Dow fell 24, decliners just ahead of advancers & NAZ added 6. The MLP index rebounded 2+ to the 505s & the REIT index went up 2+ to climb over 320. Junk bond funds were about even & Treasuries traded lower. Oil dropped to
the lowest level in more than 2 years (under 79) after Saudi Arabia reduced the relative cost of its oil to US customers next
month, while raising those to Asia & Europe. Gold languishes in the mid 1100s.
AMJ (Alerian MLP Index tracking fund)
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The Treasury said its borrowing in Q4 will be the lowest for the period in 7 years as the economy gains momentum, boosting tax receipts. The Treasury plans to issue $232B in net marketable debt, about $45B more than projected 3 months ago & the lowest since 2007. In Q4, the Treasury plans to borrow another $209B. Budget deficits have been falling since 2009, & the 2014 deficit was 2.8% of GDP, according to the Congressional Budget Office, down from 9.8% of GDP in 2009. “The strengthening of economic conditions in recent years has occurred alongside a faster-than-expected reduction in the federal government budget deficit,” the Treasury’s chief economist said. “The U.S. economic recovery continues to move solidly forward.” Borrowing projections for Q4 were revised up as the Treasury aimed to have more cash on hand at the end of the qtr, increasing its cash-balance estimate to $200B from $140B in Aug. The Treasury projects it will have $100B in cash on Mar 31. The Treasury borrowed $205B in Q3, more than an Aug projection of $192B. The cash balance was $158B at the end of Sep, more than the previous estimate of $150B. Shrinking budget gaps have come as the economy has gained momentum. US GDP grew at a 3.5% annualized rate in Q3, exceeding the median 3% forecast.
U.S. Borrowing Needs at Lowest Since 2007 as Economy Strengthens
Photo: Bloomberg
Ford (F), Toyota (TM), Fiat Chrysler (FCAU) & Nissan reported US sales that exceeded estimates as buyers emboldened by falling gasoline prices flocked to sport-utility vehicles. TM deliveries rose 6.9%, topping the 6.4% estimate as the RAV4 & Highlander SUVs set Oct records. FCAU, led by the Jeep brand’s 52% gain, vehicle sales climbed 22%. Ford’s light-vehicle sales fell 1.8%, better than the estimate for a 4.3% decline. Ford’s SUV sales rose 10.3%, while its car & truck sales declined. Sales of SUVs, including crossovers, have been increasing as fuel prices have fallen this year. The average price for a gallon of gasoline in the US fell to $2.98 yesterday, the lowest since Dec 2010. Combined with technology that allows some SUV models to achieve a rating of 30 miles or more per gallon of highway driving, the segment is seeing a revival. Total light-vehicle deliveries are expected to rise 5.6% from year earlier to 1.28M. General Motors (GM) also had strong SUV sales even as it missed estimates. Sales for GM, the largest US automaker, rose 0.2%, below the 3.1% forecast. The Buick brand had its best Oct since 2007 as its Encore small SUV posted a 33% gain. Sales of the Cadillac Escalade rose 30% & the Chevrolet Tahoe large SUV was up 6.1% last month. FCAU said the industry’s annualized sales pace for Oct may have reached 16.9M, including medium & heavy-duty trucks that typically account for at least 200K yearly sales. GM estimated that the light-vehicle selling rate was 16.4M last month.
Ford, Chrysler Sales Exceed Estimates in October on SUV Demand
Saudi Arabia is telling the market it won’t cut output to lift crude back to $100 a barrel & that prices must fall further before it does so, according to consultant FACTS Global Energy. Swelling supplies from non-OPEC producers drove Brent crude lower from a month ago amid waning demand from China. OPEC meets Nov 27 to consider changing its production target in the face of the highest US crude output in almost 30 years. “Production of shale oil in the U.S. will not be hit as hard as the Saudis think” by the price decline, FGE Chairman Fereidun Fesharaki said today in Qatar. Producers in the US “can withstand a lot of pressure” by reining in their operating costs before they curb investment in new wells & production, he said. Crude could drop to between $60-$80 a barrel & stay within that range there for about 6 months until global production aligns with demand, Fesharaki. Oil in that range is the “right price” to balance the market, he added. Saudi Arabia was “clever” to vary its crude output between 8-10M barrels a day to compensate for plunging production in Libya after a rebellion toppled that nation’s former leader, Fesharaki said. The kingdom, which pumped 9.75M barrels a day last month, is now unwilling to produce less than 8M barrels daily to defend prices near $100, & other OPEC members would have to share the burden of any output cut the group may make, he said.
Saudi Arabia Signals It Will Let Oil Slide Further, FACTS Says
There was not a lot of excitement in the market today. Lower oil prices seem to be the story getting the most interest. On the one hand it saves consumers money at the gas pumps, but it's also hard on energy companies. MLPs could be feeling the effects of falling prices directly as they extract oil from the ground or have pipelines which move oil around the country. Their earnings for Q3 are coming out now & guidance for Q4 should help investors undertand how low price oil will impact them.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLF15.NYM | ....Crude Oil Jan 15 | ....78.42 |  ...2.00 | (2.5%) |
The Treasury said its borrowing in Q4 will be the lowest for the period in 7 years as the economy gains momentum, boosting tax receipts. The Treasury plans to issue $232B in net marketable debt, about $45B more than projected 3 months ago & the lowest since 2007. In Q4, the Treasury plans to borrow another $209B. Budget deficits have been falling since 2009, & the 2014 deficit was 2.8% of GDP, according to the Congressional Budget Office, down from 9.8% of GDP in 2009. “The strengthening of economic conditions in recent years has occurred alongside a faster-than-expected reduction in the federal government budget deficit,” the Treasury’s chief economist said. “The U.S. economic recovery continues to move solidly forward.” Borrowing projections for Q4 were revised up as the Treasury aimed to have more cash on hand at the end of the qtr, increasing its cash-balance estimate to $200B from $140B in Aug. The Treasury projects it will have $100B in cash on Mar 31. The Treasury borrowed $205B in Q3, more than an Aug projection of $192B. The cash balance was $158B at the end of Sep, more than the previous estimate of $150B. Shrinking budget gaps have come as the economy has gained momentum. US GDP grew at a 3.5% annualized rate in Q3, exceeding the median 3% forecast.
U.S. Borrowing Needs at Lowest Since 2007 as Economy Strengthens
Ford (F), Toyota (TM), Fiat Chrysler (FCAU) & Nissan reported US sales that exceeded estimates as buyers emboldened by falling gasoline prices flocked to sport-utility vehicles. TM deliveries rose 6.9%, topping the 6.4% estimate as the RAV4 & Highlander SUVs set Oct records. FCAU, led by the Jeep brand’s 52% gain, vehicle sales climbed 22%. Ford’s light-vehicle sales fell 1.8%, better than the estimate for a 4.3% decline. Ford’s SUV sales rose 10.3%, while its car & truck sales declined. Sales of SUVs, including crossovers, have been increasing as fuel prices have fallen this year. The average price for a gallon of gasoline in the US fell to $2.98 yesterday, the lowest since Dec 2010. Combined with technology that allows some SUV models to achieve a rating of 30 miles or more per gallon of highway driving, the segment is seeing a revival. Total light-vehicle deliveries are expected to rise 5.6% from year earlier to 1.28M. General Motors (GM) also had strong SUV sales even as it missed estimates. Sales for GM, the largest US automaker, rose 0.2%, below the 3.1% forecast. The Buick brand had its best Oct since 2007 as its Encore small SUV posted a 33% gain. Sales of the Cadillac Escalade rose 30% & the Chevrolet Tahoe large SUV was up 6.1% last month. FCAU said the industry’s annualized sales pace for Oct may have reached 16.9M, including medium & heavy-duty trucks that typically account for at least 200K yearly sales. GM estimated that the light-vehicle selling rate was 16.4M last month.
Ford, Chrysler Sales Exceed Estimates in October on SUV Demand
Saudi Arabia is telling the market it won’t cut output to lift crude back to $100 a barrel & that prices must fall further before it does so, according to consultant FACTS Global Energy. Swelling supplies from non-OPEC producers drove Brent crude lower from a month ago amid waning demand from China. OPEC meets Nov 27 to consider changing its production target in the face of the highest US crude output in almost 30 years. “Production of shale oil in the U.S. will not be hit as hard as the Saudis think” by the price decline, FGE Chairman Fereidun Fesharaki said today in Qatar. Producers in the US “can withstand a lot of pressure” by reining in their operating costs before they curb investment in new wells & production, he said. Crude could drop to between $60-$80 a barrel & stay within that range there for about 6 months until global production aligns with demand, Fesharaki. Oil in that range is the “right price” to balance the market, he added. Saudi Arabia was “clever” to vary its crude output between 8-10M barrels a day to compensate for plunging production in Libya after a rebellion toppled that nation’s former leader, Fesharaki said. The kingdom, which pumped 9.75M barrels a day last month, is now unwilling to produce less than 8M barrels daily to defend prices near $100, & other OPEC members would have to share the burden of any output cut the group may make, he said.
Saudi Arabia Signals It Will Let Oil Slide Further, FACTS Says
There was not a lot of excitement in the market today. Lower oil prices seem to be the story getting the most interest. On the one hand it saves consumers money at the gas pumps, but it's also hard on energy companies. MLPs could be feeling the effects of falling prices directly as they extract oil from the ground or have pipelines which move oil around the country. Their earnings for Q3 are coming out now & guidance for Q4 should help investors undertand how low price oil will impact them.
Dow Jones Industrials
