Markets start the new year soaring to new records

Dow rocketed ahead 330 (closing at session highs), advancers over decliners 4-3 & NAZ shot up 119.  The MLP index rose 2+ to 221 & the REIT index dropped 6+ to the 398s.  Junk bond funds remained slightly higher & Treasuries were being purchased.  Oil inched higher & gold went up 7 to 1530 (more on both below).

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CEOs in the US ranked a potential recession as their #1 concern for the upcoming year, new survey results show.  CEOs ranked a potential recession as their #3 concern in 2018, listing cyberattacks as their top fear in the annual survey conducted by nonprofit business research organization  The Conference Board received responses from 750 CEOs & 800 C-suite level execs around the world, including 123  US CEOs, & 114 other US C-Suite execs   "In 2019, recession risk in the United States was ranked as the third biggest challenge, after cybersecurity and the threat of new competitors," Conference Board Chief Economist Bart van Ark said.  "The higher 2020 ranking of recession risk reflects more widespread concerns about the global slowdown as it evolved during 2019."  "Global GDP growth slowed to 2.3 percent, as much as 0.7 percentage point lower than the year before. Still, that’s not a recession – not in the US nor globally. ... The Conference Board forecasts global growth to modestly recover to 2.5 percent, and U.S. growth might stabilize around 2 percent or a little more," he added.  Chuck Mitchell, Conference Board exec director of Knowledge, Content & Quality, said the results should "raise a warning flag."  "This should raise a warning flag about possible complacency, considering the current speed of disruption," he said.  "The truth is that today, companies no longer enjoy the luxury of a decades-long lead time to adapt to the digital revolution."  The results highlight growing fears of an economic slump amid foreign trade tensions, as well as growing confidence in cybersecurity, which ranked sixth in US CEOs' top concerns this year.  The #2 fear in 2020 is global political instability & the #3 fear is uncertainty regarding global trade.  "Budgets to strengthen cybersecurity have been ramped up globally even though the companies often still lack a strategy to deal with the financial and reputational impact of a cyberattack or a data breach," van Ark said.  A potential recession tied with uncertainty regarding global trade for the top concern among Chinese CEOs, revealing that US & Chinese execs share similar concerns as political trade decisions impact businesses in both countries.  "The ongoing concerns about recession risk among business leaders reflect the slowing economy of the past year and the uncertainties about the outcome of the trade disputes and other policy concerns," van Ark said.

2020's new taxes, regulations to clobber small businesses

A private survey showed manufacturing activity expanded in the month of Dec, but missed expectations.  The Markit/Caixin Purchasing Managers' Index (PMI) for manufacturing came in at 51.5 in Dec — although the forecast was for private manufacturing PMI to come in at 51.7 in the last month of the year.  The Caixin PMI was at 51.8 in Nov.  PMI readings above 50 indicate expansion, while those below that level signal contraction.  IHS Markit & Caixin said in a press release that domestic demand expanded in Dec, but the pace of expansion was slower than in Oct & Nov.  There was also an improvement in business sentiment, they said.  On Tues, China released official manufacturing PMI for Dec that was slightly above expectations at 50.2, data from the country's statistics bureau showed. Investors are keeping a close watch on the health of China's economy amid a long-drawn trade conflict between the US & China which has weighed on sentiment.  The official PMI survey typically polls a large proportion of big businesses & state-owned enterprises.  The Markit/Caixin survey features a bigger mix of small-&-medium sized firms.  On Dec 13, the US & China announced they had reached a phase one trade deal including some tariff relief, increased agricultural purchases & structural change to intellectual property & technology issues.  Pres Trump has said he will be signing the phase one deal with China at the White House on Jan 15.

China’s manufacturing activity expanded in December, a private survey shows

Gold prices rose for a 7th straight session to finish at their highest in more than 3 months, unfazed by strength in the US stock market & the $ after the precious metal scored its biggest one-year advance since 2010.  Yesterday, the People’s Bank of China said it would reduce the portion of deposits commercial banks are required to set aside as reserves, releasing Bs of $ to the financial system to help boost economic growth.  Gold for Feb delivery rose $5 (0.3%) to settle at $1528 an ounce.  That was the highest finish for a most-active contract since Sep 24 & the 7-session rise was the longest such streak of gains since the one ended Jun 7.  Gold rose rose 18.9% in 2019 in 2019, its biggest annual rise since a 29.7% jump in 2010.  Gold prices, which had consolidated in the fall after a strong run-up earlier in 2019, regained momentum in the final leg of 2019, pushing back above $1500 an ounce.

Gold scores highest finish since late September

Oil futures started 2020 with a modest gain, as traders eyed developments in the Middle East & weighed prospects for crude supply disruptions in the region.  Prices also found some support after China's central bank announced it would provide a further shot of stimulus to the economy, which may boost the potential for energy demand.  West Texas Intermediate (WTI) crude for Feb delivery tacked on 12¢ to settle at $61.18 a barrel, while global benchmark Brent crude for Mar delivery rose 25¢ (0.4%) to $66.25 a barrel.  US & most global financial markets were closed yesterday for the New Year's Day holiday.  Oil lost ground Tues but saw WTI, the US benchmark, log a 34.5 % gain in 2019, while Brent, the global benchmark, rose 22.7%.  It was the strongest year for both benchmarks since 2016.  Oil prices edged higher today, following an attempt by supporters of Iran-backed militias to storm the US Embassy on Tues.  Protesters subsequently withdrew from the area.  The US took steps to boost security at the embassy, sending Marines from neighboring Kuwait & moving to deploy an infantry battalion of around 750 solders to the region.

Oil prices notch a gain as traders eye Middle East tensions, China adds to stimulus

Investors were happy to see the stock market starting the year on the right foot.  Today the Dow closed at its highs & is pushing for 29K, needing just another 130.  The major worry is the strong demand for gold & Treasuries, classic safe haven investments.  While stock averages reached numerous record highs last year, gold & Treasuries also had sharp gains with gold closing today near last year's highs.

Dow Jones Industrials