Dow inched up 3, decliners slightly ahead of advancers & NAZ added 17. The MLP index dropped 2+ to the 208s after its recent advance & the REIT index was off 1+ to 391. Junk bond funds did little & Treasures saw significant buying. Oil rose to the high 59s & gold went up 7 to 1480 (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)
The critical holiday shopping season is off to a sluggish start in the US. In Nov, which includes key shopping dates like Black Friday, retail sales rose less than expected, reigniting jitters that despite a strong labor market the record-long economic expansion is beginning to cool down. New figures published by the Commerce Dept revealed that retail sales increased by a seasonally adjusted 0.2% last month, down from 0.4% in Oct. Excluding the more volatile measures of autos & gas, sales were flat. The US consumer has remained relatively resilient, even as uncertainties from the US-China trade war continue to rattle markets. But Thanksgiving fell on the 4th Thurs in Nov this year, the last possible date it could be, making this holiday shopping season the shortest since 2013. (Cyber Monday also fell in Dec this year, likely contributing to the lackluster report). Parts of the country were also hit with a brutal snowstorm, which possibly discouraged some spendoing. Navy Federal Credit Union corporate economist Robert Frick said the report indicates “more consumer caution,” though he noted that consumers are still spending enough to keep powering the economy. Still, the report also included some good news. Sales of motor vehicle & parts dealers, which account for about 20% of total retail sales, ticked up by 0.5%, while sales at electronics & appliance stores rose 0.7%, the most since Jul & gas station sales advanced 0.7%. Online sales accounted for a large swath of spending, posting a 0.8% gain last month. According to the latest data from Adobe Analytics, online holiday sales were up 14.1% from the year-ago period. The economy expanded at a 2.1% annualized pace in Q3.
The landslide victory of UK Prime Minister Boris Johnson along with Pres Trump's victory on phase one of the US-China trade deal, as well as US-Mexica-Canada agreement (USMCA) earlier this week is signaling a global move to the right & more pro-business policies which should boost demand for agriculture & oil, among other commodities. By lifting trade barriers & leveling the economic playing field we should unleash an era of solid global economic growth & create prosperity. The first focus after the backdrop of the US China trade deal will be agriculture. US farmers who were on the front lines of the trade war will now see their pain eased with China committed to buying $50B of US agriculture products. Across the pond, the UK people want to be set free of the EU & their restrictions. They want their people & their business's make the decisions that are best for their future. While some worry that a hard Brexit could lead to some economic disruptions, it will also open up new opportunities & perhaps a deeper trade relationship with America. Instead of being reliant just on EU trading partners the UK will be open to a new world of possibilities. Those possibilities should extend across the globe. This will create a strong demand for oil, gas & other energy products as economic growth rises, more is needed to fuel that growth. Govs should be getting the message that people want to do business. They want to do it free & fair. They want to prosper & whenever possible they need the gov to get out of the way.
National Economic Council Director Larry Kudlow maintained a cautious optimism around the trade agreement struck by China & the US. He said the deal should lift business confidence, but “we will see how it works. We will see if the Chinese stay with their word.” China & the US agreed on a phase one trade deal. The agreement — which both sides are aiming to sign in Jan — includes some tariff relief & a commitment from China to increase its purchases of US agricultural products. However, Kudlow noted that discussions over forced technology transfers, a major sticking point of the trade war since it began, may not be over along with talks about intellectual property protections. “Regarding intellectual property rights, there’s a section in that chapter that would prevent the kind of counterfeiting among tradable goods that has been going on for years. that is clearly an unfair trading practice,” Kudlow added. “There’s a section, also in the IP area, that says plainly that if an American company is going for a license to do business that any forced technology transfers will not be used by the Chinese.” “We will test those propositions,” he said, adding the U.S. expects China to make these changes “in good faith.” Stocks posted small moves after investors learned the details of the phase one trade agreement. As part of the deal, China will purchase $40B in US agricultural products. However, Kudlow said those purchases will be made over a 2-year period. “The sense we got from the Chinese is they believe it’s doable. They’ve been in the market buying agricultural and other commodities let’s say as goodwill,” he said.
Larry Kudlow: ‘We will see if the Chinese stay with their word’
Gold prices settled higher, buoyed by weakness in the $ & a fall in bond yields, to tally a gain for the week, as traders struggled to sort out details of news that the US & China have agreed to a phase-one trade deal. The US & China have reached an agreement on text of a phase one trade deal & will now move toward signing a deal as quickly as possible, Chinese officials said. The US will scrap tariffs on Chinese goods in phases, Vice Commerce Minister Wang Shouwen said. Pres Trump said that the US & China agreed to a phase-one trade deal & said tariffs that were scheduled for Dec 15 on Chinese goods have been called off. Against that backdrop, Feb gold rose $8.90 (0.6%) to settle at $1481 an ounce, the highest finish for a most-active contract since Dec 5. For the week, gold rose 1.1%. Market strategists had warned that dissipating geopolitical fears, including on Brexit & US-China trade, remain downbeat factors for the yellow metal over a longer term. UK Prime Minister Boris Johnson secured a decisive victory that gives him a new 5-year term after the Conservative Party won a general election. Gold prices have been influenced by concerns about trade & uncertainties surrounding a UK election, as well as dovish stances by the Federal Reserve & the ECB, which recently expressed support for lower rates for a longer period to support global economies. The recent geopolitical moves, notably the UK election, has pushed one measure of the $ firmly lower as the £ jumped overnight, but was weaker today. A weaker buck can make commodities pegged to the currency more attractive to buyers using other currencies.
Gold prices settle higher to score a gain for the week
Oil futures ended higher, with US & global benchmark prices at their highest levels since mid-Sep, after the US & China said they have reached a preliminary agreement on a phase one trade agreement. The lack of a trade agreement had been a major headwind to crude demand, but oil prices got a boost yesterday when Pres Trump tweeted that the US was “getting VERY close to a BIG DEAL with China.” Some reports then emerged saying that Trump approved a phase-one trade deal with China, possibly averting new tariffs on some $160B in consumer goods that were set to take effect Sun & bolstering hope that the harm done to global economic growth may fade. China confirmed that it reached a deal on the text of a phase one pact, but that the deal would need to first go thru legal procedures before it is signed. Trump separately announced a phase 1 deal today & scrapped tariffs on Chinese goods that were set to go into effect on Sun. US benchmark prices briefly topped $60 a barrel for the first time since Sep. West Texas Intermediate crude for Janu delivery rose 89¢ (1.5%) to settle at $60.07 a barrel. For the week, prices for the front-month contract rose 1.5%. Feb Brent crude gained $1.02 (1.6%) to finish at $65.22 a barrel. For the week, it ended 1.3% higher. Front-mont prices for both WTI & Brent crude settled at their highest levels since Sep 16. On top of trade, a decisive victory for Boris Johnson's UK Conservative Party yesterday may remove another element of concern for assets considered risky like oil & stocks. Prices for crude have been mostly drifting higher after central banks signaled a willingness to keep interest rates low & maintain economic stimulus for the foreseeable future which may help to boost the global economy & buoy crude demand. An agreement to further cut global production between members of OPEC & allies in Vienna last week has also helped to support energy futures, despite signs of growing oil inventories. Meanwhile, data from Baker Hughes showed the first weekly increase in active US oil-rigs in 8 weeks, suggesting the potential for rise in production, but had little impact on prices for the session.
Phase 1 of the big trade deal turned out to be a non-event. That's what happens after it was so well advertised. Now final details must be addressed. The Dow stayed near breakeven when enthusiasm from the initial buying cooled down. Next week, traders will have a chance to better assess what this means along with prospects for future negotiations.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The critical holiday shopping season is off to a sluggish start in the US. In Nov, which includes key shopping dates like Black Friday, retail sales rose less than expected, reigniting jitters that despite a strong labor market the record-long economic expansion is beginning to cool down. New figures published by the Commerce Dept revealed that retail sales increased by a seasonally adjusted 0.2% last month, down from 0.4% in Oct. Excluding the more volatile measures of autos & gas, sales were flat. The US consumer has remained relatively resilient, even as uncertainties from the US-China trade war continue to rattle markets. But Thanksgiving fell on the 4th Thurs in Nov this year, the last possible date it could be, making this holiday shopping season the shortest since 2013. (Cyber Monday also fell in Dec this year, likely contributing to the lackluster report). Parts of the country were also hit with a brutal snowstorm, which possibly discouraged some spendoing. Navy Federal Credit Union corporate economist Robert Frick said the report indicates “more consumer caution,” though he noted that consumers are still spending enough to keep powering the economy. Still, the report also included some good news. Sales of motor vehicle & parts dealers, which account for about 20% of total retail sales, ticked up by 0.5%, while sales at electronics & appliance stores rose 0.7%, the most since Jul & gas station sales advanced 0.7%. Online sales accounted for a large swath of spending, posting a 0.8% gain last month. According to the latest data from Adobe Analytics, online holiday sales were up 14.1% from the year-ago period. The economy expanded at a 2.1% annualized pace in Q3.
November retail sales a bad omen on America's economic prospects
The landslide victory of UK Prime Minister Boris Johnson along with Pres Trump's victory on phase one of the US-China trade deal, as well as US-Mexica-Canada agreement (USMCA) earlier this week is signaling a global move to the right & more pro-business policies which should boost demand for agriculture & oil, among other commodities. By lifting trade barriers & leveling the economic playing field we should unleash an era of solid global economic growth & create prosperity. The first focus after the backdrop of the US China trade deal will be agriculture. US farmers who were on the front lines of the trade war will now see their pain eased with China committed to buying $50B of US agriculture products. Across the pond, the UK people want to be set free of the EU & their restrictions. They want their people & their business's make the decisions that are best for their future. While some worry that a hard Brexit could lead to some economic disruptions, it will also open up new opportunities & perhaps a deeper trade relationship with America. Instead of being reliant just on EU trading partners the UK will be open to a new world of possibilities. Those possibilities should extend across the globe. This will create a strong demand for oil, gas & other energy products as economic growth rises, more is needed to fuel that growth. Govs should be getting the message that people want to do business. They want to do it free & fair. They want to prosper & whenever possible they need the gov to get out of the way.
US-China trade deal, Boris Johnson and USMCA win trifecta for commodities
National Economic Council Director Larry Kudlow maintained a cautious optimism around the trade agreement struck by China & the US. He said the deal should lift business confidence, but “we will see how it works. We will see if the Chinese stay with their word.” China & the US agreed on a phase one trade deal. The agreement — which both sides are aiming to sign in Jan — includes some tariff relief & a commitment from China to increase its purchases of US agricultural products. However, Kudlow noted that discussions over forced technology transfers, a major sticking point of the trade war since it began, may not be over along with talks about intellectual property protections. “Regarding intellectual property rights, there’s a section in that chapter that would prevent the kind of counterfeiting among tradable goods that has been going on for years. that is clearly an unfair trading practice,” Kudlow added. “There’s a section, also in the IP area, that says plainly that if an American company is going for a license to do business that any forced technology transfers will not be used by the Chinese.” “We will test those propositions,” he said, adding the U.S. expects China to make these changes “in good faith.” Stocks posted small moves after investors learned the details of the phase one trade agreement. As part of the deal, China will purchase $40B in US agricultural products. However, Kudlow said those purchases will be made over a 2-year period. “The sense we got from the Chinese is they believe it’s doable. They’ve been in the market buying agricultural and other commodities let’s say as goodwill,” he said.
Larry Kudlow: ‘We will see if the Chinese stay with their word’
Federal Reserve Bank of NY Pres John Williams said
that the outlook for the US economy remains pretty good but central
bankers will need to respond to unexpected events should they arise. “We need to be ready to change our views based on the data,” Williams added.
Fed’s Williams Says Central Bank Should Be Flexible as Data Evolves
Gold prices settled higher, buoyed by weakness in the $ & a fall in bond yields, to tally a gain for the week, as traders struggled to sort out details of news that the US & China have agreed to a phase-one trade deal. The US & China have reached an agreement on text of a phase one trade deal & will now move toward signing a deal as quickly as possible, Chinese officials said. The US will scrap tariffs on Chinese goods in phases, Vice Commerce Minister Wang Shouwen said. Pres Trump said that the US & China agreed to a phase-one trade deal & said tariffs that were scheduled for Dec 15 on Chinese goods have been called off. Against that backdrop, Feb gold rose $8.90 (0.6%) to settle at $1481 an ounce, the highest finish for a most-active contract since Dec 5. For the week, gold rose 1.1%. Market strategists had warned that dissipating geopolitical fears, including on Brexit & US-China trade, remain downbeat factors for the yellow metal over a longer term. UK Prime Minister Boris Johnson secured a decisive victory that gives him a new 5-year term after the Conservative Party won a general election. Gold prices have been influenced by concerns about trade & uncertainties surrounding a UK election, as well as dovish stances by the Federal Reserve & the ECB, which recently expressed support for lower rates for a longer period to support global economies. The recent geopolitical moves, notably the UK election, has pushed one measure of the $ firmly lower as the £ jumped overnight, but was weaker today. A weaker buck can make commodities pegged to the currency more attractive to buyers using other currencies.
Gold prices settle higher to score a gain for the week
Oil futures ended higher, with US & global benchmark prices at their highest levels since mid-Sep, after the US & China said they have reached a preliminary agreement on a phase one trade agreement. The lack of a trade agreement had been a major headwind to crude demand, but oil prices got a boost yesterday when Pres Trump tweeted that the US was “getting VERY close to a BIG DEAL with China.” Some reports then emerged saying that Trump approved a phase-one trade deal with China, possibly averting new tariffs on some $160B in consumer goods that were set to take effect Sun & bolstering hope that the harm done to global economic growth may fade. China confirmed that it reached a deal on the text of a phase one pact, but that the deal would need to first go thru legal procedures before it is signed. Trump separately announced a phase 1 deal today & scrapped tariffs on Chinese goods that were set to go into effect on Sun. US benchmark prices briefly topped $60 a barrel for the first time since Sep. West Texas Intermediate crude for Janu delivery rose 89¢ (1.5%) to settle at $60.07 a barrel. For the week, prices for the front-month contract rose 1.5%. Feb Brent crude gained $1.02 (1.6%) to finish at $65.22 a barrel. For the week, it ended 1.3% higher. Front-mont prices for both WTI & Brent crude settled at their highest levels since Sep 16. On top of trade, a decisive victory for Boris Johnson's UK Conservative Party yesterday may remove another element of concern for assets considered risky like oil & stocks. Prices for crude have been mostly drifting higher after central banks signaled a willingness to keep interest rates low & maintain economic stimulus for the foreseeable future which may help to boost the global economy & buoy crude demand. An agreement to further cut global production between members of OPEC & allies in Vienna last week has also helped to support energy futures, despite signs of growing oil inventories. Meanwhile, data from Baker Hughes showed the first weekly increase in active US oil-rigs in 8 weeks, suggesting the potential for rise in production, but had little impact on prices for the session.
Oil ends at 3-month high as the U.S. and China reach a preliminary phase one trade deal
Phase 1 of the big trade deal turned out to be a non-event. That's what happens after it was so well advertised. Now final details must be addressed. The Dow stayed near breakeven when enthusiasm from the initial buying cooled down. Next week, traders will have a chance to better assess what this means along with prospects for future negotiations.
Dow Jones Industrials
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