Dow rose 137 after yesterday's big advance, advancers over decliners 2-1& NAZ jumped 123. The MLP index crawled higher in the 118s & the REIT index was up a bit 7+ to the 367s (a more than 3 month high). Junk bond funds inched higher & Treasuries were slightly weaker. Oil was bid higher in the 37s as traders monitor the storm hitting the Gulf Coast gold slid back 7 to 1956.
| CL=F | Crude Oil | 37.51 | +0.25 | +0.7% |
| GC=F | Gold | 1,960.10 | | -3.60 | -0.2% |
US industrial production rose 0.4% in Aug, a much smaller gain than in the prior 2 months, the Federal Reserve reported. The gain in Aug was close to expectations of a 0.5% gain. Manufacturing production surged a revised 6.1% in Jun - revised from a 5.7% gain. It slowed a bit to a revised 3.5% gain in Jul - up from prior estimate of a 3% rise. The index is still 7.3% below its pre-pandemic Feb level. Manufacturing output rose 1% in Aug but the gains for most manufacturing industries have gradually slowed since Jun. Mining production fell 2.5% in Aug as hurricanes & tropical storms battered the Gulf of Mexico & caused sharp but temporary declines in oil & gas extraction. Production of cars & trucks fell 3.7% in Aug after a strong gain in the prior month. Utilities fell 0.4% after a strong 3.8% rise in Jul. Capacity utilization rose to 71.4% in Aug (the capacity utilization rate reflects the limits to operating the nation's factories, mines & utilities). Manufacturing has been a bright spot in the economy as it has been easier to re-engineer factories during COVID-19 than it has been to reopen the shuttered service economy. Economists think the big uplift from the early summer is over.
U.S. industrial output cools in August after strong gains earlier in summer
The US gov announced an import ban on some items from China that it believes are produced with “state-sponsored forced labor.” US Customs and Border Protection issued 5 withhold release orders, which are issued when the agency has reason to believe products imported may be made in whole – or part – by forced labor (including convict labor, child labor & indentured labor). As a result, these products, are not allowed to be imported into the country. The products are manufactured in the Xinjiang Uyghur Autonomous Region and include certain hair products, apparel, cotton exports & computer parts. “By taking this action, DHS is combating illegal and inhumane forced labor, a type of modern slavery, used to make goods that the Chinese government then tries to import into the United States,” acting DHS deputy secretary Ken Cuccinelli said. “When China attempts to import these goods into our supply chains, it also disadvantages American workers and businesses.” So far this fiscal year, CBP has issued 12 withhold release orders, which it characterized as “unprecedented.” The agency said it will detain products in question at any port, regardless of the country of origin, if it believes the items are manufactured in violation of US standards. It receives allegations of forced labor from a variety of sources, including from the general public.
US bans Chinese products believed to be made by forced labor
The Intl Energy Agency (IEA) cut its forecast for 2020 oil demand growth, citing a “treacherous” path ahead amid weakening market sentiment & an upsurge in the number of coronavirus cases reported across the globe. In a closely-watched monthly report, the IEA trimmed its outlook for worldwide oil demand growth to 91.7M barrels per day. That marks a contraction of 8.4M bpd year-on-year, more than the 8.1M bpd contraction predicted in the Paris-based energy agency's Aug report. “We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA added. “The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year.” Intl benchmark Brent crude traded at $40.21 a barrel, up 1.5%, while US West Texas Intermediate crude (WTI) stood at $37.90, 1.7% higher. Oil prices have dropped 40% since the start of the year. “I think the main message that we put across in the report is that sentiment seems to be weakening,” Neil Atkinson, head of the oil industry & markets division at IEA, said. “We have seen oil prices very, very range-bound since roughly the middle to the later part of June, between $40 and $45 a barrel for Brent. But, just recently we have seen $40 a barrel tested and it does look as if the rebound in recovery is beginning to stall.” He said the upsurge of coronavirus cases across Europe, in particular, reflected “a cause for concern,” before adding: “It does look as if we are not out of the woods yet.” The report comes shortly after OPEC cut its forecast for oil demand growth in 2020, citing a weaker-than-expected recovery in India & other Asian countries. The oil-producing group also warned yesterday that risks would remain “elevated and skewed to the downside” for the first half of 2021. The IEA echoed this sentiment, saying “renewed weakness” in India reflected a cause for concern. However, China, which emerged from lockdown sooner than other major economies, continued to recover “strongly,” the group said. Energy market participants have become increasingly anxious about a faltering economic recovery & stumbling fuel demand in the wake of the coronavirus pandemic.
IEA cuts 2020 oil demand forecast, sees ‘treacherous’ path ahead with rising coronavirus cases
The manufacturing data was good enough, about what was expected in an economy that is trying to make headway. US-China relations trade relations continue to be shaky. But traders are excited about the prospects for new vaccines in the near future.
No comments:
Post a Comment