Dow went up 23. advancers & decliners were about even & NAZ retreated 15. The MLP index fell 2+ to the 219s & the REIT index rose 1+ to the 403s. Junk bond funds slid lower & Treasuries continued in demand. Oil was flattish in the 61s & gold gained 2 to 1516 (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)
China's Q4 economic growth may have been “the weakest of 2019” — but it still showed an improvement compared to the previous qtr & to the same period a year ago, a business survey showed. Manufacturing & services saw the strongest revenue improvement compared to the the previous qtr, though profit was “muted,” according to research firm China Beige Book's quarterly review of the world's 2nd-largest economy, which was based on a survey of more than 3300 Chinese businesses. 3 important results emerged from the survey. First, there are signs that cash flows have deteriorated quickly. “It is easy to discount a seemingly unceasing trend of worsening cash flow, since it in some ways is a feature of the system. But even by Chinese standards, Q4 late payables and deliverables soared—to the worst levels we’ve recorded,” the report said. Secondly, new orders continue to fall even though companies are reporting higher revenue in Q4. “Demand may not hold up,” the report said, adding that “firms may not yet have understood the message their customers are sending.” Finally, the economy saw record levels of corp borrowing in Q4. “Loan applications nationally shot to an all-time high, while rejections sank to an all-time low,” according to the China Beige Book. “For the first time since 2012 we saw each of our four core sectors—Manufacturing, Retail, Services, and Property—report over 30% of firms borrowing.” The rise in business loans is in part due to the comeback of shadow financing. Shadow banking refers to unregulated lending activities that often present higher risks as they are subject to less regulatory oversight. Beige Book's data showed that the proportion of loans from non-bank lenders have increased to nearly 40% in Q4, compared to 29% in the same period in 2013. China's smaller private firms have contributed to the country's economic growth but traditionally, they have had a more difficult time getting loans than the larger, state-owned corps, leading many to turn to shadow banking. “Firms say shadow bankers are paying little heed to official data refusing to acknowledge their resurgence, accounting for roughly two-fifths of loans for a third straight quarter,” the report showed. “And the bond market appears just as agreeable, with issuance rising for a record sixth straight quarter.” “We’ve shown in the past that the economy is not even credit-constrained, much less starved. That’s now become an understatement,” the China Beige Book added. Other concerns include oversupply & rising wages that could eat into profits. China's manufacturing was “surprisingly solid” despite a protracted trade war with the US, the survey showed. The world's 2 largest economies have been embroiled in a trade dispute that has seen both sides levy additional tariffs on Bs of $s worth of goods from each other.
China’s corporate borrowing soars and cash flows deteriorate, survey shows
China, Russia & Iran are conducting joint naval drills beginning in the Indian Ocean & the Gulf of Oman amid heightened tensions in the region after the Trump administration withdrew the US from a landmark nuclear pact with Tehran. The military exercises, scheduled to continue thru Mon, are intended to “deepen exchange and cooperation between the navies of the three countries,” a Chinese defense ministry spokesman said. He went on to say that the exercise was a “normal military exchange” between the 3 countries & was not “connected to the regional situation.” The Gulf of Oman connects the Arabian Sea with the strategic Strait of Hormuz, thru which about a 5th of the world's oil supply passes, & the Persian Gulf. The US accused Iran of attacking oil tankers in the waterway in May & Jun in an attempt to disrupt global shipping channels. The US ramped up its military presence in the Middle East & sent missile defense systems to Saudi Arabia in the wake of the attacks. Tehran is participating in the joint operation because it would “stabilize security” in the region and bolster the fight against “terrorism and piracy,” said Aboldazl Shekarchi, a brigadier general and spokesman for Iran's armed forces. The US reimposed economic sanctions against Iran in 2018 when Pres Trump withdrew from a nuclear pact the Obama administration had brokered with Tehran & other world powers in 2015.
Gold settled near a 3-month high, clinching its best weekly gain in 4 months, bolstered by investor caution about how far the record rally for stocks can extend into 2020. Gold for Feb delivery advanced $3.70 (0.2%) at $1518 an ounce, its highest level for the most-active contract since Sep 24 when it closed at $1540. For the week, gold rose 2.5%, its sharpest weekly climb since early Aug. The yellow metal has been gaining partly on the back of upbeat signs from the Sino-American trade war, with the US & China moving toward an apparent partial resolution — a potential positive sign for gold because China represents one of the biggest buyers of precious metals. Gold also has rallied at the same time as US stocks, which today saw all 3 major equity benchmarks hit fresh intraday records. Meanwhile, weakness in the $ also has helped to bolster bullion prices.
Oil prices tilted higher, trading around a 3-month peak, after a report showed a bigger-than-expected decline in weekly US stores of crude & its byproducts. The Energy Information Administration (EIA) showed that US crude supplies fell by 5.467M barrels last week. The forecast was for a decrease of 3M barrels, although the less closely followed American Petroleum Institute report showed a 7.9M-barrel tumble on Tues. EIA data also showed supply increases of 1.963M barrels for gasoline stocks & a decline of 152K barrels for distillates. West Texas Intermediate crude for Feb delivery, the US benchmark grade, rose 13¢ (0.2%) at $61.81 a barrel, near its highest price since Sep 16. Feb Brent crude, meanwhile, added 30¢ (0.4%) at $68.19 a barrel, following a 1.1% gain in the prior session. That contract expires on Dec 30. The Mar contract, which is currently the most active, was up 15¢ (0.2%) at $66.92. The intl benchmark on Thurs finished at a roughly 3-month high. All that said, market participants also were digesting a report signaling that the group known as OPEC+, including members of the OPEC & allies like Russia, may consider ending a pact to reduce global production next year. Earlier this month, OPEC & its allies agreed to officially cut production by 500K barrels per day on top of its current reduction agreement, beginning in Jan . Those additional reductions were meant to take total output cuts for OPEC+ to 1.7M barrels day, including the current cuts of 1.2M barrels a day from Oct 2018 levels that was put into place in Jan 2019. For the week, WTI has gained 2.1%, while Brent is poised for a 2.7% weekly gain.
Oil prices rise to 3-month peak as EIA report shows bigger-than-expected crude drop
This was an unexciting day for stock trading. And that was done on low trading volume. Mon there could be more excitement. The chart below for the Dow shows it's essentially at record level.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
China's Q4 economic growth may have been “the weakest of 2019” — but it still showed an improvement compared to the previous qtr & to the same period a year ago, a business survey showed. Manufacturing & services saw the strongest revenue improvement compared to the the previous qtr, though profit was “muted,” according to research firm China Beige Book's quarterly review of the world's 2nd-largest economy, which was based on a survey of more than 3300 Chinese businesses. 3 important results emerged from the survey. First, there are signs that cash flows have deteriorated quickly. “It is easy to discount a seemingly unceasing trend of worsening cash flow, since it in some ways is a feature of the system. But even by Chinese standards, Q4 late payables and deliverables soared—to the worst levels we’ve recorded,” the report said. Secondly, new orders continue to fall even though companies are reporting higher revenue in Q4. “Demand may not hold up,” the report said, adding that “firms may not yet have understood the message their customers are sending.” Finally, the economy saw record levels of corp borrowing in Q4. “Loan applications nationally shot to an all-time high, while rejections sank to an all-time low,” according to the China Beige Book. “For the first time since 2012 we saw each of our four core sectors—Manufacturing, Retail, Services, and Property—report over 30% of firms borrowing.” The rise in business loans is in part due to the comeback of shadow financing. Shadow banking refers to unregulated lending activities that often present higher risks as they are subject to less regulatory oversight. Beige Book's data showed that the proportion of loans from non-bank lenders have increased to nearly 40% in Q4, compared to 29% in the same period in 2013. China's smaller private firms have contributed to the country's economic growth but traditionally, they have had a more difficult time getting loans than the larger, state-owned corps, leading many to turn to shadow banking. “Firms say shadow bankers are paying little heed to official data refusing to acknowledge their resurgence, accounting for roughly two-fifths of loans for a third straight quarter,” the report showed. “And the bond market appears just as agreeable, with issuance rising for a record sixth straight quarter.” “We’ve shown in the past that the economy is not even credit-constrained, much less starved. That’s now become an understatement,” the China Beige Book added. Other concerns include oversupply & rising wages that could eat into profits. China's manufacturing was “surprisingly solid” despite a protracted trade war with the US, the survey showed. The world's 2 largest economies have been embroiled in a trade dispute that has seen both sides levy additional tariffs on Bs of $s worth of goods from each other.
China’s corporate borrowing soars and cash flows deteriorate, survey shows
China, Russia & Iran are conducting joint naval drills beginning in the Indian Ocean & the Gulf of Oman amid heightened tensions in the region after the Trump administration withdrew the US from a landmark nuclear pact with Tehran. The military exercises, scheduled to continue thru Mon, are intended to “deepen exchange and cooperation between the navies of the three countries,” a Chinese defense ministry spokesman said. He went on to say that the exercise was a “normal military exchange” between the 3 countries & was not “connected to the regional situation.” The Gulf of Oman connects the Arabian Sea with the strategic Strait of Hormuz, thru which about a 5th of the world's oil supply passes, & the Persian Gulf. The US accused Iran of attacking oil tankers in the waterway in May & Jun in an attempt to disrupt global shipping channels. The US ramped up its military presence in the Middle East & sent missile defense systems to Saudi Arabia in the wake of the attacks. Tehran is participating in the joint operation because it would “stabilize security” in the region and bolster the fight against “terrorism and piracy,” said Aboldazl Shekarchi, a brigadier general and spokesman for Iran's armed forces. The US reimposed economic sanctions against Iran in 2018 when Pres Trump withdrew from a nuclear pact the Obama administration had brokered with Tehran & other world powers in 2015.
Iran joins Russia and China in joint naval exercises beginning Friday
Gold settled near a 3-month high, clinching its best weekly gain in 4 months, bolstered by investor caution about how far the record rally for stocks can extend into 2020. Gold for Feb delivery advanced $3.70 (0.2%) at $1518 an ounce, its highest level for the most-active contract since Sep 24 when it closed at $1540. For the week, gold rose 2.5%, its sharpest weekly climb since early Aug. The yellow metal has been gaining partly on the back of upbeat signs from the Sino-American trade war, with the US & China moving toward an apparent partial resolution — a potential positive sign for gold because China represents one of the biggest buyers of precious metals. Gold also has rallied at the same time as US stocks, which today saw all 3 major equity benchmarks hit fresh intraday records. Meanwhile, weakness in the $ also has helped to bolster bullion prices.
Gold settles near 3 month high, posts best week since August
Oil prices tilted higher, trading around a 3-month peak, after a report showed a bigger-than-expected decline in weekly US stores of crude & its byproducts. The Energy Information Administration (EIA) showed that US crude supplies fell by 5.467M barrels last week. The forecast was for a decrease of 3M barrels, although the less closely followed American Petroleum Institute report showed a 7.9M-barrel tumble on Tues. EIA data also showed supply increases of 1.963M barrels for gasoline stocks & a decline of 152K barrels for distillates. West Texas Intermediate crude for Feb delivery, the US benchmark grade, rose 13¢ (0.2%) at $61.81 a barrel, near its highest price since Sep 16. Feb Brent crude, meanwhile, added 30¢ (0.4%) at $68.19 a barrel, following a 1.1% gain in the prior session. That contract expires on Dec 30. The Mar contract, which is currently the most active, was up 15¢ (0.2%) at $66.92. The intl benchmark on Thurs finished at a roughly 3-month high. All that said, market participants also were digesting a report signaling that the group known as OPEC+, including members of the OPEC & allies like Russia, may consider ending a pact to reduce global production next year. Earlier this month, OPEC & its allies agreed to officially cut production by 500K barrels per day on top of its current reduction agreement, beginning in Jan . Those additional reductions were meant to take total output cuts for OPEC+ to 1.7M barrels day, including the current cuts of 1.2M barrels a day from Oct 2018 levels that was put into place in Jan 2019. For the week, WTI has gained 2.1%, while Brent is poised for a 2.7% weekly gain.
Oil prices rise to 3-month peak as EIA report shows bigger-than-expected crude drop
This was an unexciting day for stock trading. And that was done on low trading volume. Mon there could be more excitement. The chart below for the Dow shows it's essentially at record level.
Dow Jones Industrials
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