Dow fell 119, decliners modestly ahead of advancers & NAZ lost 2. The MLP index was up 1 to the 226s & the REIT index fell 5 to the 398s. Junk bond funds crawled higher & Treasuries were sold. Oil was lower in the 62s & gold added 2 to 1571 (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 US & France gave themselves 2 weeks to find a compromise on the taxation of digital services in hopes of avoiding an all-out trade war. Both countries have been at odds over a French law, passed over the summer, that imposes a 3% tax on digital revenue generated by large tech companies. Although French Pres Macron has argued the law is necessary to prevent tech companies from avoiding taxes, the Trump administration has said it unfairly targets American companies & threatened to retaliate with $2.4B in tariffs on French products. The tax hits companies that are worth at least €750M ($834M ) globally & €25M in France. It will be retroactively applied from early 2019 & could generate up to €400M per year, according to the French gov. “We have given ourselves 15 days until our next meeting on the margins of the Davos summit at the end of January,” French Finance Minister Bruno Le Maire said in Paris. The French minister told reporters that he spoke with Treasury Secretary Steve Mnuchin over the phone & said they agreed to seek a compromise about digital taxation that fell within the parameters of the Organization for Economic Co-operation & Development (OECD). Le Maire & Mnuchin will meet at the World Economic Forum in Davos, Switzerland, which takes place Jan 21-24, at the end of the self-imposed 15-day deadline. If the 2 countries are unable to reach an agreement, the US has vowed to hit France with tariffs as high as 100%, targeting sparkling wine, cheese & makeup. The EU has said it would respond with its own tariffs if DC follows thru. Separately, the OECD has been working toward overhauling the global tax system, including proposing a rule that would give countries the ability to tax digital companies based on sales, rather than physical presence. The rules would apply to companies with annual revenues of more than $830M in “consumer-facing industries,” which includes big tech companies & other firms that sell services & goods to consumers.
US factory orders fell 0.7% in Nov to mark the 3rd decline in 4 months, the Commerce Dept said. The forecast called for a 0.8% drop. Durable-goods orders were revised to show a 2.1% decline instead of 2% & orders for nondurable goods rose 0.6% in the month. The closely watched index of non-defense orders excluding aircraft was revised up to a 0.2% gain from the initial estimate of 0.1%.
Gold futures marked a 10th straight climb, the longest streak of gains in 2 years, with prices at their highest finish since 2013. Haven demand for the metal boosted prices as investors weighed the prospects for further escalation in Mideast tensions. Feb gold added $5.50 (0.4%) to settle at $1574 an ounce, after settling up 1.1% yesterday. Prices for the most-active contract marked the highest settlement 2013 for a 2nd straight session. Gold stretched its streak of consecutive gains to 10 sessions, representing its longest period of gains since the 11 days of wins booked from Dec 2017 to Jan 2018. Gold & haven assets have received bids after the killing of a top Iranian military commander, Qassem Soleimani, last week, which has reverberated thru financial markets, momentarily upending appetite for assets considered risky & boosting traditional haven assets like gold. Investors also said technical factors could determine the next phase for gold, which already has enjoyed a strong move, even before the Middle East tensions flared up.
Oil prices settled lower, pulling back after gains in the last 3 sessions lifted prices to multimonth highs, with fears of a crude supply disruption in the Middle East following the US killing an Iranian general last week momentarily subsiding. Against that backdrop, West Texas Intermediate crude for Feb delivery fell 57¢ (0.9%) to settle at $62.70 a barrel after prices yesterday posted the highest settlement for the most-active contract since May 1. Mar Brent crude shed 64¢ (0.9%) to $68.27 a barrel, a day after the contract settled at its highest since Sep 16. Despite today's retreat, WTI crude trades about 2.7% higher & Brent trades more than 3% higher, since the start of the month & worries that Mideast tensions could eventually flare up. The US, including the Dept of Homeland Security & the Maritime Administration, have issued warnings about potential threats against websites & American vessels in the Persian Gulf in the wake of the airstrike in Iraq that killed Soleimani on Fri. It was reported that US forces in the Middle East were placed on high alert overnight yesterday to possibly shoot down Iranian drones amid threats of an imminent attack on US targets. Javad Zarif, Iran's foreign minister, said the US would be dealt with “at a time and place of Iran’s choosing.”
Oil prices register first loss in 4 sessions as worries about the Mideast ease
The Dow remained down about 100 for most of the day while NAZ hovered near breakeven. Tensions surrounding Iran are not causing significant selling of stocks, although gold is attracting more investor interest. Macro economic data is being reported & it has been considered mostly neutral.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US & France gave themselves 2 weeks to find a compromise on the taxation of digital services in hopes of avoiding an all-out trade war. Both countries have been at odds over a French law, passed over the summer, that imposes a 3% tax on digital revenue generated by large tech companies. Although French Pres Macron has argued the law is necessary to prevent tech companies from avoiding taxes, the Trump administration has said it unfairly targets American companies & threatened to retaliate with $2.4B in tariffs on French products. The tax hits companies that are worth at least €750M ($834M ) globally & €25M in France. It will be retroactively applied from early 2019 & could generate up to €400M per year, according to the French gov. “We have given ourselves 15 days until our next meeting on the margins of the Davos summit at the end of January,” French Finance Minister Bruno Le Maire said in Paris. The French minister told reporters that he spoke with Treasury Secretary Steve Mnuchin over the phone & said they agreed to seek a compromise about digital taxation that fell within the parameters of the Organization for Economic Co-operation & Development (OECD). Le Maire & Mnuchin will meet at the World Economic Forum in Davos, Switzerland, which takes place Jan 21-24, at the end of the self-imposed 15-day deadline. If the 2 countries are unable to reach an agreement, the US has vowed to hit France with tariffs as high as 100%, targeting sparkling wine, cheese & makeup. The EU has said it would respond with its own tariffs if DC follows thru. Separately, the OECD has been working toward overhauling the global tax system, including proposing a rule that would give countries the ability to tax digital companies based on sales, rather than physical presence. The rules would apply to companies with annual revenues of more than $830M in “consumer-facing industries,” which includes big tech companies & other firms that sell services & goods to consumers.
US, France set deadline to avoid all-out trade war
US factory orders fell 0.7% in Nov to mark the 3rd decline in 4 months, the Commerce Dept said. The forecast called for a 0.8% drop. Durable-goods orders were revised to show a 2.1% decline instead of 2% & orders for nondurable goods rose 0.6% in the month. The closely watched index of non-defense orders excluding aircraft was revised up to a 0.2% gain from the initial estimate of 0.1%.
U.S. factory orders fall 0.7% in November, 3rd drop in 4 months
Gold futures marked a 10th straight climb, the longest streak of gains in 2 years, with prices at their highest finish since 2013. Haven demand for the metal boosted prices as investors weighed the prospects for further escalation in Mideast tensions. Feb gold added $5.50 (0.4%) to settle at $1574 an ounce, after settling up 1.1% yesterday. Prices for the most-active contract marked the highest settlement 2013 for a 2nd straight session. Gold stretched its streak of consecutive gains to 10 sessions, representing its longest period of gains since the 11 days of wins booked from Dec 2017 to Jan 2018. Gold & haven assets have received bids after the killing of a top Iranian military commander, Qassem Soleimani, last week, which has reverberated thru financial markets, momentarily upending appetite for assets considered risky & boosting traditional haven assets like gold. Investors also said technical factors could determine the next phase for gold, which already has enjoyed a strong move, even before the Middle East tensions flared up.
Gold scores strongest streak of gains in 2 years
Oil prices settled lower, pulling back after gains in the last 3 sessions lifted prices to multimonth highs, with fears of a crude supply disruption in the Middle East following the US killing an Iranian general last week momentarily subsiding. Against that backdrop, West Texas Intermediate crude for Feb delivery fell 57¢ (0.9%) to settle at $62.70 a barrel after prices yesterday posted the highest settlement for the most-active contract since May 1. Mar Brent crude shed 64¢ (0.9%) to $68.27 a barrel, a day after the contract settled at its highest since Sep 16. Despite today's retreat, WTI crude trades about 2.7% higher & Brent trades more than 3% higher, since the start of the month & worries that Mideast tensions could eventually flare up. The US, including the Dept of Homeland Security & the Maritime Administration, have issued warnings about potential threats against websites & American vessels in the Persian Gulf in the wake of the airstrike in Iraq that killed Soleimani on Fri. It was reported that US forces in the Middle East were placed on high alert overnight yesterday to possibly shoot down Iranian drones amid threats of an imminent attack on US targets. Javad Zarif, Iran's foreign minister, said the US would be dealt with “at a time and place of Iran’s choosing.”
Oil prices register first loss in 4 sessions as worries about the Mideast ease
The Dow remained down about 100 for most of the day while NAZ hovered near breakeven. Tensions surrounding Iran are not causing significant selling of stocks, although gold is attracting more investor interest. Macro economic data is being reported & it has been considered mostly neutral.
Dow Jones Industrials
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