Dow dropped 152, decliners over advancers 3-2 & NAZ fell 18. The MLP index sank 4+ to the 221s & the REIT index shot up 4+ to the 418s. Junk bond funds did little & Treasuries traded higher. Oil continued lower in the 58s & gold was off 2 to 1557 (more 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 Canadian gov will unveil legislation to ratify the US-Mexico-Canada trade deal on Jan 29, Prime Minister Justin Trudeau said. Speaking to reporters ahead of parliament's return on Mon, Trudeau said Canada would immediately move forward on ratifying the trilateral trade pact (USMCA) with the US & Mexico. "Passing the new NAFTA in parliament is our priority,'' Trudeau said while flanked by members of his cabinet following a 3-day retreat. He noted Ms of Canadians depend on stable, reliable trade. Canada is the last country to ratify the revamp of the 26-year-old North American Free Trade Agreement (NAFTA) that includes tougher rules on labor & automotive content. The deal cannot take effect until it has been ratified by all 3 member nations. Last week, the US Senate overwhelmingly approved the legislation to implement the USMCA on a 89-10 bipartisan vote, sending the measure to Pres Trump for him to sign into law. Trump made the renegotiation of NAFTA a key element of his 2016 presidential election campaign, calling it the ``worst trade deal ever made,'' while blaming it for the loss of thousands of American factory jobs to low-wage Mexico.
Pres Trump said that imposing tariffs on European cars is still on the table as he meets with other world leaders at the World Economic Forum. "We expect to be able to make a deal with Europe, and if they don't make a deal we'll certainly give [tariffs] very strong consideration," Trump added. The US has a trade deficit with Europe & Trump could turn his attention toward a trade deal with the EU very soon. "They know what the deadline is," the pres said in a sideline interview, noting that the date would be public soon. He met with European Commission Pres Ursula von der Leyen as well. The pres has been talking up the issue for months. "I came into a position where the European Union was making anywhere from $100 to $150 billion a year in deficits to the United States. They were making it and we were losing it, and so we had to do something that is fair," Trump said during a meeting with French Pres Emmanuel Macron in Dec. Macron said yesterday that he had a "great discussion" with Trump about France's planned digital tax, which is something Trump has heavily criticized. In addition, Trump has publicly taken aim at Germany, even threatening last year to impose tariffs on foreign cars sold in the US over trade deficits. He has pressured automakers like BMW to build more cars in the US. Execs from Germany's top automakers met with Trump at the White House at the end of 2018.
Boeing BA, a Dow stock, is telling airlines & suppliers that it doesn't expect regulators to sign off on the 737 Max until the middle of 2020, months later than the manufacturer previously expected. The extended delay poses another headache for carriers who have already missed one peak travel season without the fuel-efficient planes. Shares fell after the news was reported. “The agency is following a thorough, deliberate process to verify that all proposed modifications to the Boeing 737 MAX meet the highest certification standards,” the Federal Aviation Administration said. “We continue to work with other safety regulators to review Boeing’s work as the company conducts the required safety assessments and addresses all issues that arise during testing. We have set no timeframe for when the work will be completed.” All US airlines with Maxes in their fleets have pulled the planes from their schedules until early Jun. BA's shift in its forecast is a far cry from the end-of-2019 estimate former CEO Dennis Muilenburg stood by, despite push-back from regulators. BA fired Muilenburg last month & replaced him with longtime board member Dave Calhoun. The change in forecast shows Calhoun is taking a more conservative view of when the planes will return to service. Several separate problems with the plane have been discovered in recent months, including a software issue Ba disclosed last week. But the company hasn't found anything new since since then, according to a leaker. BA said it was basing the updated timeline on its previous experience with the certification process. “It is subject to our ongoing attempts to address known schedule risks and further developments that may arise in connection with the certification process,” the company said. The revised timeframe also accounts for the “rigorous scrutiny that regulatory authorities are rightly applying at every step of their review of the 737 Max's flight control system” as well as the additional pilot training that will be needed. The company said returning the Max to service is its #1 priority. “We acknowledge and regret the continued difficulties that the grounding of the 737 MAX has presented to our customers, our regulators, our suppliers, and the flying public,” BA said. It will provide investors with more information when it reports earnings next week, the company added. The stock tumbled 10.78 to the 313s (around 2+ year lows).
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
Homebuilding took a sharp turn higher to end 2019, but it is far from enough to satisfy the current demand. The US housing market is short nearly 4M homes, according to realtor.com. Analyzing US census data, the report showed that the 5.9M single-family homes built in 2012-2019 do not offset the 9.8M new households formed during that time. Even with an above average pace of construction, it would take builders 4-5 years to get back to a balanced market. The shortfall today can be blamed on the epic housing crash of more than a decade ago, brought on by irrational & unscrupulous mortgage lending. With loans available to even the riskiest buyers, builders responded by putting up 1.7M single-family homes at the peak of the construction boom in 2005, according to the US census. That was about 5M more than the 20-year average. When the lion's share of those bad mortgages defaulted, & Ms of homes went into foreclosure, home construction plummeted, landing at just 430 starts by 2011. In addition, about 5M homes were bought by investors & turned into rentals during & after the crisis, further lowering for-sale inventory. Builders crawled back after that, focusing on mostly higher-end homes, where the margins are more attractive. But lower mortgage rates & the aging millennial population have ignited demand in the last few years, & while builders put up 888K homes in 2019, it was still not enough.
Housing market falling short by nearly 4 million homes as demand grows
Italy & Britain will face US tariffs if they proceed with a tax on digital companies such as Alphabet (GOOG) & Facebook (FB), Treasury Secretary Steve Mnuchin warned. Mnuchin issued the warning after France agreed to delay the imposition of its own digital tax in the face of threats of steep US tariffs on French exports. Mnuchin said French Pres Emmanuel Macron agreed to hold off on the tax through the end of the year while the 2 countries work out a permanent resolution. The truce is “the beginning of a solution,” Mnuchin said on the sidelines of the World Economic Forum. France announced the tax last year as a way of collecting revenue from web-based companies that pay little or no tax on substantial sales in France. Italy's parliament passed a similar tax last year that was set to take effect this year. Britain is scheduled to implement a similar tax this year. Mnuchin said the US was clear it thought France's digital tax was an unfair levy on gross revenue & hoped Britain & Italy would suspend their plans. “If not they’ll find themselves faced with President Trump’s tariffs. We’ll be having similar conversations with them.” Countries working thru the Organization for Economic Cooperation & Development recently arrived at a plan for apportioning taxes paid by multinational companies on activity that spans borders & isn't easily captured by existing income tax schemes, including digital activity. The US has signaled it objects to the plan but supports a mechanism to resolve global tax disputes that would give multinational companies a safe harbor. With a “phase one” trade deal with China in place, Mnuchin also said phase 2 wouldn't necessarily be a “big bang” that removes all existing tariffs. “We may do 2A and some of the tariffs come off. We can do this sequentially along the way.” In addition, Mnuchin said the US would run annual deficits of about $1T for the next 2 years, because of some provisions of the tax cut such as expensing of investment, & increased gov spending agreed to as part of an agreement with congressional Dems. But “I’ll stick with my projections that the tax deal will pay for itself,” he said.
Gold futures ended lower, pressured as China, one of the commodity's biggest buyers, faced a viral outbreak that could hurt buying of physical gold at a peak holiday period. Prices for the gold, however, pared some of their earlier losses as the US Centers for Disease Control & Prevention was expected to announced the first US case of Wuhan coronavirus. Some analysts have said that the spread of the disease would support haven buying in the precious metal. Gold for Feb delivery fell $2.40 (about 0.2%) to settle at $1557 an ounce, off the session's low of $1546. According to reports, 6 people have died & 291 have been infected by the virus in China, the National Health Commission said today. A number of countries have already adopted screening measures for travelers from China, especially those arriving from Wuhan, due to concerns about a global outbreak similar to SARS, another coronavirus that spread from China to more than a dozen countries in 2002-2003,
The coronavirus scare has become a major worry for investors. Adding to that worry are the troubles at BA which could be big enough to impact GDP growth. However the popular stock averages are just under record levels & optimism by investors is high.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The Canadian gov will unveil legislation to ratify the US-Mexico-Canada trade deal on Jan 29, Prime Minister Justin Trudeau said. Speaking to reporters ahead of parliament's return on Mon, Trudeau said Canada would immediately move forward on ratifying the trilateral trade pact (USMCA) with the US & Mexico. "Passing the new NAFTA in parliament is our priority,'' Trudeau said while flanked by members of his cabinet following a 3-day retreat. He noted Ms of Canadians depend on stable, reliable trade. Canada is the last country to ratify the revamp of the 26-year-old North American Free Trade Agreement (NAFTA) that includes tougher rules on labor & automotive content. The deal cannot take effect until it has been ratified by all 3 member nations. Last week, the US Senate overwhelmingly approved the legislation to implement the USMCA on a 89-10 bipartisan vote, sending the measure to Pres Trump for him to sign into law. Trump made the renegotiation of NAFTA a key element of his 2016 presidential election campaign, calling it the ``worst trade deal ever made,'' while blaming it for the loss of thousands of American factory jobs to low-wage Mexico.
Canada to unveil legislation to ratify USMCA deal on Jan. 29: Trudeau
Pres Trump said that imposing tariffs on European cars is still on the table as he meets with other world leaders at the World Economic Forum. "We expect to be able to make a deal with Europe, and if they don't make a deal we'll certainly give [tariffs] very strong consideration," Trump added. The US has a trade deficit with Europe & Trump could turn his attention toward a trade deal with the EU very soon. "They know what the deadline is," the pres said in a sideline interview, noting that the date would be public soon. He met with European Commission Pres Ursula von der Leyen as well. The pres has been talking up the issue for months. "I came into a position where the European Union was making anywhere from $100 to $150 billion a year in deficits to the United States. They were making it and we were losing it, and so we had to do something that is fair," Trump said during a meeting with French Pres Emmanuel Macron in Dec. Macron said yesterday that he had a "great discussion" with Trump about France's planned digital tax, which is something Trump has heavily criticized. In addition, Trump has publicly taken aim at Germany, even threatening last year to impose tariffs on foreign cars sold in the US over trade deficits. He has pressured automakers like BMW to build more cars in the US. Execs from Germany's top automakers met with Trump at the White House at the end of 2018.
Trump says tariffs on European cars are still on the table
Boeing BA, a Dow stock, is telling airlines & suppliers that it doesn't expect regulators to sign off on the 737 Max until the middle of 2020, months later than the manufacturer previously expected. The extended delay poses another headache for carriers who have already missed one peak travel season without the fuel-efficient planes. Shares fell after the news was reported. “The agency is following a thorough, deliberate process to verify that all proposed modifications to the Boeing 737 MAX meet the highest certification standards,” the Federal Aviation Administration said. “We continue to work with other safety regulators to review Boeing’s work as the company conducts the required safety assessments and addresses all issues that arise during testing. We have set no timeframe for when the work will be completed.” All US airlines with Maxes in their fleets have pulled the planes from their schedules until early Jun. BA's shift in its forecast is a far cry from the end-of-2019 estimate former CEO Dennis Muilenburg stood by, despite push-back from regulators. BA fired Muilenburg last month & replaced him with longtime board member Dave Calhoun. The change in forecast shows Calhoun is taking a more conservative view of when the planes will return to service. Several separate problems with the plane have been discovered in recent months, including a software issue Ba disclosed last week. But the company hasn't found anything new since since then, according to a leaker. BA said it was basing the updated timeline on its previous experience with the certification process. “It is subject to our ongoing attempts to address known schedule risks and further developments that may arise in connection with the certification process,” the company said. The revised timeframe also accounts for the “rigorous scrutiny that regulatory authorities are rightly applying at every step of their review of the 737 Max's flight control system” as well as the additional pilot training that will be needed. The company said returning the Max to service is its #1 priority. “We acknowledge and regret the continued difficulties that the grounding of the 737 MAX has presented to our customers, our regulators, our suppliers, and the flying public,” BA said. It will provide investors with more information when it reports earnings next week, the company added. The stock tumbled 10.78 to the 313s (around 2+ year lows).
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
Boeing doesn’t expect regulators to sign off on 737 Max until mid-2020
Homebuilding took a sharp turn higher to end 2019, but it is far from enough to satisfy the current demand. The US housing market is short nearly 4M homes, according to realtor.com. Analyzing US census data, the report showed that the 5.9M single-family homes built in 2012-2019 do not offset the 9.8M new households formed during that time. Even with an above average pace of construction, it would take builders 4-5 years to get back to a balanced market. The shortfall today can be blamed on the epic housing crash of more than a decade ago, brought on by irrational & unscrupulous mortgage lending. With loans available to even the riskiest buyers, builders responded by putting up 1.7M single-family homes at the peak of the construction boom in 2005, according to the US census. That was about 5M more than the 20-year average. When the lion's share of those bad mortgages defaulted, & Ms of homes went into foreclosure, home construction plummeted, landing at just 430 starts by 2011. In addition, about 5M homes were bought by investors & turned into rentals during & after the crisis, further lowering for-sale inventory. Builders crawled back after that, focusing on mostly higher-end homes, where the margins are more attractive. But lower mortgage rates & the aging millennial population have ignited demand in the last few years, & while builders put up 888K homes in 2019, it was still not enough.
Housing market falling short by nearly 4 million homes as demand grows
Italy & Britain will face US tariffs if they proceed with a tax on digital companies such as Alphabet (GOOG) & Facebook (FB), Treasury Secretary Steve Mnuchin warned. Mnuchin issued the warning after France agreed to delay the imposition of its own digital tax in the face of threats of steep US tariffs on French exports. Mnuchin said French Pres Emmanuel Macron agreed to hold off on the tax through the end of the year while the 2 countries work out a permanent resolution. The truce is “the beginning of a solution,” Mnuchin said on the sidelines of the World Economic Forum. France announced the tax last year as a way of collecting revenue from web-based companies that pay little or no tax on substantial sales in France. Italy's parliament passed a similar tax last year that was set to take effect this year. Britain is scheduled to implement a similar tax this year. Mnuchin said the US was clear it thought France's digital tax was an unfair levy on gross revenue & hoped Britain & Italy would suspend their plans. “If not they’ll find themselves faced with President Trump’s tariffs. We’ll be having similar conversations with them.” Countries working thru the Organization for Economic Cooperation & Development recently arrived at a plan for apportioning taxes paid by multinational companies on activity that spans borders & isn't easily captured by existing income tax schemes, including digital activity. The US has signaled it objects to the plan but supports a mechanism to resolve global tax disputes that would give multinational companies a safe harbor. With a “phase one” trade deal with China in place, Mnuchin also said phase 2 wouldn't necessarily be a “big bang” that removes all existing tariffs. “We may do 2A and some of the tariffs come off. We can do this sequentially along the way.” In addition, Mnuchin said the US would run annual deficits of about $1T for the next 2 years, because of some provisions of the tax cut such as expensing of investment, & increased gov spending agreed to as part of an agreement with congressional Dems. But “I’ll stick with my projections that the tax deal will pay for itself,” he said.
Mnuchin warns U.K., Italy on digital tax plans
Gold futures ended lower, pressured as China, one of the commodity's biggest buyers, faced a viral outbreak that could hurt buying of physical gold at a peak holiday period. Prices for the gold, however, pared some of their earlier losses as the US Centers for Disease Control & Prevention was expected to announced the first US case of Wuhan coronavirus. Some analysts have said that the spread of the disease would support haven buying in the precious metal. Gold for Feb delivery fell $2.40 (about 0.2%) to settle at $1557 an ounce, off the session's low of $1546. According to reports, 6 people have died & 291 have been infected by the virus in China, the National Health Commission said today. A number of countries have already adopted screening measures for travelers from China, especially those arriving from Wuhan, due to concerns about a global outbreak similar to SARS, another coronavirus that spread from China to more than a dozen countries in 2002-2003,
Gold prices end lower as coronavirus threatens China buying
The coronavirus scare has become a major worry for investors. Adding to that worry are the troubles at BA which could be big enough to impact GDP growth. However the popular stock averages are just under record levels & optimism by investors is high.
Dow Jones Industrials
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