Dow dropped 118, decliners over advancers about 2-1 & NAZ was off 8. The MLP index was flattish at 217 & the REIT index recovered 2+ to the 417s. Junk bond funds did little & Treasuries were bid higher. Oil sank another 1+ to the 54s (7 week low) of a forecast for lower supplies & gold went up 5 to 1561.
AMJ (Alerian MLP Index tracking fund)
US equity markets fell as Beijing moved to stop the spread of the coronavirus & earnings season rolled on. All 3 major averages were trading lower, but remained just off their record highs. Overnight, China locked down 3 cities to try & contain the coronavirus, which has killed 17 people & sickened more than 500. Biotechnology companies with flu treatments gained. Commodities were broadly lower, with West Texas Intermediate crude oil down 2.7% at $55.19 a barrel & gold lower by a tad near $1555. Treasurie rallied, pushing the yield on the 10-year note down 3.3 basis points to 1.738%. In Europe, Germany's DAX was down 0.6% while Britain's FTSE & France's CAC shed 0.4% & 0.3%, respectively. Overnight, China’s Shanghai Composite was hit hard as authorities attempted to stop the spread of the coronavirus ahead of the Lunar New Year. Elsewhere in Asia, Hong Kong's Hang Seng & Japan's Nikkei fell 1.5% & 1%, respectively.
Hotel chains based in the US & UK are reacting to Wuhan virus fears by waiving fees for guests who change or cancel reservations at Chinese locations. Chicago-based Hyatt Hotels said today it will waive cancellation fees for guests set to stay in areas most likely to be affected by the coronavirus outbreak that has claimed 17 lives. The company has around 100 locations in the Greater China region. London-based Intercontinental Hotels will do the same for customers staying in mainland China, Hong Kong, Macau & Taiwan between Jan 23 & Feb 3, the company confirmed. "We will keep monitoring the situation closely, actively respond to and strictly follow respective regulations, and continue to prioritize the health and well being of our guests and employees," IHG said. China decided today to lock down 3 cities that are home to more than 18M people in an unprecedented effort to try to contain a deadly new viral illness that has sickened hundreds & spread to other cities & countries in the Lunar New Year travel rush. Chinese state television puts the number of coronavirus cases at 634 as of today.
Commerce Secretary Wilbur says a trade deal with Europe, which Pres Trump has long accused of treating the US unfairly in international trade, is possible in 2020. “They have the desire to make a deal with us,” Ross said at the World Economic Forum. ”Frankly, I’ve seen a little bit of a sense of panic among some of the Europeans because they know that with us solidifying both the USMCA and China phase one, we're in a much stronger negotiating position then we’ve ever been.” The Senate's signoff this month on the USMCA, Trump's overhaul of the Clinton-era North American Free Trade Agreement, followed House approval in Dec after months of negotiations by Dems. The deal, combined with Trump's signing of an initial trade pact with Beijing, drove US stock markets to new highs, & the pres says he now has leeway to focus on Europe. "I didn't want to do China and Europe at the same," Trump said a day earlier. While Europe has been difficult to negotiate with, he added, reaching an agreement will ultimately be "very easy because if we can't make a deal, we'll have to put at 25 percent tariffs on the cars, 20 or 25 percent." It's not the first time the Trump administration has dangled the threat of double-digit tariffs on European automobiles to pressure the trading bloc into making a deal, despite backlash from both automakers & gov officials in states where they build cars. The European companies, in particular, rely on shipments of parts from their home bases to the US to build cars that are sold here.
Railroad operator Union Pacific Corp (UNP) reported a lower-than-expected quarterly profit, as freight volumes of agricultural products and energy shipments fell. Last year, the company cut capital spending & jobs, as the US-China trade war worsened the industry-wide slump in freight volumes. US trade policies & softness in the domestic auto & industrial sectors have also hit freight volumes. Operating ratio, a measure of operating expenses as a percentage of revenue & a key metric analysts, fell 1.9 points to 59.7% in Q4 ended Dec 31, from a year earlier. A lower ratio means higher profitability for railroads. Quarterly EPS fell to $2.02 from $2.12 a year earlier. Total operating revenue fell 9.5% to $5.21B. Analysts expected EPS of $2.04 on revenue of $5.22B. The stock rose 5.09.
club.ino.com/trend/analysis/stock/UNP?a_aid=CD3289&a_bid=6ae5b6f7
Stocks are taking another breather. Earnings are starting to come in but more attention is paid to the virus scare in China. Considering the Dow's advance shown in the chart below, a rest is in order.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 54.92 | -1.82 | -3.2% |
| GC=F | Gold | 1,563.60 | +6.90 | +0.4% |
US equity markets fell as Beijing moved to stop the spread of the coronavirus & earnings season rolled on. All 3 major averages were trading lower, but remained just off their record highs. Overnight, China locked down 3 cities to try & contain the coronavirus, which has killed 17 people & sickened more than 500. Biotechnology companies with flu treatments gained. Commodities were broadly lower, with West Texas Intermediate crude oil down 2.7% at $55.19 a barrel & gold lower by a tad near $1555. Treasurie rallied, pushing the yield on the 10-year note down 3.3 basis points to 1.738%. In Europe, Germany's DAX was down 0.6% while Britain's FTSE & France's CAC shed 0.4% & 0.3%, respectively. Overnight, China’s Shanghai Composite was hit hard as authorities attempted to stop the spread of the coronavirus ahead of the Lunar New Year. Elsewhere in Asia, Hong Kong's Hang Seng & Japan's Nikkei fell 1.5% & 1%, respectively.
Stocks slump as coronavirus spreads, earnings roll on
Hotel chains based in the US & UK are reacting to Wuhan virus fears by waiving fees for guests who change or cancel reservations at Chinese locations. Chicago-based Hyatt Hotels said today it will waive cancellation fees for guests set to stay in areas most likely to be affected by the coronavirus outbreak that has claimed 17 lives. The company has around 100 locations in the Greater China region. London-based Intercontinental Hotels will do the same for customers staying in mainland China, Hong Kong, Macau & Taiwan between Jan 23 & Feb 3, the company confirmed. "We will keep monitoring the situation closely, actively respond to and strictly follow respective regulations, and continue to prioritize the health and well being of our guests and employees," IHG said. China decided today to lock down 3 cities that are home to more than 18M people in an unprecedented effort to try to contain a deadly new viral illness that has sickened hundreds & spread to other cities & countries in the Lunar New Year travel rush. Chinese state television puts the number of coronavirus cases at 634 as of today.
Coronavirus hysteria hits US, international hotel chains
Commerce Secretary Wilbur says a trade deal with Europe, which Pres Trump has long accused of treating the US unfairly in international trade, is possible in 2020. “They have the desire to make a deal with us,” Ross said at the World Economic Forum. ”Frankly, I’ve seen a little bit of a sense of panic among some of the Europeans because they know that with us solidifying both the USMCA and China phase one, we're in a much stronger negotiating position then we’ve ever been.” The Senate's signoff this month on the USMCA, Trump's overhaul of the Clinton-era North American Free Trade Agreement, followed House approval in Dec after months of negotiations by Dems. The deal, combined with Trump's signing of an initial trade pact with Beijing, drove US stock markets to new highs, & the pres says he now has leeway to focus on Europe. "I didn't want to do China and Europe at the same," Trump said a day earlier. While Europe has been difficult to negotiate with, he added, reaching an agreement will ultimately be "very easy because if we can't make a deal, we'll have to put at 25 percent tariffs on the cars, 20 or 25 percent." It's not the first time the Trump administration has dangled the threat of double-digit tariffs on European automobiles to pressure the trading bloc into making a deal, despite backlash from both automakers & gov officials in states where they build cars. The European companies, in particular, rely on shipments of parts from their home bases to the US to build cars that are sold here.
Europe has 'sense of panic' over securing US trade deal: Wilbur Ross
Railroad operator Union Pacific Corp (UNP) reported a lower-than-expected quarterly profit, as freight volumes of agricultural products and energy shipments fell. Last year, the company cut capital spending & jobs, as the US-China trade war worsened the industry-wide slump in freight volumes. US trade policies & softness in the domestic auto & industrial sectors have also hit freight volumes. Operating ratio, a measure of operating expenses as a percentage of revenue & a key metric analysts, fell 1.9 points to 59.7% in Q4 ended Dec 31, from a year earlier. A lower ratio means higher profitability for railroads. Quarterly EPS fell to $2.02 from $2.12 a year earlier. Total operating revenue fell 9.5% to $5.21B. Analysts expected EPS of $2.04 on revenue of $5.22B. The stock rose 5.09.
club.ino.com/trend/analysis/stock/UNP?a_aid=CD3289&a_bid=6ae5b6f7
Trade war weighs on railroad operator Union Pacific
Stocks are taking another breather. Earnings are starting to come in but more attention is paid to the virus scare in China. Considering the Dow's advance shown in the chart below, a rest is in order.
Dow Jones Industrials
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