Dow climbed 77 to a new record close, advancers over decliners 3-2 & NAZ added 37. The MLP index was flattish in the 217s & the REIT index rose 3+ to 403. Junk bond funds were little changed & Treasuries fluctuated in price. Oil fell almost 1 but held above 60 (more below) & gold was off 2 to 1475.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Treasury Secretary Steve Mnuchin says the replacement for the North American Free Trade Agreement will boost the US economy by .5%, but some leading economists do not agree. “I think we are going to get an excess 50 basis points of additional growth in GDP as a result of this agreement. People who say this is just the NAFTA 2.0 just don’t understand the technicalities of this agreement,” Mnuchin said. “This is our largest trading block — incredibly important to U.S. workers and U.S. farmers. This addresses everything from enabling small businesses to be able to compete more fairly, to expanding agricultural opportunities in opening markets, to protecting digital trade,” he added. But Mnuchin did not drill into the mechanics of his calculation. His projection outpaces those put forward by two independent economic authorities. Based on the original revised treaty that the US signed with Mexico & Canada last year, the US International Trade Commission forecast the impact would raise GDP by.35% after 6 years, while the IMF has said the impact would be negligible. A report published this week by The Peterson Institute for Intl Economics, based on the ITC's original projections for the US-Mexico-Canada Agreement (USMCA) said that US GDP will decline by.12%. The nonpartisan, nonprofit institution said the ITC's projections were based on “the dubious assumption” that the USMCA will spur more US investment by reducing uncertainty in policies on data, e-commerce & intellectual property rights. But it said in the report, “Canada and Mexico have already committed to those reforms thru their participation in the successor to the Trans-Pacific Partnership,” known as the Comprehensive & Progressive Agreement for Trans-Pacific Partnership. “The Intl Trade Commission's projections of growth were based on assumptions that there would be a flood of investment because of elimination of uncertainty once the deal was signed,” said a spokesperson for The Peterson Institute. “Our scholars found that assumption as having no basis.” A spokeswoman for the IMF said, “IMF Working Papers” describe research in progress by its authors & do not necessarily represent the views of the IMF, its board or management.
Mnuchin’s USMCA growth estimate might be too optimistic
Americans increased spending in Nov at the fastest rate in 4 months, suggesting households still have plenty of buying power to keep the economy growing at a steady pace thru the holiday shopping season. Consumer spending rose 0.4% last month, the government said. That’s the biggest increase since Jul. The cost of goods and services also increased slightly in Nov, but inflation more broadly was still quite low. The PCE price index rose 0.2% last month to push the yearly rate of inflation up a tick to 1.5%. That's still well below the Federal Reserve's 2% inflation target, however. Households bought more cars & trucks in Nov. They also spent more on health care. Steadily rising incomes — a byproduct of the strongest labor market in decades — have made it easier for households to spend. Incomes climbed a solid 0.5% last month, rebounding from a flat reading in Oct that was viewed as an anomaly. Consumers were also able to pocket some more savings. The savings rate edged up to 7.9% from 7.8%. The broad increase in consumer spending last month told a somewhat different picture than a narrower survey of how much Americans spent at retail stores. Retail sales appeared somewhat soft, but it might have stemmed from a late Thanksgiving holiday that pushed Black Monday into Dec. If so, retail sales should be stronger in Dec than would usually be the case. Meanwhile, another inflation bellwether in the report, known as core PCE, edged up 0.1% last month. It's risen just 1.6% in the past 12 months. The core rate strips out food & energy prices since they tend to swing more sharply than the cost of other goods & services. Strong consumer spending has kept the economy expanding for a record 11th straight year, but it hasn't been enough to offset the drag from weaker business investment. US growth in 2019 has slowed after hitting a 13-year peak in 2018. Slower growth is expected to persist into early 2020, but the odds of recession are seen as very low.
Oil futures were sharply lower, with declines accelerating after a weekly report on drilling rigs showed a big increase. Baker Hughes reported that the number of active US rigs drilling for oil rose by 18 to 685 this week, marking a 2nd straight weekly rise in rigs. The total active US rig count also climbed 14 to 813. West Texas Intermediate crude for Feb delivery, the US benchmark grade, fell 98¢ (1.6%) to trade at $60.20 a barrel, after gaining 0.5% yesterday, when it marked its highest settlement since Sep 16. Feb Brent crude shed 58¢ (0.9%) at $65.96 a barrel, snapping a 6th straight session of gains, its longest win streak since Jan 10, following a rise of 0.6% yesterday. The intl oil benchmark also hit its highest finish since Sep 16. Oil prices have been mostly bolstered by more optimistic expectations for the global economy & Sino-American trade developments, as well as the decision earlier this month by OPEC & its allies, a group known as OPEC+, to deepen production cuts. Yesterday, China revealed a list of import tariff exemptions for 6 chemical & oil products from the US. However, some commodity experts warn that global crude supplies could overwhelm demand in 2020, with the oil market oversupplied by 0.3M barrels a day in the coming year.
The Dow took off in early trading & held at those levels for the rest of the day (with a little selling into the close). Maybe Santa Claus help inspire buying. Last Dec was a very ugly month for stocks. This Dec, the Dow is up 400 to new records & investors are felling very good.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury Secretary Steve Mnuchin says the replacement for the North American Free Trade Agreement will boost the US economy by .5%, but some leading economists do not agree. “I think we are going to get an excess 50 basis points of additional growth in GDP as a result of this agreement. People who say this is just the NAFTA 2.0 just don’t understand the technicalities of this agreement,” Mnuchin said. “This is our largest trading block — incredibly important to U.S. workers and U.S. farmers. This addresses everything from enabling small businesses to be able to compete more fairly, to expanding agricultural opportunities in opening markets, to protecting digital trade,” he added. But Mnuchin did not drill into the mechanics of his calculation. His projection outpaces those put forward by two independent economic authorities. Based on the original revised treaty that the US signed with Mexico & Canada last year, the US International Trade Commission forecast the impact would raise GDP by.35% after 6 years, while the IMF has said the impact would be negligible. A report published this week by The Peterson Institute for Intl Economics, based on the ITC's original projections for the US-Mexico-Canada Agreement (USMCA) said that US GDP will decline by.12%. The nonpartisan, nonprofit institution said the ITC's projections were based on “the dubious assumption” that the USMCA will spur more US investment by reducing uncertainty in policies on data, e-commerce & intellectual property rights. But it said in the report, “Canada and Mexico have already committed to those reforms thru their participation in the successor to the Trans-Pacific Partnership,” known as the Comprehensive & Progressive Agreement for Trans-Pacific Partnership. “The Intl Trade Commission's projections of growth were based on assumptions that there would be a flood of investment because of elimination of uncertainty once the deal was signed,” said a spokesperson for The Peterson Institute. “Our scholars found that assumption as having no basis.” A spokeswoman for the IMF said, “IMF Working Papers” describe research in progress by its authors & do not necessarily represent the views of the IMF, its board or management.
Mnuchin’s USMCA growth estimate might be too optimistic
Americans increased spending in Nov at the fastest rate in 4 months, suggesting households still have plenty of buying power to keep the economy growing at a steady pace thru the holiday shopping season. Consumer spending rose 0.4% last month, the government said. That’s the biggest increase since Jul. The cost of goods and services also increased slightly in Nov, but inflation more broadly was still quite low. The PCE price index rose 0.2% last month to push the yearly rate of inflation up a tick to 1.5%. That's still well below the Federal Reserve's 2% inflation target, however. Households bought more cars & trucks in Nov. They also spent more on health care. Steadily rising incomes — a byproduct of the strongest labor market in decades — have made it easier for households to spend. Incomes climbed a solid 0.5% last month, rebounding from a flat reading in Oct that was viewed as an anomaly. Consumers were also able to pocket some more savings. The savings rate edged up to 7.9% from 7.8%. The broad increase in consumer spending last month told a somewhat different picture than a narrower survey of how much Americans spent at retail stores. Retail sales appeared somewhat soft, but it might have stemmed from a late Thanksgiving holiday that pushed Black Monday into Dec. If so, retail sales should be stronger in Dec than would usually be the case. Meanwhile, another inflation bellwether in the report, known as core PCE, edged up 0.1% last month. It's risen just 1.6% in the past 12 months. The core rate strips out food & energy prices since they tend to swing more sharply than the cost of other goods & services. Strong consumer spending has kept the economy expanding for a record 11th straight year, but it hasn't been enough to offset the drag from weaker business investment. US growth in 2019 has slowed after hitting a 13-year peak in 2018. Slower growth is expected to persist into early 2020, but the odds of recession are seen as very low.
Consumer spending climbs in November at fastest pace in 4 months
Oil futures were sharply lower, with declines accelerating after a weekly report on drilling rigs showed a big increase. Baker Hughes reported that the number of active US rigs drilling for oil rose by 18 to 685 this week, marking a 2nd straight weekly rise in rigs. The total active US rig count also climbed 14 to 813. West Texas Intermediate crude for Feb delivery, the US benchmark grade, fell 98¢ (1.6%) to trade at $60.20 a barrel, after gaining 0.5% yesterday, when it marked its highest settlement since Sep 16. Feb Brent crude shed 58¢ (0.9%) at $65.96 a barrel, snapping a 6th straight session of gains, its longest win streak since Jan 10, following a rise of 0.6% yesterday. The intl oil benchmark also hit its highest finish since Sep 16. Oil prices have been mostly bolstered by more optimistic expectations for the global economy & Sino-American trade developments, as well as the decision earlier this month by OPEC & its allies, a group known as OPEC+, to deepen production cuts. Yesterday, China revealed a list of import tariff exemptions for 6 chemical & oil products from the US. However, some commodity experts warn that global crude supplies could overwhelm demand in 2020, with the oil market oversupplied by 0.3M barrels a day in the coming year.
U.S. oil prices head 1.6% lower as rig-count data show weekly increase
The Dow took off in early trading & held at those levels for the rest of the day (with a little selling into the close). Maybe Santa Claus help inspire buying. Last Dec was a very ugly month for stocks. This Dec, the Dow is up 400 to new records & investors are felling very good.
Dow Jones Industrials
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