Markets vacillate after sluggish economic data

Dow was off 8, decliners over advancers 5-4 & NAZ fell 74.  The MLP index went up 2+ to the 189s & the REIT index slid back 4+ to 447s.  Junk bond funds were higher & Treasuries continued to be sold keeping yield on the 10 Treasury note above 1.6%.  Oil added about 1 to the 79s & gold was even at 1758 (more on both below).

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The Organization for Economic Cooperation & Development (OECD) announced a major breakthrough on corp tax rates, after years of disagreement.  The group of developed nations agreed to a global minimum corp tax rate of 15%.  This marks a huge shift for smaller economies, such as the Republic of Ireland, which have attracted intl firms — to a large extent — via a lower tax rate.  “The landmark deal, agreed by 136 countries and jurisdictions representing more than 90% of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits,” the OECD said.  The breakthrough comes after some changes were made to the original text, notably that the rate of 15% will not be increased at a later date, & that small businesses will not be hit with the new rates.  This helped Ireland — a longtime opponent of raising corp tax rates — to get on board with the plan.  Hungary, another long-term skeptic about a global tax deal, also changed its mind after receiving reassurances there will be a lengthy implementation period.  Countries now have to work out some outstanding details so the new deal is ready to kick in during 2023.

World leaders reach landmark deal on a global corporate tax rate

Pres Biden said the US economy is making "consistent and steady progress," despite missing projections in the Sep jobs report, maintaining that the economy is "moving forward."  "Today's report has unemployment down to 4.8%, a significant improvement from when I took office, and a sign that our economy is moving forward, even in the face of the COVID pandemic," Biden said, adding that "jobs are up" & "wages are up."  "That's progress," he added.  The Sep jobs report was projected to show that hiring gained steam last month as COVID-19 cases subsided nationwide & as federal unemployment benefits ended for Ms of Americans.  But the Labor Dept announced that US employers hired far fewer workers than expected.  Nonfarm payrolls increased by 194K workers in Sep as the unemployment rate fell to 4.8%.  The forecast expected the addition of 500K new jobs & the unemployment rate to slip to 5.1%.  The job gains in Aug were raised up to 366K from 235K.  The pres, though, touted the Labor Dept's findings this week that, in Q3, the number of layoffs & job reductions "is the lowest in this country since 1997."  Biden said the jobs report reminds that "there is important work ahead of us and important investments we need to make."  "America is still the largest economy in the world, but we risk losing our edge as a nation if we don't move," Biden said, making a plug for his massive infrastructure & spending plans pending in Congress, saying the investments in his plan will give American workers "a fighting chance," & bring the country to a higher GDP & job creation.

Biden says US economy making 'steady progress' despite lackluster jobs report

Oil hit $80 per barrel, a 7-year, high threatening to raise energy costs further for Ms of Americans at the gas pump & this winter heating season.  NYMEX crude has gained over 60% this year.  Brent, the global benchmark, hit the $83 level & has gained over 58% this year   In addition to hitting consumers, higher crude prices are a further reflection of how the US is falling behind as a global energy leader.  "We became the largest producer of oil and gas in the world, were larger than Saudi Arabia, were larger than Russia. And that was an important accomplishment for America and for the American people to have that reversed in so short a time, it is indeed shocking," said Dan Brouillette, former US Energy Secretary under Pres Trump.  OPEC recently kept production at current levels, despite rising demand from the ongoing pandemic rebound & pressure from the US.  Prices at the pump hit $3.26 per gallon, per AAA, the highest since 2014.

Oil hits seven year high as US falls behind as global energy leader

Gold futures ended lower, giving back earlier gains seen on the back of employment data from the Labor Dept that revealed the US economy created a lot less jobs than expected in Sep.  Prices for the precious metal earlier found support as the smaller-than-expected number of jobs created last month made it less likely that the Federal Reserve will decide to taper bond purchases soon.  The economy created only 194K new jobs in Sep to mark the 2nd disappointing increase in a row.  The forecast was for 500K new jobs.  Gold for Dec fell $1 to settle at $1757 an ounce, with the most-active contract for the precious metal down just $1 from the week-ago finish at $1758.  Gold's modest move for the week came against the backdrop of Treasury yields rising to their highs not seen in months, while the $ been modestly stronger.  A stronger $ & rising yields ordinarily undercut buying in bullion because strength in the currency can make the asset comparatively more expense to overseas buyers & gov debt competes with precious metals, which don't offer a coupon, for safe-haven bids. 

Gold ends lower for week as prices give up gains from ‘disappointing’ September U.S. employment reading

Oil futures rose, with US prices scoring a nearly 5% gain for the week after touching highs above $80 a barrel for the first time in almost 7 years.  Natural-gas futures, meanwhile, pulled back from a nearly 13-year high 3 days ago to finish lower for the week.  West Texas Intermediate (WTI) crude for Nov delivery rose $1.05 (1.3%) to settle at $79.35 a barrel after touching a high of $80.11.  Front-month contract prices for the US benchmark finished at their highest since 2014.  Dec Brent crude, the global benchmark, rose 44¢ (0.5%) to $82.39 a barrel, up 4.9% for the week.  It marked 5th straight weekly climb.  Both WTI & Brent crude marked their 7th weekly gain in a row.  Nov natural gas fell by 11¢ (2%) to settle at $5.565 per M British thermal units, leaving it down 1% for the week after bouts of volatility.  Prices have still more than doubled YTD.  Data from Baker Hughes today, however, showed a 5th straight weekly rise in the number of US rigs drilling for oil, up 5 at 433 this week, implying an upcoming increase in output.  Meanwhile, soaring natural-gas prices were seen adding to demand for crude, as gas-fired power plants, particularly in Asia, & other gas users switch to oil.  OPEC+ earlier this week stuck to its plans to increase crude production in monthly increments of 400K barrels a day, defying pressure to relax existing output curbs more quickly.

U.S. oil futures post a nearly 5% weekly climb after touching highs above $80 a barrel

Oil & natural gas bulls are very happy with their rising pries.  That trend should continue, a negative for the recovering global economy.  Higher oil prices year-over-year partially reflect the very depressed market in 2020 when the big oils reported record losses.  At its low, oil went below zero in Apr which contributes to the large % increases this year.  Of course, cutting US production is not helping matters.  In a wild week for stocks, Dow finished up 420.  Not bad, all considered.

Dow Jones Industrials