Dow surged 545 (finishing at the highs), advancers over decliners better than 3-1 & NAZ shot up 194. The MLP index added 2+ to the 257s & the REIT index rose 1+ to the 347s. Junk bond funds gained & Treasuries were little changed. Oil backed off to the 61s (more below) & gold was steady at 1226.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US oil production jumped to a record 11.6M barrels a day last week & rising US output is a factor that could prompt OPEC members & allies to react when they meet over the weekend. Oil prices have cratered amid concerns of a global supply glut & the jump in US output only adds to these concerns. West Texas Intermediate futures are now down 20% from the near 4-year high reached a month ago. US production is up a stunning 2M barrels a day from the same period last year & 400K barrels from the week earlier, based on weekly gov data. Weekly numbers are often revised, but the higher production figure is in line with growing US output expectations. The US gov expects Oct production was 11.4M barrels a day & expects production can grow to 12.1M barrels a day on average next year. OPEC's Joint Ministerial Monitoring Committee will meet this weekend in Abu Dhabi, ahead of next month's broader meeting in Vienna, & production levels are expected to be discussed. Saudi Arabia, which leads OPEC, & Russia had agreed to raise production ahead of US sanctions on Iranian oil, & the joint committee could decide to recommend lowering production. The committee could make a recommendation that would be acted on at OPEC's Dec meeting. Sources have said OPEC & allies could not rule out a return to production cuts next year. There's been increasing talk that OPEC & Russia are concerned about supply & may want to cut because they front loaded production ahead of US sanctions on Iranian oil, which went into effect on Mon. Pres Trump had called on Saudi Arabia to use its surplus capacity to add oil to the market ahead of the sanctions. Trump this week said he didn't want the Iran sanctions to drive oil prices higher. US production has surpassed Russia & Saudi Arabia. Russian production is estimated about 11.4M barrels a day & Saudi Arabia production is up to abut 10.7M barrels, after it upped production to compensate for the potential of Iran barrels coming off the market. Prior to early Oct, oil prices had been rising as Venezuela supply continued to dwindle & Iranian barrels came off the market. The surge in prices ahead of Oct had encouraged increased US drilling. In addition to ramping up output, the US has been exporting more crude. The US exported 2.4M barrels a day of crude last week & nearly 5M barrels of condensates & refined products (gasoline & diesel).
US pumps more oil than Russia and Saudi Arabia; OPEC could strike back
Housing sentiment fell to its lowest level in a year in Oct, according to a monthly survey by Fannie Mae. Consumer attitudes toward both buying & selling homes dropped, with the former falling the most of all the 6 survey components, a sizable 5 percentage points. That tied the survey's 2nd lowest reading in its history. The data are a sharp turnaround from last spring, when confidence in the US housing market was soaring, mortgage rates were relatively low and the economy was flying high. Fewer consumers now expect home prices to rise, echoing other surveys that have shown a drop in the number of people who think owning a home is currently a good investment. Home prices are still gaining, but those increases have been shrinking each month: They've fallen below 6% annually for the first time in a year, according to the much-watched S&P CoreLogic Case-Shiller home price index. Housing sentiment has been falling for the past several months, despite the fact that more consumers think the economy is on the right track. That component of the survey reached a new high. “The contrast between the survey’s findings of weak homebuying sentiment and overall economic optimism mirrors what we’re seeing in the broader economy,” said Doug Duncan, senior VP & chief economist at Fannie Mae. “While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion.” Fewer people now believe mortgage rates will fall back to recent lows. In fact, rates have continued to rise over the last week, putting pressure on mortgage application volume. Last week it fell to the lowest level in 4 years, as rates hit an 8-year high. Not only are potential buyers faced with weakening affordability, but there are still very few entry-level homes for sale. While supplies are finally rising for the first time in more than a year, they are coming off near-record lows, so there is still not a lot to choose from. Adding insult to the supply injury, as mortgage rates rise, fewer homeowners may want to list their properties for sale.
Housing sentiment tumbles to lowest in a year, as more say now is not a good time to buy
Oil futures declined, with US prices settling at their lowest in almost 8 months after a gov report revealed that domestic crude supplies rose for a 7th week in succession gasoline stockpiles unexpectedly climbed. The move follows deep losses in recent sessions & come ahead of a meeting between members of OPEC & its allies this weekend that could result in supply cuts. Oil traders were also looking on with interest at the midterm election outcome. A split in DC may force the Trump administration to soften its hard-line stance on countries like Iran. Also,the Dem control of the House may crank up the pressure on regulations that limit US shale production. Both WTI & Brent futures have generally traded in the red following a sharp Oct selloff that pushed both the global and US benchmarks into correction territory. The losses continued after the Trump administration granted waivers to allow 8 nations to continue buying Iranian crude despite US-driven economic sanctions against the Islamic Republic. The renewed oil-focused economic sanctions on Tehran took effect Mon, but the Trump administration late last week announced temporary waivers to 8 countries, which it identified this week as some of Iran’s biggest oil buyers: China, India, Italy, Greece, Japan, South Korea, Taiwan & Turkey. US benchmark West Texas Intermediate crude for Dec fell by 54¢ (0.9%) to settle at $61.67 a barrel, posting an 8th straight session decline. The settlement was also the lowest for a front-month contract since mid-Mar. Global benchmark Jan Brent crude slipped 6¢ to $72.07 a barrel on ICE Futures Europe, the lowest finish since Aug17.
This was one stellar day for stocks. Enthusiasm by investors is riding high on hopes for cooperation between Trump & Congress. That sounds good although talk is cheap. The honeymoon period may not last very long. The next major event for the Dems is to select a speaker of the House & that looks like it will be a tough fight. While strong, the economy has 2 major weak sectors. Housing is stumbling & autos are running flattish relative to the last 2 years. Enjoy today's advance while it lasts.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres & the Reps intended
to pass new tax measures to provide relief to middle-class Americans,
but now that Dems control the House of Representatives – that
legislation is likely dead on arrival. When
asked about the future of tax cuty, Trump said the prospects depend on cooperation from
Dems. Even though Reps pushed 3
separate tax packages thru the House in Sep, don’t expect them to be approved anyway. Tax cuts 2.0 aimed
to make some of the reforms passed under the Tax Cuts & Jobs Act
permanent, help families save more & provide a new tax break for
startup businesses. Trump also floated another
“major” 10% tax cut for middle-class Americans in the weeks
leading up to the midterm elections, which is also unlikely to advance. The next battle will be over making
some provisions of the Tax Cuts & Jobs Act – like lower individual tax
rates – permanent. But that will be a partisan battle closer to 2025,
when many of the temporary measures are set to expire. There
is still one area where parties may work together to provide further
relief to Americans, however, & that is in the form of pension reform. Some
of the retirement savings measures proposed in Tax Cuts 2.0 include
encouraging the use of a Universal Savings Account, eliminating the
contribution age limit for IRA accounts & making it easier for small
businesses to work together to offer retirement plans.
Tax Cuts 2.0: Prospects post midterms
US oil production jumped to a record 11.6M barrels a day last week & rising US output is a factor that could prompt OPEC members & allies to react when they meet over the weekend. Oil prices have cratered amid concerns of a global supply glut & the jump in US output only adds to these concerns. West Texas Intermediate futures are now down 20% from the near 4-year high reached a month ago. US production is up a stunning 2M barrels a day from the same period last year & 400K barrels from the week earlier, based on weekly gov data. Weekly numbers are often revised, but the higher production figure is in line with growing US output expectations. The US gov expects Oct production was 11.4M barrels a day & expects production can grow to 12.1M barrels a day on average next year. OPEC's Joint Ministerial Monitoring Committee will meet this weekend in Abu Dhabi, ahead of next month's broader meeting in Vienna, & production levels are expected to be discussed. Saudi Arabia, which leads OPEC, & Russia had agreed to raise production ahead of US sanctions on Iranian oil, & the joint committee could decide to recommend lowering production. The committee could make a recommendation that would be acted on at OPEC's Dec meeting. Sources have said OPEC & allies could not rule out a return to production cuts next year. There's been increasing talk that OPEC & Russia are concerned about supply & may want to cut because they front loaded production ahead of US sanctions on Iranian oil, which went into effect on Mon. Pres Trump had called on Saudi Arabia to use its surplus capacity to add oil to the market ahead of the sanctions. Trump this week said he didn't want the Iran sanctions to drive oil prices higher. US production has surpassed Russia & Saudi Arabia. Russian production is estimated about 11.4M barrels a day & Saudi Arabia production is up to abut 10.7M barrels, after it upped production to compensate for the potential of Iran barrels coming off the market. Prior to early Oct, oil prices had been rising as Venezuela supply continued to dwindle & Iranian barrels came off the market. The surge in prices ahead of Oct had encouraged increased US drilling. In addition to ramping up output, the US has been exporting more crude. The US exported 2.4M barrels a day of crude last week & nearly 5M barrels of condensates & refined products (gasoline & diesel).
US pumps more oil than Russia and Saudi Arabia; OPEC could strike back
Housing sentiment fell to its lowest level in a year in Oct, according to a monthly survey by Fannie Mae. Consumer attitudes toward both buying & selling homes dropped, with the former falling the most of all the 6 survey components, a sizable 5 percentage points. That tied the survey's 2nd lowest reading in its history. The data are a sharp turnaround from last spring, when confidence in the US housing market was soaring, mortgage rates were relatively low and the economy was flying high. Fewer consumers now expect home prices to rise, echoing other surveys that have shown a drop in the number of people who think owning a home is currently a good investment. Home prices are still gaining, but those increases have been shrinking each month: They've fallen below 6% annually for the first time in a year, according to the much-watched S&P CoreLogic Case-Shiller home price index. Housing sentiment has been falling for the past several months, despite the fact that more consumers think the economy is on the right track. That component of the survey reached a new high. “The contrast between the survey’s findings of weak homebuying sentiment and overall economic optimism mirrors what we’re seeing in the broader economy,” said Doug Duncan, senior VP & chief economist at Fannie Mae. “While economic growth posted the fastest back-to-back pace in four years in the third quarter, residential investment declined for the third consecutive quarter, a first for the current expansion.” Fewer people now believe mortgage rates will fall back to recent lows. In fact, rates have continued to rise over the last week, putting pressure on mortgage application volume. Last week it fell to the lowest level in 4 years, as rates hit an 8-year high. Not only are potential buyers faced with weakening affordability, but there are still very few entry-level homes for sale. While supplies are finally rising for the first time in more than a year, they are coming off near-record lows, so there is still not a lot to choose from. Adding insult to the supply injury, as mortgage rates rise, fewer homeowners may want to list their properties for sale.
Housing sentiment tumbles to lowest in a year, as more say now is not a good time to buy
The German gov panel of independent
economic advisers has cut its growth forecast for this year, citing a
tougher foreign trade environment, among other issues. The 5 advisers predicted growth of 1.6% this year in
Europe's biggest economy, down sharply from the 2.3% forecast in Mar. They predicted an expansion of 1.5% next year,
down from 1.8%. In their report, they
noted that the German economy is in one of its longest upswings since
World War II but wrote that "a less favorable foreign trade environment,
temporary production issues and capacity bottlenecks are slowing the
pace of expansion." Last year, GDP grew 2.2%, Germany's strongest performance in 6 years. The gov last month forecast 1.8% growth for 2018.
German government advisers slash economic growth forecast
Oil futures declined, with US prices settling at their lowest in almost 8 months after a gov report revealed that domestic crude supplies rose for a 7th week in succession gasoline stockpiles unexpectedly climbed. The move follows deep losses in recent sessions & come ahead of a meeting between members of OPEC & its allies this weekend that could result in supply cuts. Oil traders were also looking on with interest at the midterm election outcome. A split in DC may force the Trump administration to soften its hard-line stance on countries like Iran. Also,the Dem control of the House may crank up the pressure on regulations that limit US shale production. Both WTI & Brent futures have generally traded in the red following a sharp Oct selloff that pushed both the global and US benchmarks into correction territory. The losses continued after the Trump administration granted waivers to allow 8 nations to continue buying Iranian crude despite US-driven economic sanctions against the Islamic Republic. The renewed oil-focused economic sanctions on Tehran took effect Mon, but the Trump administration late last week announced temporary waivers to 8 countries, which it identified this week as some of Iran’s biggest oil buyers: China, India, Italy, Greece, Japan, South Korea, Taiwan & Turkey. US benchmark West Texas Intermediate crude for Dec fell by 54¢ (0.9%) to settle at $61.67 a barrel, posting an 8th straight session decline. The settlement was also the lowest for a front-month contract since mid-Mar. Global benchmark Jan Brent crude slipped 6¢ to $72.07 a barrel on ICE Futures Europe, the lowest finish since Aug17.
U.S. oil prices at lowest in nearly 8 mos. as domestic crude supplies climb for 7th week in a row
This was one stellar day for stocks. Enthusiasm by investors is riding high on hopes for cooperation between Trump & Congress. That sounds good although talk is cheap. The honeymoon period may not last very long. The next major event for the Dems is to select a speaker of the House & that looks like it will be a tough fight. While strong, the economy has 2 major weak sectors. Housing is stumbling & autos are running flattish relative to the last 2 years. Enjoy today's advance while it lasts.
Dow Jones Industrials
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