Dow dropped 128, advancers over decliners 3-2 & NAZ pulled back 66. The MLP index was fractionally lower in the 199s & the REIT index recovered yesterday's loss, up 4+ to 433. Junk bond funds did little & Treasuries remained in demand. Oil rose in the 53s & gold gained 11 to 1623.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
America’s manufacturing recession looks like it could be over
Small business confidence rises, signaling a more positive outlook for US economy
Gold futures climbed higher, sending bullion up for a 6th straight session to its highest finish in 7 years,as persistent worries about China's coronavirus & a benign interest-rate environment provide a runway higher for the precious metal. Gold for Apr rose $8.70 (0.5%) to settle at $1620, after a similar rise yesterday. Prices for the most-active contract posted the highest finish since 2013. Gold has climbed in tandem with the $, something that doesn't usually occur as a stronger greenback can weaken the appeal for $-pegged safe haven assets like gold. The $ index climbed for a 3rd day to a 3 year high. Today, the China's central bank (PBOC) cut its benchmark one-year loan prime rate by 10 basis points & the 5-year loan prime rate by 5 basis points. That followed its recent cut in the one-year medium-term lending rate.
Oil futures finished higher, buoyed by a smaller-than-expected weekly increase in US crude supplies. Prices were already moving up ahead of the supply data, partly on the back of expectations that efforts by China to stimulate the economy will blunt the hit to crude demand from the country's COVID-19 outbreak. The prospect of a further squeeze on Venezuelan oil exports has also supported prices. US benchmark West Texas Intermediate crude for Mar delivery rose 49¢ (0.9%) to finish at $53.78 a barrel, with the contract expiring at the settlement. It marked its highest settlement since Jan 24. Apr WTI crude, which is now the front-month contract, settled at $53.88, up 39¢ (0.7%). Global benchmark Apr Brent crude rose 19¢ (0.3%) to $59.31 a barrel, for the highest front-month contract finish since Jan taking the Dow down to 29. The Energy Information Administration reported that US crude supplies edged up by 400K barrels last week. Supply data were delayed by a day this week because of the holiday on Mon. Analysts expected the data, to show a rise of 3.3M barrels. The American Petroleum Institute reported a climb of 4.2M barrels, according to sources.
Stocks were sold at midday taking the Dow down to 29K. Then the bulls returned & brought a recovery, although it still finished in the red. The Volatility Index (VIX) went up 1+ to the 15s, reflecting growing nervousness by investors. So far, the virus has not hit the world outside China very hard. But China has a large impact on the global trade & it affects all economies. Nobody knows how badly the virus will affect global trade. Demand for safe haven gold continues strong while investors worry about how long the virus threat might remain..
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
A contraction in US manufacturing spurred by the
trade battle with China & slowing global growth may have reached an
end already, if 2 key business surveys hold up. Production at
American facilities fell in H2-2019 despite an otherwise
growing economy, sparking worries that a broader recession might be in
the works. But
indicators this week from the key Philadelphia & NY Federal
Reserve districts showed a sharp rebound that far exceeded eypectations. Early in the week, NY's Empire State
Manufacturing Survey for general business conditions posted a reading of
12.9, up 8 points from Jan & its best level since May. New orders
surged to 22.1, the highest since Sep 2017, & shipments rose to
18.9, the best since Nov 2018. Today, the Philadelphia survey exploded 20 points higher to 36.7, the highest in years. New orders hit their highest since May 2018. The indices are percentage measures of companies
expecting growth or contraction. Though the employment components for
both regions were stagnant, the measures taken together show a
manufacturing sector on the rebound. “Absolutely, the fundamentals
in the U.S. are strong — sustained growth, strongest labor market in 50
years, price stability with inflation close to our goal. So, yeah, it’s
a good picture,” Fed Vice Chair Richard Clarida said following the Philadelphia report. However the coast isn't completely clear for the sector as pockets of trouble remain, particularly with Boeing's (BA), a Dow stock, struggles. The
Fed's Jan headline reading on industrial production showed a
contraction of 0.3% & the Labor Dept reported that manufacturing
jobs fell 12K, mostly due to a decline in motor vehicles &
parts. The manufacturing index was down 0.1%, but stripping out civilian
aircraft production, which has been hampered by BA's 737 Max
problems, it showed an advance of 0.3%. Clarida said a first-phase
tariff armistice between the US & China, along with the trade
agreement between the US, Mexico & Canada and the start of Brexit,
should further boost the picture. “There’s no doubt there’s been a
decline in trade policy uncertainty,” Clarida added. “To the extent that
[uncertainty] was holding back investment, that should be a positive
this year.”
America’s manufacturing recession looks like it could be over
Small business sentiment is on the rise to kick
off 2020, with confidence nearing all-time highs, according to data from
CNBC & SurveyMonkey. The CNBC/SurveyMonkey Small Business Confidence
Index climbed 2 points in Q1, from 59 to 61, as
concerns over trade policy impacts lessened, thanks to a trade deal with
China & the signing of the USMCA. This is a sharp turnaround from the
lows seen last summer as trade turmoil weighed on Main Street's
outlook. The Small Business Confidence Index is calculated based
on entrepreneurs' responses to a set of 8 questions about their
businesses as part of the Survey. That poll was conducted Feb 3–10 among a national sample of 2K small
business owners ages 18 & up. While
confidence increased, the move can be attributed to more business
owners feeling less pessimistic about issues like trade, moving to a
more neutral position. If small business owners had turned positive on
their outlook, the confidence index could have risen even further this
quarter. “It’s not that everyone is feeling optimistic — things
are moving to the middle,” says Laura Wronski, senior research scientist
at SurveyMonkey. “There’s now a higher percentage of people who don’t
expect any impact from things like changes in trade or tax policy.” In
the next 12 months, about 1/5 of small business owners expect a
negative impact from changes in trade policy, while 26% expect a
positive effect — more than ½ say the changes will have no impact. Of
the small business owners that said either deal would impact their
operations directly, most came from the retail sector. “There was a
lot of worry about tariffs and the trade war that has been abated due
to the agreement with China,” says Todd McCracken, pres of
the National Small Business Association. “Those concerns about what
would happen with trade and supply chains are less worrisome than they
were.” Generally, business owners are feeling more positive about business,
with 56% saying conditions are good & only 7% saying the opposite.
Recession fears have also calmed down somewhat, with 49% of businesses
saying a recession is likely in the next year, down from 53% this same
qtr of 2019. Jobs & the economy came in as the top issues for 1/3 of respondents,
followed by health care, the environment & immigration. Finding
qualified workers to fill positions remains the biggest challenge for
19% of respondents, the same percentage of respondents who deemed this
their biggest hurdle in Q1 2019. “They’ve got no simple solution. We are a victim of our own success, since the economy is doing so well,” McCracken says. “It’s hard to find workers for that next opportunity.” Even
as workers are in short supply, there's little movement on wages. In
fact, 70% of respondents said that if one of their employees were to
quit today, they would expect to pay their replacement the same; just
14% said they would expect to pay more. With regard to minimum-wage
increases kicking in across the country, nearly ½ said they expected
wage hikes to have some impact on business, with 22% projecting lower
profits & 14% saying hikes would force them to cut hours & 8% saying
increases would lead to layoffs.
Small business confidence rises, signaling a more positive outlook for US economy
Gold futures climbed higher, sending bullion up for a 6th straight session to its highest finish in 7 years,as persistent worries about China's coronavirus & a benign interest-rate environment provide a runway higher for the precious metal. Gold for Apr rose $8.70 (0.5%) to settle at $1620, after a similar rise yesterday. Prices for the most-active contract posted the highest finish since 2013. Gold has climbed in tandem with the $, something that doesn't usually occur as a stronger greenback can weaken the appeal for $-pegged safe haven assets like gold. The $ index climbed for a 3rd day to a 3 year high. Today, the China's central bank (PBOC) cut its benchmark one-year loan prime rate by 10 basis points & the 5-year loan prime rate by 5 basis points. That followed its recent cut in the one-year medium-term lending rate.
Gold futures post highest settlement since mid-February 2013
Oil futures finished higher, buoyed by a smaller-than-expected weekly increase in US crude supplies. Prices were already moving up ahead of the supply data, partly on the back of expectations that efforts by China to stimulate the economy will blunt the hit to crude demand from the country's COVID-19 outbreak. The prospect of a further squeeze on Venezuelan oil exports has also supported prices. US benchmark West Texas Intermediate crude for Mar delivery rose 49¢ (0.9%) to finish at $53.78 a barrel, with the contract expiring at the settlement. It marked its highest settlement since Jan 24. Apr WTI crude, which is now the front-month contract, settled at $53.88, up 39¢ (0.7%). Global benchmark Apr Brent crude rose 19¢ (0.3%) to $59.31 a barrel, for the highest front-month contract finish since Jan taking the Dow down to 29. The Energy Information Administration reported that US crude supplies edged up by 400K barrels last week. Supply data were delayed by a day this week because of the holiday on Mon. Analysts expected the data, to show a rise of 3.3M barrels. The American Petroleum Institute reported a climb of 4.2M barrels, according to sources.
Oil futures end higher as U.S. crude supplies post a smaller-than-expected weekly climb
Stocks were sold at midday taking the Dow down to 29K. Then the bulls returned & brought a recovery, although it still finished in the red. The Volatility Index (VIX) went up 1+ to the 15s, reflecting growing nervousness by investors. So far, the virus has not hit the world outside China very hard. But China has a large impact on the global trade & it affects all economies. Nobody knows how badly the virus will affect global trade. Demand for safe haven gold continues strong while investors worry about how long the virus threat might remain..
Dow Jones Industrials
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