made by workers who earn at least $16 an hour by 2023. Pres Trump signed USMCA, commonly referred to as the "new NAFTA," on Nov 30, 2018, but Pelosi has yet to put the trade agreement on the House floor due to the Dems' enforcement concerns. Mexico ratified the trade deal in Jun & Canadian Prime Minister Justin Trudeau has said he will bring it up for a vote once it passes the US House. The delay has drawn the wrath of both the Trump administration & Reps, who say not getting the deal signed before Congress adjourns for the year on Dec 20 could put it in jeopardy, with 2020 being an election year. Last month, Commerce Secretary Wilbur Ross said USMCA is "much better" on key issues than any trade deal in US history while noting its delay has "cost the economy billions of dollars."
USMCA trade agreement reached
Gold futures settled at a slight loss, finding little reason to move in either direction ahead of a mid-week policy update from the Federal Reserve & a UK general election that could roil markets. The coming 2-day Fed meeting, begins tomorrow & concludes with a monetary policy decision on Wed. Feb gold lost 20¢ to settle at $1464 an ounce, after declining 0.5% last week. Today, after sinking on the back of a hotter-than-expected US jobs report on Fri, gold initially saw some support following economic reports out of China that showed the world's 2nd-largest economy continued to be hurt by trade conflicts & a global economic slowdown. China trade data showed that exports to the US had fallen 23% year-over-year in Nov. More broadly, exports to all countries fell 1.1% year-over-year. However, prices for gold gave up earlier gains as news emerged that House Dems reached a tentative agreement over a rewrite of the US-Mexico-Canada trade deal. However, this report was attributed to an anonymous Dem aide, who’s not authorized to discuss the talks.
Gold prices slip a bit ahead of Fed meeting this week
Oil futures fell, but settled above the session’s worst levels, as traders weighed expectations for energy demand, with some economic weakness in China raising concerns over a slowdown, but news of tentative US-Mexico-Canada trade deal offered support. The move for prices follow last week's important gathering of OPEC & allies, known as OPEC+. West Texas Intermediate crude for Jan delivery fell 18¢ (0.3%) to settle at $59.02 a barrel, after trading as low as $58.23 during the session. Prices booked a 7.3% weekly gain on Fri, marking the biggest such rise since late Jun. Feb Brent crude shed 14¢ (0.2%) to $64.25 a barrel, after the global oil benchmark logged a 6.5% weekly gain. Data out of China showed that global exports were off 1.1% from a year earlier at $221.7B, refreshing concerns about the world's 2nd-largest economy & its potential impact on oil uptake. China's exporters have been hurt by the US tariffs, as both countries attempt to resolve a yearlong dispute ahead of a Dec 15 deadline that will see annual tariffs on $156B in China goods raised to 15%. Today, however, news emerged that House Dems have reached a tentative agreement with labor leaders & the White House over a rewrite of the US-Mexico-Canada trade deal. The deal has yet to be completed & no vote has been scheduled. Mexico & Canada are among the biggest markets for US petroleum exports. Last week, crude-oil prices were influenced by negotiations between big producers in Vienna. OPEC & allies agreed to officially cut production by 500K barrels a day on top of its current reduction agreement, beginning in Jan. The additional reductions will take total output cuts for the OPEC+, to 1.7M barrels a day, including the current cuts of 1.2M barrels a day from Oct 2018 levels.
Oil prices fall, but settle above session lows as traders focus on demand prospects
Traders have a lot to deal with & on balance leaned towards selling. The China deal is close but not close enough as the Dec 15 tariff deadline nears & USMCA may squeeze thru at the last minute this year. The report showing a sharp decline in Chinese exports to the US is weighing heavily on the authorities in China. Then there is the Fed meeting which begins tomorrow. It is widely expected that interest rates will be left alone after 3 consecutive hikes, but what they have to say about the future always gets a lot of attention. In nervous trading, the Dow finished below 28K again.
Dow Jones Industrials
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