Baltic Dry Index. 1558 -17 Brent Crude 64.39
Spot Gold 1460
Never ending Brexit now January 31,
maybe sooner.
Trump’s Nuclear China Tariffs
Now in effect.
The USA v EU trade war started October
18. Now in effect.
“The markets in the long
run are no doubt driven by fundamental economic laws—if the United States runs
a persistent trade deficit, the dollar will eventually plummet—but in the short
run money flows less rationally. Fear and, to a lesser extent, greed are what
make money move.”
Liar's Poker
With the latest US jobs report on
Friday, all is well at the Great Trump Party, the punchbowl is full and getting
constantly topped up. Drink up and party on!
This old dinosaur commodities trader and
market follower since 1968, will still slip out of the party early. I don’t
fully trust the figures, given the ending of the long GM automotive strike, but
anyway employment always booms right up until the moment it doesn’t once the
next recession starts. Just don’t tell that to anyone on Wall Street.
I’ll stay focused on rising trouble in
the global economy, Germany leading the EUSSR into recession, an increasing US
manufacturing slowdown, a growing US agriculture and trucking recession, a
recent big miss in US home sales and what appears to me to be a growing widespread
downturn in US real estate pricing.
But who am I to rain on yesterday’s Wall
Street, Trumpian employment, parade?
Below, drink up and party on. What could
possibly go wrong?
Jobs growth soars in November as payrolls surge by 266,000
Those totals easily beat the Wall Street consensus. Economists surveyed by Dow Jones had been looking for solid job growth of 187,000 and saw the unemployment rate holding steady from October’s 3.6%. The decline in November’s jobless rate came amid a corresponding 0.1 percentage point drop in the labor force participation rate, to 63.2%.
Stocks opened sharply higher in reaction to the better-than-expected report. Bond yields also surged.
“Bottom line, America is working,” Larry Kudlow, director of the National Economic Council, told CNBC’s “Squawk on the Street.” “These are very strong numbers. These are happy numbers, these are sunny Friday numbers.”
The jobs growth was the best since January’s 312,000 and well clear of the November 2018 total of 196,000. While hopes already were up, much of that was based on the return of General Motors workers following a lengthy strike. That dynamic indeed boosted employment in motor vehicles and parts by 41,300, part of an overall 54,000 gain in manufacturing.
----In addition to the robust November gains, revisions brought up totals from the two previous months. September’s estimate went up 13,000 to 193,000 and the initial October count increased by 28,000 to 156,000. Those changes added 41,000 to the previous tallies and brought the 2019 monthly average to 180,000, compared with 223,000 in 2018.
“This is a
blowout number and the U.S. economy continues to be all about the jobs,” Tony
Bedikian, head of global markets for Citizens Bank said in a note. “The
unemployment rate is at a 50-year low and wages are increasing. Business owners
may be getting more cautious due to trade and political uncertainty and growth
may be slow, but consumers keep spending and the punch bowl still seems full.
More
CNBC’s Cramer says U.S. ‘can walk away from the table’ in China trade talks after jobs report
By Mark
DeCambre Published: Dec 6, 2019 7:27
p.m. ET
A hotter-than-expected jobs report for November has Wall
Street waxing extremely bullish. How much so?
Some market participants are starting to contemplate the notion that stellar employment figures could help embolden U.S. trade negotiators in a protracted tariff dispute between the U.S. and China—possibly resulting in a delay if not outright scuttling of a long-sought-after resolution.
Indeed, a key report of the week from the Labor Department report showed that the U.S. economy created 266,000 new jobs in November, according to the Labor Department, the biggest gain since January and the unemployment rate slipped to 3.5%, a 50-year low.
On top of all that, the government also revised the increase in new jobs in October to 156,000 from 128,000 and September’s gain was raised to 193,000 from 180,000, all underscoring health in one of the pillars of strength in the domestic economy in its 11th year of expansion.
A few strategists, traders, economists and TV personalities saw those numbers making a U.S.-China trade deal less likely to happen before a Dec. 15 deadline for $156 billion in new tariffs on consumer goods to take effect.
“This positive number could delay any US/China trade agreement, as signs of a stronger US economy will embolden US negotiators,” wrote Chris Gaffney, president of World Markets at TIAA Bank, in a research note after the nonfarm-payrolls report on Friday.
“As Trump stated earlier this week, he really isn’t in any rush to get a deal done by year end and the positive jobs data should rally the equity markets going into year end,” he said.
More
Opinion: Trump perfectly orchestrates the stock market’s rise whenever momentum wanes
By Nigam
Arora Published: Dec 5, 2019 12:20
p.m. ET
President Trump has successfully turned a segment of stock
market investors into puppy dogs. Just witness trading this week.At the same time, Republicans are beginning to tie Trump’s hands in small ways. Let’s explore these issues with the help of two charts.
Please click here for an annotated chart of ETF DIA, +0.11%, which represents the Dow Jones Industrial Average DJIA, +0.10%.
Please click here for an annotated chart of S&P 500 ETF SPY, +0.24%, which represents the benchmark S&P 500 Index SPX, +0.15%. For the sake of transparency, this chart was previously published at a time when stock market futures were running high before the latest drop in the stock market.
Note the following:
• The first chart shows that the Dow fell over 400 points on Trump’s comments that it might be best to complete the phase-one trade deal with China after the election.
• The first chart shows that the very next day, the Dow jumped over 200 points on Trump’s comments that talks with China were going well.
• The first chart shows that Trump has been orchestrating the stock market’s rise with his near-perfectly timed comments. Please see “President Trump might just be the best stock market timer ever.”
• The second chart gives you a better perspective of the technical condition of the market. The chart shows two prior patterns combining the price action, internal momentum and volume that are similar to the present pattern in the stock market. In both prior cases, the stock market declined. For details on interpreting the chart and other relevant macro data, please read “Believe in a Santa Claus rally if you want, but first look at this chart.”
• The U.S. Senate is getting ready to vote on a bill for sanctions against China for internment of over one million Uighur Muslims in the Xinjiang province in northwest China.
• Republicans are getting up the nerve to join Democrats to pass the bill.
• The bill is likely to have a veto-proof majority.
• Investors should note that Republicans are joining Democrats to force Trump to sign the bill, which would certainly anger China.
More
Almost half of big investors predict a stock-market drop in 2020
Natixis finds the world’s largest investors in wait-and-see mode, hamstrung by political turmoil
By Mark
Cobley December 5, 2019 12:01 am GMT
Almost half of the world’s large investment funds,
such as pension schemes, endowments and insurance firms, think the stock market
is due for a correction in 2020, according to the latest survey of their views.The finding, from an annual survey by Natixis Investment Managers of 500 funds worth a collective $15tn, marks an uptick in scepticism from last year.
While 48% of respondents to the survey said they fear a stock-market setback this year, 41% said the same at the end of 2018.
The S&P 500 has risen 25% in 2019, while the MSCI World is up 22.4% in dollar terms.
Despite the apparent rise in converts to the bearish cause, the world’s largest investors are not making significant changes to where they put their money. “Asset allocations remain in a holding pattern,” Natixis reported.
The French fund manager found small declines in the sums its respondents have invested in public equity markets — 36.5% to 35.8% — and bond markets, from 39.1% to 38.7%.
The winner was off-market “alternative” investments, a catch-all term for property, private equity, infrastructure and certain kinds of hedge funds and illiquid debt funds. That went from 17.5% to 18.7% of investors’ portfolios — an implied net investment of around $180bn, based on total assets of $15tn in the survey.
---- Looking ahead to 2020, Natixis said respondents expect politics to continue to weigh heavy on the market’s prospects. Sixty-nine per cent of respondents said countries interfering in one another’s elections is becoming an increasing problem around the world, and 64% said the US presidential poll next year will be a major source of market volatility.
More
German industry slump sparks renewed economic growth fears
December 6, 2019 / 7:25 AM
BERLIN (Reuters) - Germany’s industrial
output unexpectedly dropped in October, reviving worries about its economic
growth outlook as its manufacturing backbone takes a blow from global trade
conflicts and disruptions in the auto sector.
Industrial
output dropped 1.7% on the month against expectations for a 0.1% rise,
Statistics Office figures showed on Friday. Production of capital goods slumped
by 4.4% on the month, the steepest decline in more than five years.
Europe’s
biggest economy is going through a soft patch as its export-oriented
manufacturers struggle against a backdrop of trade friction, an ailing car
industry and uncertainties over Britain’s planned departure from the European
Union.
“Now the
trepidation starts again about GDP growth in the final quarter,” said
Jens-Oliver Niklasch, economist at Landesbank Baden-Wuerttemberg.
German
industry now expects output in the coming months to fall more slowly than was
foreseen a month ago, a survey of 2,300 firms in the sector by the Ifo economic
institute showed.
In its 10th
successive year of growth, Germany’s economy has been relying on strong
consumption as exports weaken, which resulted in a second-quarter GDP
contraction of 0.2%.
The economy
grew by just 0.1% in the third quarter, narrowly avoiding recession, which
economists usually define as two consecutive quarters of negative growth.
“Trade
conflicts, global uncertainty and disruption in the automotive industry have
put the entire German industry in a headlock, from which it is hard to escape,”
said Carsten Brzeski, economist at ING.
The
automobile association VDA said on Wednesday that it expected global car sales
to fall by 5% this year and that the crisis would force German companies to cut
more jobs in 2020.
More
Finally, Softbank Group once again.
Merry Christmas from Katerra. Is Softbank the next Drexel Burnham?
SoftBank-Backed Katerra to Cut 200 Jobs, Close Arizona Factory
The construction startup funded by SoftBank is aiming to turn an operating profit by the end of next year.
Sarah McBrideDecember 3, 2019, 5:39 PM EST
Katerra Inc., a modular construction startup, got an $865 million cash infusion from investors led by
SoftBank Group Corp. last year. Now, the company is shutting down a factory in Phoenix and cutting 200 jobs.
The move will shift Katerra’s manufacturing away from Phoenix and into its highly automated and lower-cost factory in Tracy, California. The transition will help the company grow more quickly in the U.S. and overseas, said Katerra Chief Executive Officer Michael Marks. It will also put the startup on track to turn an operating profit by the end of next year, and to double revenue to about $4 billion, he added.
Of the cost-cutting, “that’s never good news for the people getting laid off,” Marks said.
SoftBank’s investment into Katerra adhered to its typical playbook of pumping big money into potentially transformative startups. Katerra’s mission is to shake up the construction industry with a combination of efficient factories, prefab parts and modular construction units. But SoftBank’s methods proved risky this year, when one of its major investments, co-working startup WeWork, was forced to scrap plans for an initial public offering once investors got a look at its finances and corporate governance.
Katerra’s large investment from SoftBank’s Vision Fund allowed for rapid growth, in part driven by the acquisition of smaller construction companies. But integrating the other businesses hasn’t always gone smoothly, and Katerra has been dealing with construction delays and issues with perfecting its modules, such as wall panels and floor panels.
---- Many of Katerra’s contracts and some of its top hires come directly from introductions made by SoftBank, he said, including that of the recruiting firm that found Katerra’s new chief financial officer, General Electric Co. veteran Matthew Marsh. SoftBank can also be credited for lining up business for Katerra from other Vision Fund companies, including WeWork parent We Co. Katerra is designing a pantry and lighting system for use in future WeWork projects.
Of the
Vision Fund’s 88 portfolio companies, some are “just doing so wildly fabulous,
and no one ever writes about that,” Marks said, calling much of the criticism
about SoftBank “inflammatory.” Some of the Vision Fund’s fast-growing companies
include South Korean online retailer Coupang and blood-testing company Guardant
Health Inc.
Katerra
plans to keep the Phoenix factory operational through the end of the year.
Marks said that despite the timing during the holiday season, he hoped that
employees would be able to quickly find new work. Workers who are affected will
get a 90-day severance package that includes full pay and benefits, the
company said.
More
“Buy potatoes,” he said.
“Gotta hop.” Then he hung up. Of course. A cloud of fallout would threaten
European food and water supplies, including the potato crop, placing a premium
on uncontaminated American substitutes. Perhaps a few folks other than potato
farmers think of the price of potatoes in America minutes after the explosion
of a nuclear reactor in Russian, but I have never met them.”
Liar's Poker.
This weekend’s musical diversion. Time
for a little French triumphalism. Step up Marc-Antoine Charpentier (1636 – 1704.) Turn up the volume and enjoy.
Charpentier - Marche de Triomphe H.547
Once again, another year draws to a close and it’s
time for my annual year-end appeal.
If you are a regular reader who finds the LIR
informative, interesting, occasionally amusing or entertaining, please consider
making a small donation via the Paypal button on the right of the LIR website.
For obvious reasons in our new age of mainstream media fake news, and data
tracking, I want to keep the LIR advertising free, but capitalist. But in any
event, thank you for reading and sending along helpful articles and suggestions.
21st
century adage: Is that true, or did you hear it on the BBC?
The monthly Coppock Indicators finished November
DJIA: 28,051
+63 Up. NASDAQ: 8,665 +94 Up. SP500: 3,141 +90 Up. All higher again, but it’s not a buy signal I would
follow.
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