Dow climbed 125 (off the highs), advancers over decliners 2-1 & NAZ gained 38. The MLP index rose 10+ to the 252s & the REIT index slid back 2+ to the 306s. Junk bond funds were bid higher & Treasuries advanced, taking the yield on the 10 Treasury below 2%. Oil AM gains were pared in late day trading & gold was essentially even (still well above 1100).
OPEC delegates said they have no meeting planned with Russia after
the country's Energy Minister Alexander Novak indicated he was willing
to meet with the group next month to coordinate oil-output policy. 4
OPEC representatives said they hadn’t heard of any plan for talks. One
Gulf member said de facto leader Saudi Arabia had no proposal to trim
production by 5%, after a country had
suggested such a cut at previous OPEC meetings (citing Novak). The
minister said Russia would be willing to discuss output with OPEC. Until this week, Russia, which
relies on energy for more than 40% of its budget revenue, had
repeatedly stated its goal of keeping crude production stable even as
prices tumble. Still, this month's price slump to a 12-year low has put
the country under increasing financial pressure. The Finance Ministry
says the nation's budget deficit, already at a 5-year high in 2015,
may widen this year as the rout deepens. There are significant
obstacles in the way of an agreement with the OPEC. Saudi Arabia wants to defend market share &
Russia's inability to cut production in winter months makes coordination
difficult. Russia's oil output is set to reach a post-Soviet record of 10.89M barrels a day in
Jan.
The 2 countries' opposing views on Syria, where Russia is pres Al-Assad's closest ally & Saudi Arabia seeks his removal,
present another diplomatic obstacle. The state energy producer Saudi Arabian Oil,
signaled last week that the kingdom would persist
with its policy of maintaining production. Global oil markets are in
the process of re-balancing & a price recovery is “inevitable,” he
said. OPEC's next scheduled meeting is in Jun. With the
organization effectively abandoning its output ceiling in Dec,
Russia pumping at record levels & US shale fields proving more
resilient than forecast, the global surplus has continued to swell &
prices have continued to fall.
The U.S. Census Bureau reported home ownership at 63.7% in Q4. That puts homeownership rates near the lowest they've been since the 1990s. Although there has been a slight uptick from the previous 2
qtrs, homeownership are well below where they were in 2004, when
they were as high as 69.4%. Rates have been steadily declining
nationwide since before the last recession.
Source: US Census Bureau
Ownership rates remain highest in the Midwest & lowest in the West. Meanwhile, Millennials continue to shy away from buying homes. A
decade ago, 43% of people 18-35 years old were homeowners. Today,
it’s below 35%. But the decline isn't just because of Millennials. All age groups
have seen a falloff in homeownership in the past 10 years. In 2005,
69.7% of those 35-44 years old owned a home. In 2015, it was 59.3%. However, it also means the demand for rentals is on the rise. Median
asking home prices are back to where they were 10 years ago but median
rents are up 43% in that time.
Apple, a Dow stock, acquired education-technology startup LearnSprout,
which creates software for schools & teachers to track students’
performance. AAPL is working on education tools for the iPad,
which will allow students to see interactive lessons, track their
progress, & share tablet computers with peers. "Apple buys smaller
technology companies from time to time, and we generally do not discuss
our purpose or plans," a company spokesman said. More than 2½K school districts in 42 US states
use LearnSprout software. The
startup has raised more than $4M from investors. LearnSprout
competes with Clever, which has raised more than $40M from investors. The stock was fractionally higher. If you would like to learn more about AAPL, click on this link: club.ino.com/trend/analysis/stock/AAPL?a_aid=CD3289&a_bid=6ae5b6f7
Rising stock prices today are a mystery other than bargain hunting after yesterday's decline. Saudi Arabia is not going to cut production & most other OPEC are pumping all the oil they can to limit the decline in revenue. Then there's Iran which is already doing a lot of business with European countries. Earnings have been nothing to write home about. The high yield sector has done well this week, probably from bargain hunting after so much selling. Dow finished above 16K, but still has a substantial decline in Jan which is a solid negative sign for the rest of the year.
Dow inched up 14, advancers over decliners 2-1 & NAZ added 2. The MLP index jumped 12+ to the 254s & the REIT index went up 1+ to the 309s. Junk bond funds edged higher & Treasuries were weak. Oil shot up to the 33s (see below) while gold was flattish.
Oil climbed to a 3-week high after Russia's Energy Minister was
reported to say that OPEC & other producers will meet next month to
discuss a potential production cut & futures surged. Alexander Novak said the meeting participants may
discuss a Saudi Arabian proposal for all oil-producing countries to trim
production by 5%. The Organization of
Petroleum Exporting Countries abandoned its output target in Dec at a
meeting in Vienna, & Saudi Arabia has led the group in fighting for
market share against higher-cost producers such as shale drillers in the
US.
Oil
is down about 6% this year as volatility in global markets adds
to concern over brimming US stockpiles & an expected increase in
Iranian exports after the removal of intl sanctions. Saudi
Arabia, the de facto leader of OPEC, has insisted that output cuts can
only happen with the cooperation of other producers. Yesterday, Russia talked down the prospect of working with OPEC to cut output as the country's energy minister met with heads of the nation's biggest
oil companies to discuss coordinating with the group. Pres Putin's spokesman said that while
consultations with other producing countries were regular, there wasn't
any “specific discussion on coordination of actions” on output.
Orders for business equipment fell in Dec by the most in 10
months, a sign US companies were slashing capital investment even
before the turmoil in global financial markets. Bookings for
non-military capital goods excluding aircraft plunged 4.3% last
month after a 1.1%t decrease in Nov that was previously
reported as down 0.3%, according to the Commerce Dept. Orders for all durable goods slumped 5.1%, the most since Aug 2014,
reflecting a broad-based pullback. Spending on equipment may stay
depressed as a further decline in oil prices prompts energy companies to
retrench. What's more, US exporters continue to struggle against
softer global demand and an appreciating $.
The
forecast estimated orders
for all durable goods would fall 0.7%. Bookings for non-defense
capital goods excluding aircraft, a proxy for business investment,
were projected to slip 0.2%. Shipments of non-military
capital goods excluding aircraft, used to calculate GDP, decreased 0.2% after falling 1.1% the month before. Equipment
spending cooled in Q4 after rising at a
9.9% annualized pace in Q3, the strongest since
the same period in 2014. Companies placed fewer orders for
communications gear, computers, machinery & transportation equipment.
The only increases were in primary metals & electrical equipment. Commercial
aircraft orders slumped 29.4% after falling 23.3% a month earlier. Excluding
transportation equipment, which often swings from month to month,
bookings decreased 1.2%. Orders
for military equipment dropped 34.4% last month, while demand
for non-defense goods decreased 2.9% after falling 2%. This
report indicates companies are making progress paring inventories after
stockpiles earlier this year outstripped demand. Durable goods
inventories increased 0.5%, the most since the end of 2014. The
plunge in crude oil prices has prompted producers to reduce investment. .
Applications for unemployment benefits in the US declined last week
from a 6-month high, indicating layoffs remain low following the
volatility typically associated with post-holiday staff adjustments. Jobless
claims fell 16K to 278K from
294K in the prior period, according to the Labor Dept. The forecast called for 281K. The number of those continuing to
receive benefits climbed. Claims near 4-decade lows are consistent with labor market improvement that the
Federal Reserve cited on yesterday. The 4-week moving average decreased to 283K last week, from 285K. The
number continuing to receive jobless benefits rose 49K
to 2.27K & the unemployment rate among
people eligible for benefits climbed to 1.7% from 1.6% the
prior period. Since
early Mar, claims have been below the 300K level that economists
say is typically consistent with an improving job market.
The talk about production cuts by OPEC are being treated as a lot of hot air. That's all it is. Even if there are cuts, they will take time to be felt in the oil market & Iran will be adding to production when given the green light. Meanwhile, sluggish growth around the world, especially in China, will weigh on demand. Dow is still looking up at 16K, hoping to rise above that level.
![Live 24 hours gold chart [Kitco Inc.]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_vNlLwnlNBE_-ESNGJvYBdfcj7SNBYtdLBwps6OWwwD2pu9yntmhxzG9wvQSBs2_PlA7ObMRFkKFY3HsVdAyGuSoYtijCxEDXEUeuIEajf7e3rI6NYWFLSQW9siFtlY8mg=s0-d)
...1.03 
