Dow sank 453 to session lows, decliners over advancers 3-1 & NAZ dropped 175. The MLP index fell 3+ to 211 & the REIT index was off 1+ to the 416s (still near record territory). Junk bond funds slid lower & Treasuries continued in heavy demand. Oil was off 1+ to go under 53 & gold rose 8 to 1580, a 6 year high (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)
US sales of newly built homes fell 0.4% in Dec, cooling slightly after low mortgage rates fueled gains for much of 2019. The Commerce Dept said that new single-family houses sold at a seasonally adjusted annual rate of 694K last month. But for all of 2019, sales climbed 10.3% to 681K, the highest total since 2006 when 1.05M new homes were sold amid a housing bubble that led to the last recession. Last year's gains were driven entirely by new homes purchased in the South & West. Sales of new homes slumped in the Northeast & Midwest in 2019. Lower mortgage rates began to boost real estate sales relative to 2018. Dec's median new-home sales price was $331K, up 0.5% from a year ago.
Canada's minority Liberal gov kicked off the ratification process for a new continental trade pact today & urged opposition lawmakers to formally approve the deal as quickly as possible. Canada is the only country still to ratify the trilateral US-Mexico-Canada Agreement (USMCA), which updates the 25-year-old North American Free Trade Agreement. Deputy Prime Minister Chrystia Freeland, who led Canada's negotiating team, urged lawmakers to set partisanship aside. The Liberals do not control the House of Commons & must rely on opposition legislators to govern. "The ball is in their court,'' Freeland told reporters after formally giving notice the gov would be introducing the necessary legislation today. "I am calling on all members of Parliament to support the agreement and to support its entry into force without undue delay,'' she said. Pres Trump is expected to sign the new trade deal into law on Wed. Trump made the renegotiation of NAFTA a key element of his 2016 presidential election campaign. Canada's main opposition Conservative Party has expressed a determination to examine what it calls potentially worrying aspects of the deal, but also says it has no intention of dragging the process out. Business & industry groups want the Trudeau gov to ratify the trade pact as quickly as possible to alleviate economic uncertainty. Free trade is critical to the economies of Canada & Mexico, which both send around 75% of goods to their much larger neighbor. "It is crucial for businesses that this agreement is ratified in an expeditious manner,'' the Canadian Chamber of Commerce said.
Oil dropped to its lowest level since Oct, as fears over a potential slowdown in crude demand, sparked by the coronavirus outbreak, continued to pressure prices. West Texas Intermediate crude fell 1.9%, or $1.05, to settle at $53.14 per barrel, for the 5th straight session of losses, & the lowest closing price since Oct 15. At its low, WTI dipped more than 3% to hit $52.13, a price not seen since Oct 10. The contract is coming off its 3rd straight week of losses & worst week since Jul & is now trading in bear market territory after falling more than 20% from its recent Apr high of $66.60. Intl benchmark Brent crude fell 2.5% ($1.53) to $59.16. It's also coming off its 3rd straight week of losses & its worst week since Dec 2018. The flu-like coronavirus, first identified on Dec 31 in the Chinese city of Wuhan, has now killed 82 people, according to Chinese officials, with at least 2900 confirmed cases worldwide. The virus has spread to 10 additional countries, including South Korea, Japan & the US, where the 5th case was confirmed yesterday. A slowdown in China’s economy would hit oil demand since the nation is the world's largest crude oil importer —importing a record 10.12M barrels per day in 2019 — & the world's 2nd-largest oil consumer, according to data from the General Administration of Customs. Yesterday Saudi Arabia's energy minister Prince Abdulaziz bin Salman said that OPEC+ would step in to bolster prices if needed, while noting that the sell-off was “primarily driven by psychological factors and extremely negative market expectations adopted by some market participants despite (the virus’) very limited impact on global oil demand.” But his comments did little to assuage fears as prices continued to move lower today.
Oil tumbles into bear market, hits more than 3-month low on fears coronavirus will slow global growth
Gold prices tallied their highest finish in more than 6 years, as fears of the economic impact of a fast-moving viral outbreak hurt appetite for stocks & powered buying in assets perceived as havens. The coronavirus, which reportedly originated in Wuhan City, China, has infected nearly 3000 & killed at least 80, prompting Beijing to extend the annual Lunar New Year holiday by 2 days to Feb 2 to contain the disease, according to reports. In the US, the number of domestic cases hit 5, according to Centers for Disease Control & Prevention. Gold for Feb delivery gained $5.50 (0.4%) to settle at $1577 an ounce, after hitting an intraday high at $1588. It settled with a weekly gain of 0.7% on Fri. The precious metal finished today at the highest for a most-active futures contract since Apr 2013. US stocks, with the Dow & S&P 500 trading lower, supporting gains for the precious metal & bond prices, with the 10-year Treasury note yield, that moves in the opposite direction of bond prices, down at 1.608% from 1.68% late Fri.
Gold logs highest finish in over 6 years as China virus fears fuel market unease
There was heavy selling of stocks at the opening & that pressure remained for the rest of the trading session. The Dow finished at session lows & today's drop is clearly visible on the 1 year chart below. The goings on did not seem to affect traders, but the virus has. Canada needs to approve the USMCA deal & traders will watching that story this week. The Dow is still 800 below its recent record, some consolation for the bulls.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
US sales of newly built homes fell 0.4% in Dec, cooling slightly after low mortgage rates fueled gains for much of 2019. The Commerce Dept said that new single-family houses sold at a seasonally adjusted annual rate of 694K last month. But for all of 2019, sales climbed 10.3% to 681K, the highest total since 2006 when 1.05M new homes were sold amid a housing bubble that led to the last recession. Last year's gains were driven entirely by new homes purchased in the South & West. Sales of new homes slumped in the Northeast & Midwest in 2019. Lower mortgage rates began to boost real estate sales relative to 2018. Dec's median new-home sales price was $331K, up 0.5% from a year ago.
2019 home sales strongest since 2006
Canada's minority Liberal gov kicked off the ratification process for a new continental trade pact today & urged opposition lawmakers to formally approve the deal as quickly as possible. Canada is the only country still to ratify the trilateral US-Mexico-Canada Agreement (USMCA), which updates the 25-year-old North American Free Trade Agreement. Deputy Prime Minister Chrystia Freeland, who led Canada's negotiating team, urged lawmakers to set partisanship aside. The Liberals do not control the House of Commons & must rely on opposition legislators to govern. "The ball is in their court,'' Freeland told reporters after formally giving notice the gov would be introducing the necessary legislation today. "I am calling on all members of Parliament to support the agreement and to support its entry into force without undue delay,'' she said. Pres Trump is expected to sign the new trade deal into law on Wed. Trump made the renegotiation of NAFTA a key element of his 2016 presidential election campaign. Canada's main opposition Conservative Party has expressed a determination to examine what it calls potentially worrying aspects of the deal, but also says it has no intention of dragging the process out. Business & industry groups want the Trudeau gov to ratify the trade pact as quickly as possible to alleviate economic uncertainty. Free trade is critical to the economies of Canada & Mexico, which both send around 75% of goods to their much larger neighbor. "It is crucial for businesses that this agreement is ratified in an expeditious manner,'' the Canadian Chamber of Commerce said.
USMCA ratification process begins in Canada
Oil dropped to its lowest level since Oct, as fears over a potential slowdown in crude demand, sparked by the coronavirus outbreak, continued to pressure prices. West Texas Intermediate crude fell 1.9%, or $1.05, to settle at $53.14 per barrel, for the 5th straight session of losses, & the lowest closing price since Oct 15. At its low, WTI dipped more than 3% to hit $52.13, a price not seen since Oct 10. The contract is coming off its 3rd straight week of losses & worst week since Jul & is now trading in bear market territory after falling more than 20% from its recent Apr high of $66.60. Intl benchmark Brent crude fell 2.5% ($1.53) to $59.16. It's also coming off its 3rd straight week of losses & its worst week since Dec 2018. The flu-like coronavirus, first identified on Dec 31 in the Chinese city of Wuhan, has now killed 82 people, according to Chinese officials, with at least 2900 confirmed cases worldwide. The virus has spread to 10 additional countries, including South Korea, Japan & the US, where the 5th case was confirmed yesterday. A slowdown in China’s economy would hit oil demand since the nation is the world's largest crude oil importer —importing a record 10.12M barrels per day in 2019 — & the world's 2nd-largest oil consumer, according to data from the General Administration of Customs. Yesterday Saudi Arabia's energy minister Prince Abdulaziz bin Salman said that OPEC+ would step in to bolster prices if needed, while noting that the sell-off was “primarily driven by psychological factors and extremely negative market expectations adopted by some market participants despite (the virus’) very limited impact on global oil demand.” But his comments did little to assuage fears as prices continued to move lower today.
Oil tumbles into bear market, hits more than 3-month low on fears coronavirus will slow global growth
Gold prices tallied their highest finish in more than 6 years, as fears of the economic impact of a fast-moving viral outbreak hurt appetite for stocks & powered buying in assets perceived as havens. The coronavirus, which reportedly originated in Wuhan City, China, has infected nearly 3000 & killed at least 80, prompting Beijing to extend the annual Lunar New Year holiday by 2 days to Feb 2 to contain the disease, according to reports. In the US, the number of domestic cases hit 5, according to Centers for Disease Control & Prevention. Gold for Feb delivery gained $5.50 (0.4%) to settle at $1577 an ounce, after hitting an intraday high at $1588. It settled with a weekly gain of 0.7% on Fri. The precious metal finished today at the highest for a most-active futures contract since Apr 2013. US stocks, with the Dow & S&P 500 trading lower, supporting gains for the precious metal & bond prices, with the 10-year Treasury note yield, that moves in the opposite direction of bond prices, down at 1.608% from 1.68% late Fri.
Gold logs highest finish in over 6 years as China virus fears fuel market unease
There was heavy selling of stocks at the opening & that pressure remained for the rest of the trading session. The Dow finished at session lows & today's drop is clearly visible on the 1 year chart below. The goings on did not seem to affect traders, but the virus has. Canada needs to approve the USMCA deal & traders will watching that story this week. The Dow is still 800 below its recent record, some consolation for the bulls.
Dow Jones Industrials
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