Dow added 32, advancers were modestly ahead of decliners & NAZ was off 22. The MLP index went up 1+ to the 226s & the REIT index declined 2+ to the 406s. Junk bond funds were mixed & Treasuries rose in price. Oil remained slightly higher (its first advance in 6 sessions) & gold fell 3 to 1547.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Ahead of signing the phase one trade deal, China is signaling to US firms that it is open for business. China's appeal to American companies comes as the country suffers an economy that has been slowing over the past 21 months & businesses moving their supply chains out of the country. It was standing room only in the hotel where the Chinese delegation is staying as business leaders lined up to meet China's vice-premier. The Chinese gov wants JP Morgan (JPM), a Dow stock, to come into China to help set transparency standards and rules, according to CEO Jamie DImon. The communist country is in need of “very good financial markets,” he said. Phase one of the US-China trade agreement will be signed tomorrow & will be “a really good deal for the United States,” according to US trade representative Robert Lighthizer. In terms of intellectual property theft, the US has no illusions about the communist nation’s history of misbehavior, Lighthizer suggested. “We’re tough, hard people, and we expect them to live up to the letter of the law… We’ll bring cases. We’ll bring actions against them if they don’t, but for right now, this is a really, really big agreement—a huge step forward,” Lighthizer added. Despite having a presence in China, large companies like Apple (AAPL), a Dow & NAZ stock, have expanded manufacturing in the US to avoid tariffs, & China hopes to win back this American money. American business leaders are primarily interested in what the Chinese delegation has to say about the industrial sector & general commerce.
The Senate will likely approve the US-Mexico-Canada Agreement this week, Majority Leader Mitch McConnell said. 5 Senate committees are expected to join the Senate Finance Committee in approving the revamped $1.2T North American trade deal, before all 100 senators vote as one body. "We are, it looks like, going to be able to process the USMCA here in the Senate this week," McConnell said on Capitol Hill. "That will be good news for the Senate and for the country and something I think we have broad bipartisan agreement on." McConnell had said before that USMCA consideration would come after an impeachment trial for Pres Trump, but he said today that the trade vote will come before the trial begins next week. Senate approval would send the USMCA to Trump's desk to be signed, the last step before it begins to be implemented. The House voted 385 to 41 to approve it in Dec.
Eli Lilly (LLY) said it plans to sell 2 versions of insulin products at ½ their current US list prices, 8 months after it started selling a ½-priced version of its widely-used Humalog injection. LLY will sell new versions of Humalog Junior KwikPen & Humalog Mix75/25, which contains a mix of fast- & intermediate-acting insulin, at a list price of $265 for a pack of 5 KwikPens. They will be available at that price by mid-Apr. Major insulin makers have been pushing to make the life-sustaining diabetes medicine available for lower costs to counter heavy criticism from lawmakers & patients. People with Type 1 diabetes need insulin to control blood sugar levels & it is also used by some with advanced Type 2 diabetes as well. But its cost in the US nearly doubled from 2012 to 2016, & stories have emerged of patients forced into risky rationing of the medicine due to its cost. LLY has called insulin a highly rebated product, meaning that list price does not reflect the actual cost. Drugmakers often argue they have to keep list prices high because of rebates or discounts they must pay to pharmacy benefit managers & health insurers to get products on their lists of covered drugs. “Real change to our reimbursement system is needed. Insurance coverage should ensure no one with diabetes is forced to ration or skip doses for financial reasons,” Mike Mason, pres of LLY's diabetes unit, said. LLY in May started selling a half-priced version of Humalog called Insulin Lispro. For the week of Dec 30, around 22% of US prescriptions for Humalog were filled with the company's ½-priced version, according to data compiled by retail drug price tracker GoodRx from sources including pharmacies & insurers. The stock went up 1.69.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3289&a_bid=6ae5b6f7
China's $-denominated exports & imports were both higher in Dec, according to its General Administration of Customs. In Dec, $-denominated exports rose 7.6% on-year, against a 1.3% drop in Nov. Dec imports were 16.3% higher than year ago. The forecast called for $-denominated exports to rise 3.2% on-year & imports to rise 9.6% in the same period. Dec trade surplus was $46.79B, against an expected $48B. In Dec China’s trade surplus with the US was $23.2B — down from $24.6B in Nov. China's imports form the US rebounded in Nov & Dec, according to China customs vice minister Zou Zhiwu. In particular, China’s soybean & pork imports from the US significantly rebounded in Dec. Zou added that positive US-China sentiment on trade boosted the confidence of companies in Dec. The data comes as US & China remain in a long-drawn trade war, but there may soon be light at the end of the tunnel. US & China trade representatives are expected to end intense bilateral negotiations with a “phase one” deal tomorrow. The deal potentially promises Bs of $s' worth of agricultural purchases & is likely to mark the beginning of reforms to China's longstanding practice of forced technology transfer. Yesterday, the US removed China from a list of countries considered currency manipulators, the Treasury Dept announced.
China’s dollar-denominated exports and imports beat expectations in December
Gold prices finished lower, suffering their 4th loss in 5 sessions, as upbeat reports from some of the US.'s largest banks, muted signs of inflation & continued progress toward a Sino-American trade pact dulled demand for haven-related assets. Gold for Feb delivery lost $6 (0.4%) to settle at $1544 an ounce. For a 2nd straight session, it marked the lowest finish for a most-active contract since Jan 2. Prices have now posted declines in four out of the last 5 sessions. The consumer-price index rose 0.2% last month, the Labor Dept said. The forecast called for a 0.3% advance. Meanwhile, the increase in the cost of living in the past 12 months rose a few ticks to 2.3%, matching the highest level since Oct 2018. But price pressures more broadly remained largely muted, likely to give the Federal Reserve little cause to lift rates soon. On the trade-negotiation front, China will pledge to buy $200B of US goods over a 2-year period in 4 industries, according to several reports. This includes $75B of manufactured goods, $50B of energy products, $40B of agricultural products, & $40B worth of services. The phase one trade deal is expected to be signed tomorrow in DC.
The Federal Reserve might have to take back the 3 interest-rate cuts engineered last year if trends holding down growth ease, said Kansas City Fed Pres Esther George. “We will need to asses whether the 2019 rate cuts prove to be ‘insurance cuts’ that will need to be reversed if headwinds fade,” George said. The Fed trimmed its benchmark federal funds rates to 1.5-1.75% in 3 qtr-point moves last summer & fall. In her remarks, George said there may be no need for the Fed to reverse course if research shows the new level of the benchmark rate is closer to an equilibrium rate than has been assumed. Most Fed officials believe the benchmark rate is now somewhat accommodative, or bolstering growth. She said it also might be necessary to cut rates further if the economy stumbles. “It could be the case that downside risks and uncertainties persist in a way that keeps investment spending weak and spills over to the consumer, altering the modal outlook and requiring further policy easing,” George added. The Fed needs some time to see what develops, George said. Keeping rates on hold for now is appropriate in my view as we assess the economy’s response to last year’s rate cuts and monitor incoming data,” she said. That is a common refrain from many Fed speakers in the beginning of 2020. The Fed will hold its next interest-rate policy meeting at the end of the month & Fed watchers widely expect the central bank to remain on hold. There has been relatively little talk from Fed officials about taking back “insurance cuts.” For her part, George said she expects the expansion to continue, supported by solid consumer spending. Manufacturing & business spending were likely to remain weak, she added. “The combination of these factors should lead to slower growth in real GDP—our broadest indicator of economic activity—to its longer-run trend of 1.75 to 2%, George said. “”With growth near trend, I would expect the unemployment rate to remain near its current level of 3.5% and inflation to remain benign.”
Last year’s rate cuts may need to be reversed, Fed’s George says
Stocks were weak in the PM. The signing ceremony tomorrow has been well advertised & some traders could be worried about last minute problems. After all, there have been so many in more than one year of negotiations. The USMCA deal also looks good, but has also been plagued by delays for more than a year. Assuming all goes well with the trade deals, there could be a relief rally which would take the Dow over 29K & probably into record territory. The bulls are still optimistic about reaching 30K shortly.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Ahead of signing the phase one trade deal, China is signaling to US firms that it is open for business. China's appeal to American companies comes as the country suffers an economy that has been slowing over the past 21 months & businesses moving their supply chains out of the country. It was standing room only in the hotel where the Chinese delegation is staying as business leaders lined up to meet China's vice-premier. The Chinese gov wants JP Morgan (JPM), a Dow stock, to come into China to help set transparency standards and rules, according to CEO Jamie DImon. The communist country is in need of “very good financial markets,” he said. Phase one of the US-China trade agreement will be signed tomorrow & will be “a really good deal for the United States,” according to US trade representative Robert Lighthizer. In terms of intellectual property theft, the US has no illusions about the communist nation’s history of misbehavior, Lighthizer suggested. “We’re tough, hard people, and we expect them to live up to the letter of the law… We’ll bring cases. We’ll bring actions against them if they don’t, but for right now, this is a really, really big agreement—a huge step forward,” Lighthizer added. Despite having a presence in China, large companies like Apple (AAPL), a Dow & NAZ stock, have expanded manufacturing in the US to avoid tariffs, & China hopes to win back this American money. American business leaders are primarily interested in what the Chinese delegation has to say about the industrial sector & general commerce.
China appeals to US companies ahead of deal, hoping to revamp slow economy
The Senate will likely approve the US-Mexico-Canada Agreement this week, Majority Leader Mitch McConnell said. 5 Senate committees are expected to join the Senate Finance Committee in approving the revamped $1.2T North American trade deal, before all 100 senators vote as one body. "We are, it looks like, going to be able to process the USMCA here in the Senate this week," McConnell said on Capitol Hill. "That will be good news for the Senate and for the country and something I think we have broad bipartisan agreement on." McConnell had said before that USMCA consideration would come after an impeachment trial for Pres Trump, but he said today that the trade vote will come before the trial begins next week. Senate approval would send the USMCA to Trump's desk to be signed, the last step before it begins to be implemented. The House voted 385 to 41 to approve it in Dec.
USMCA trade deal likely to pass Senate this week, McConnell says
Eli Lilly (LLY) said it plans to sell 2 versions of insulin products at ½ their current US list prices, 8 months after it started selling a ½-priced version of its widely-used Humalog injection. LLY will sell new versions of Humalog Junior KwikPen & Humalog Mix75/25, which contains a mix of fast- & intermediate-acting insulin, at a list price of $265 for a pack of 5 KwikPens. They will be available at that price by mid-Apr. Major insulin makers have been pushing to make the life-sustaining diabetes medicine available for lower costs to counter heavy criticism from lawmakers & patients. People with Type 1 diabetes need insulin to control blood sugar levels & it is also used by some with advanced Type 2 diabetes as well. But its cost in the US nearly doubled from 2012 to 2016, & stories have emerged of patients forced into risky rationing of the medicine due to its cost. LLY has called insulin a highly rebated product, meaning that list price does not reflect the actual cost. Drugmakers often argue they have to keep list prices high because of rebates or discounts they must pay to pharmacy benefit managers & health insurers to get products on their lists of covered drugs. “Real change to our reimbursement system is needed. Insurance coverage should ensure no one with diabetes is forced to ration or skip doses for financial reasons,” Mike Mason, pres of LLY's diabetes unit, said. LLY in May started selling a half-priced version of Humalog called Insulin Lispro. For the week of Dec 30, around 22% of US prescriptions for Humalog were filled with the company's ½-priced version, according to data compiled by retail drug price tracker GoodRx from sources including pharmacies & insurers. The stock went up 1.69.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3289&a_bid=6ae5b6f7
Eli Lilly to launch half-priced versions of two more insulin products
China's $-denominated exports & imports were both higher in Dec, according to its General Administration of Customs. In Dec, $-denominated exports rose 7.6% on-year, against a 1.3% drop in Nov. Dec imports were 16.3% higher than year ago. The forecast called for $-denominated exports to rise 3.2% on-year & imports to rise 9.6% in the same period. Dec trade surplus was $46.79B, against an expected $48B. In Dec China’s trade surplus with the US was $23.2B — down from $24.6B in Nov. China's imports form the US rebounded in Nov & Dec, according to China customs vice minister Zou Zhiwu. In particular, China’s soybean & pork imports from the US significantly rebounded in Dec. Zou added that positive US-China sentiment on trade boosted the confidence of companies in Dec. The data comes as US & China remain in a long-drawn trade war, but there may soon be light at the end of the tunnel. US & China trade representatives are expected to end intense bilateral negotiations with a “phase one” deal tomorrow. The deal potentially promises Bs of $s' worth of agricultural purchases & is likely to mark the beginning of reforms to China's longstanding practice of forced technology transfer. Yesterday, the US removed China from a list of countries considered currency manipulators, the Treasury Dept announced.
China’s dollar-denominated exports and imports beat expectations in December
Gold prices finished lower, suffering their 4th loss in 5 sessions, as upbeat reports from some of the US.'s largest banks, muted signs of inflation & continued progress toward a Sino-American trade pact dulled demand for haven-related assets. Gold for Feb delivery lost $6 (0.4%) to settle at $1544 an ounce. For a 2nd straight session, it marked the lowest finish for a most-active contract since Jan 2. Prices have now posted declines in four out of the last 5 sessions. The consumer-price index rose 0.2% last month, the Labor Dept said. The forecast called for a 0.3% advance. Meanwhile, the increase in the cost of living in the past 12 months rose a few ticks to 2.3%, matching the highest level since Oct 2018. But price pressures more broadly remained largely muted, likely to give the Federal Reserve little cause to lift rates soon. On the trade-negotiation front, China will pledge to buy $200B of US goods over a 2-year period in 4 industries, according to several reports. This includes $75B of manufactured goods, $50B of energy products, $40B of agricultural products, & $40B worth of services. The phase one trade deal is expected to be signed tomorrow in DC.
Gold suffers 4th loss in 5 sessions
The Federal Reserve might have to take back the 3 interest-rate cuts engineered last year if trends holding down growth ease, said Kansas City Fed Pres Esther George. “We will need to asses whether the 2019 rate cuts prove to be ‘insurance cuts’ that will need to be reversed if headwinds fade,” George said. The Fed trimmed its benchmark federal funds rates to 1.5-1.75% in 3 qtr-point moves last summer & fall. In her remarks, George said there may be no need for the Fed to reverse course if research shows the new level of the benchmark rate is closer to an equilibrium rate than has been assumed. Most Fed officials believe the benchmark rate is now somewhat accommodative, or bolstering growth. She said it also might be necessary to cut rates further if the economy stumbles. “It could be the case that downside risks and uncertainties persist in a way that keeps investment spending weak and spills over to the consumer, altering the modal outlook and requiring further policy easing,” George added. The Fed needs some time to see what develops, George said. Keeping rates on hold for now is appropriate in my view as we assess the economy’s response to last year’s rate cuts and monitor incoming data,” she said. That is a common refrain from many Fed speakers in the beginning of 2020. The Fed will hold its next interest-rate policy meeting at the end of the month & Fed watchers widely expect the central bank to remain on hold. There has been relatively little talk from Fed officials about taking back “insurance cuts.” For her part, George said she expects the expansion to continue, supported by solid consumer spending. Manufacturing & business spending were likely to remain weak, she added. “The combination of these factors should lead to slower growth in real GDP—our broadest indicator of economic activity—to its longer-run trend of 1.75 to 2%, George said. “”With growth near trend, I would expect the unemployment rate to remain near its current level of 3.5% and inflation to remain benign.”
Last year’s rate cuts may need to be reversed, Fed’s George says
Stocks were weak in the PM. The signing ceremony tomorrow has been well advertised & some traders could be worried about last minute problems. After all, there have been so many in more than one year of negotiations. The USMCA deal also looks good, but has also been plagued by delays for more than a year. Assuming all goes well with the trade deals, there could be a relief rally which would take the Dow over 29K & probably into record territory. The bulls are still optimistic about reaching 30K shortly.
Dow Jones Industrials
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