Warming Economy, Red Hot Stock Market

With 15% gains in the major stock indices (Nasdaq 28%) stocks are on pace for their 4th best year since 1999. Precursors of accelerating economic growth abound in 2017, reflective of the rebounding earnings and future expectations. The stubbornly sluggish US GDP continues to hover near its 2.1% post mortgage bubble 7-year expansion cycle. Underlying proxies of manufacturing and service sectors are approaching historic rates of expansion with record demand for job seekers. Factories are struggling to find capacity as New Orders and Shipments are outpacing depleted customer inventories. Today’s 3.0% GDP report for the 3rd quarter, following the 2nd quarter pace of 3%, is a strong sign that real growth is finally percolating to the economy’s bottom line GDP.
US Manufacturing as measured by ISM’s Purchasing Managers Index (PMI) hit a 13 year high in September, one of the most comprehensive rates of expansion ever recorded. Should legislative winds provide corporate tax cuts and an estimated $3 Trillion repatriation of foreign earnings in 2018, then there may yet be hope for GDP growth rates above 3% despite the impedance of a tight labor pool. Lower business taxes here would boost global growth as other countries follow suit.

This post was published at FinancialSense on 11/02/2017.

Car Manufacturers Are Electrifying Copper, ‘The Metal of the Future’

As many of you know, copper is often seen as an indicator of economic health, historically falling when overall manufacturing and construction is in contraction mode, rising in times of expansion.
That appears to be the case today. Currently trading above $3 a pound, ‘Doctor Copper’ is up close to 28 percent year-to-date and far outperforming its five-year average from 2012 to 2016.

Several factors are driving the price of the red metal right now. Manufacturing activity, as measured by the purchasing manager’s index (PMI), is expanding at a pace we haven’t seen in years in the U. S., eurozone and China. The U. S. expanded for the 100th straight month in September, climbing to a 13-year high of 60.8.
Speculators are also buying in response to word of copper shortages in China, despite September imports of the metal rising to its highest level since March. The world’s second-largest economy took in 1.47 million metric tons of copper ore and concentrates last month, an amount that’s 6 percent higher than the same month in 2016.

This post was published at GoldSeek on Tuesday, 17 October 2017.

The Biggest Global Tax Break Ever Bubbles Up from Texas Oil Industry

Recently, I had the privilege of appearing on ‘Countdown to the Closing Bell,’ Liz Claman’s program on Fox Business. When asked if I was nervous that stocks are heading too high, I said that I’m very bullish. All around the world, exports are up, GDPs are up and the global purchasing manager’s index (PMI) is up.
Oil prices continue to remain low, however, thanks in large part to the ingenuity of Texas fracking companies. As I told Liz, this has served as a multibillion-dollar ‘peace dividend’ that has mostly helped net importing markets, including ‘Chindia’ – China and India combined, where 40 percent of the world’s population lives – Japan and the European Union.
***
I can’t emphasize enough how impressive it is that Texas shale oil producers continue to ramp up output even with crude remaining in the $50 per barrel range.
This underscores their efficiency and innovation in drawing on oil reserves that were largely out-of-reach as recently as 10 or 12 years ago. What’s more, common law property rights here in the U. S. benefit mining companies in ways that simply can’t be found in Latin America and other parts of the world that operate under civil law.
According to the Energy Information Administration’s (EIA) most recent report on drilling productivity, total U. S. shale oil output is expected to climb above 6 million barrels a day for the first time in September. The biggest contributors are Texas shale oilfields, which will exceed 4 million barrels a day. West Texas’ Permian Basin alone represents nearly 400 percent of these gains, according to research firm Macrostrategy Partnership.

This post was published at GoldSeek on Tuesday, 26 September 2017.

Global Equity Markets Mostly Lower In Quiet Summertime Trading

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mostly weaker Wednesday. U. S. stock indexes are also pointed toward lower openings when the New York day session begins. World stock markets are having a tough month of August, heading into the historically even tougher months of September and October.
Gold prices are slightly higher in pre-U. S.-session trading. Gold prices are in a near-term uptrend, but struggle when prices approach the key resistance level of $1,300.00.
In overnight news, the Euro zone Markit composite purchasing managers index came in at 55.8 in August from 55.7 in July. The August number beat market expectations. A reading above 50.0 suggests growth in the sector.
The marketplace is awaiting the annual central bankers meeting held in Jackson Hole, Wyoming, Thursday through Saturday. Featured speakers from around the world include Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi. Traders and investors will closely examine the Jackson Hole speeches for clues on future monetary policy moves by the world’s major central banks. In recent years the Jackson Hole central bankers confab has significantly moved the markets.

This post was published at Wall Street Examiner on August 23, 2017.

Global Stocks Up As Commodity Mkts Rebounding; Busy Day For U.S. Data

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mostly higher overnight, boosted in part by upbeat corporate earnings reports and upturns in several raw commodity markets. U. S. stock indexes are pointed toward higher openings when the New York day session begins.
Gold prices are slightly lower on mild profit taking from recent good gains. The gold bulls still have the overall near-term technical advantage as prices are in an uptrend on the daily chart.
In overnight news, the Euro zone reported its gross domestic product at up 0.6% in the second quarter from the first, and up 2.1%, year-on-year. The second quarter saw the best GDP performance for the Euro zone since 2011.
The Euro zone manufacturing purchasing managers’ index (PMI) came in at 56.6 in July versus 57.4 in June. A reading of 56.8 was expected for July. A number above 50.0 suggests expansion in the sector.

This post was published at Wall Street Examiner by Jim Wyckoff ‘ August 1, 2017.

U.K. business optimism plunges in the wake of election

The optimism of Britain’s businesses is fading with their growth forecasts down to the lowest levels since the panic after last year’s Brexit vote.
Growth in the dominant services sector slowed down in June as new orders dipped and expectations of future demand also lost steam following the chaotic general election result.
The purchasing managers’ index, compiled by IHS Markit, fell to 53.4 in June, down from 53.8 in May. That is still above 50 and so indicates growth, but economists fear the pace will keep on slowing into the second half of the year.
Overall the surveys of the manufacturing, construction and services sectors point to GDP growth of 0.4pc in the second quarter, an improvement from 0.2pc in the first three months of the year.
But Chris Williamson, IHS Markit’s chief business economy, sounded a not of warning: “It’s clear that the economy heads into the third quarter losing momentum.”

This post was published at The Telegraph

Global Markets Mixed; Geopolitics Moving Into Spotlight Again

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mixed overnight. U. S. stock indexes are pointed toward mixed openings when the New York day session begins. Many U. S. traders are just now returning from a long holiday weekend. Gold prices are trading near steady after hitting a nearly four-month low overnight. The bears have technical momentum as gold prices are in a four-week-old downtrend on the daily bar chart.
The world geopolitical scene has heated up again, but safe-haven gold is not reacting much, at least not yet. North Korea says it has an intercontinental ballistic missile that the regime says can reach anywhere in the world. This has riled the U. S. and other Western nations. The Trump administration wants to take a hardline against the North Koreans, but its options are very limited.
In other overnight news, the Eurozone got some upbeat economic data. Retail sales were up 0.4% in May from April, and were up 2.6%, year-on-year. These numbers were better than market expectations. Meantime, the Eurozone Markit composite purchasing managers index (PMI) came in at 56.3 in June, which was slightly down from the May reading but still above market expectations.

This post was published at Wall Street Examiner on July 5, 2017.

Global Equity Markets Start Third Quarter On Positive Note

(Kitco News) – Most World markets started the second half of 2017 on an upbeat note Monday, boosted in part by positive manufacturing data just released.
The Eurozone June manufacturing purchasing managers’ index (PMI) came in at 57.4 versus 57.0 in May. A reading of 57.3 was expected in June. U. S. stock indexes are also pointed toward higher openings when the New York day session begins.
Gold prices are weaker and hit a six-week low overnight, on slack demand for the safe-haven metal amid the keener ‘risk-on’ trading atmosphere exhibited in the world marketplace recently.

This post was published at Wall Street Examiner on July 3, 2017.

World Stock Markets Mixed In Quiet Trading To End The Week

(Kitco News) – World stock markets were narrowly mixed in subdued overnight trading. U. S. stock indexes are also pointed to mixed openings when the New York day session begins.
Gold prices are posting good gains in pre-U. S.-session trading, on more short covering in the futures market and bargain hunting in the cash market.
In overnight news, the Euro zone’s Markit composite purchasing managers’ index (PMI) fell to 55.7 in June from 56.8 in May. The June number was lower than expected and at a five-month low.

This post was published at Wall Street Examiner on June 23, 2017.

Global Markets Quieter, Awaiting Very Busy Day For U.S. Economic Data

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mostly firmer overnight. U. S. stock indexes are pointed toward slightly higher openings when the New York day session begins.
Gold prices are lower in pre-U. S. session trading, after rallying to its highest level in a month Wednesday.
In overnight news, China saw some downbeat economic data Thursday. The unofficial China manufacturing purchasing managers index (PMI) came in at 49.6 in May versus the forecasts for a reading of 50.1. Meantime, the Eurozone May manufacturing PMI came in at 57.0, which was right in line with market expectations.
The important ‘outside markets’ on Thursday morning find Nymex crude oilfutures prices near steady. The oil market bears have regained downside momentum this week and the bears have the overall near-term technical advantage. Meantime, the U. S. dollar index is higher today. The greenback bears are still in near-term technical control as dollar index prices are in a nearly three-month-old downtrend.

This post was published at Wall Street Examiner by Jim Wyckoff ‘ June 1, 2017.

Hedge Fund Managers Pour SALT on U.S. Stocks, Look to Europe

By Frank Holmes
Europe is back on the map. That was one of the main takeaways last week from the SkyBridge Alternatives (SALT) hedge fund conference in Las Vegas, where $3 trillion in assets was represented. Speaker after speaker touted European equities for their attractive valuations and as a means to diversify away from the volatile American market in light of rising U. S. geopolitical risk. France’s election of centrist Emmanuel Macron over far-right nationalist Marine Le Pen this month has especially eased investors’ fears that antiestablishment forces would challenge the integrity of the European Union (EU).
Economic growth is finally picking up in Europe – ‘solid and broad,’ as European Central Bank (ECB) president Mario Draghi recently put it – and many countries’ purchasing managers’ indexes (PMIs) are at five- and six-year highs. Export orders and hiring have accelerated. Labor participation is improving. European commodity sectors, including energy and metals, look cheap and oversold, meaning it might be time to start accumulating.
Trading at around 17 times earnings, European companies are priced to move compared to American firms, which are trading at 22 times earnings.

This post was published at GoldSeek on Tuesday, 23 May 2017.

Global Markets Show Muted Reaction To U.K. Terror Attack

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mixed in overnight trading, with Asian shares mostly weaker and European stocks mostly firmer. U. S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Gold prices are slightly lower in pre-U. S. trading.
The world markets have not shown significant reactions to the terror bombing attack at a concert in Manchester, England that killed nearly two dozen young people and injured scores. These major terror attacks that occur a few times each year, unfortunately, are not surprising to the markets any more.
In overnight news, the Euro zone’s Markit composite purchasing managers’ index (PMI) came in at 56.8 in May, which is unchanged from April. The number is considered very robust and continues a string of generally upbeat economic data coming out of the European Union. Any PMI reading above 50.0 suggests growth in the sector.

This post was published at Wall Street Examiner by Jim Wyckoff ‘ May 23, 2017.

PIMCO Warns “Brace For Lower Growth” From A Less ‘Impulsive’ China

At the end of February, when we first reported that “The Global Credit Impulse Suddenly Collapsed To Negative“, citing UBS data on China’s credit impulse, we warned readers to ignore the sideshow that is Trumponomics, and focus entirely on monetary and credit developments out of China, especially since said developments were increasingly more concerning.
Now, over two months later, the same warning is being echoed by none other than the firm which recently regained the title of the world’s biggest active bond fund.
In the company’s blog, PIMCO’s Gene Fried echoes everything we have said and write that following the defeat of the new U. S. healthcare bill, investors have begun to rethink the likely time frame and extent of the Trump administration’s other top priorities, such as fiscal stimulus. Equity markets stalled and bonds rallied as investors toned down their expectations for global reflation recently.
None of this is horribly surprising, but by focusing so intensely on U. S. political developments, investors risk missing a silent shift in what has arguably been the strongest driver of global reflation in the last five years: Chinese credit. This driver is now moving sharply in reverse.
China’s ‘credit impulse,’ the change in the growth rate of aggregate credit to GDP, bears close watching: It has tended to lead the Chinese manufacturing Purchasing Managers’ Index (PMI) by a year (see Figure 1) and the U. S. Institute for Supply Management’s (ISM) manufacturing index by 14 months.

This post was published at Zero Hedge on May 3, 2017.

7 Reasons to Be Bullish on Emerging Europe

1. Eurozone PMI at a Six-Year High
For the month of March, the preliminary purchasing manager’s index (PMI) for the eurozone reached 56.7, its highest reading since April 2011. Significant gains were made in new work and backlogs of work, employment and service sector job creation.

This post was published at GoldSeek on Wednesday, 29 March 2017.

Why Commodities Could Be on the Verge of a Massive Surge

After finishing 2016 up 25 percent, commodities are getting another boost from bullish investors. Investment bank Citigroup forecasts commodity prices will increase this year on strengthening demand in China and mounting inflation inspired by President Donald Trump’s ‘America First’ policies. Commodity assets under management globally stood at $391 billion in January, up 50 percent from the same time the previous year, according to Citigroup.
Meanwhile, hedge fund managers significantly raised their bets that copper and oil prices have much further to climb, Bloomberg reported, with net-long positions in the Comex and Nymex markets surging to all-time highs.
In addition, global manufacturing activity has expanded for the past six straight months, a good sign for commodities demand going forward. As I shared with you earlier in the week, the global purchasing managers’ index (PMI) advanced to a 69-month high of 52.9 in February, with strong showings from the U. S. and eurozone.
Asia Looking for $26 Trillion: Asian Development Bank
As for China and the rest of Asia, a recent special report from the Asian Development Bank (ADB) calculates the cost to modernize the region’s infrastructure at between $22.6 trillion and $26 trillion from 2016 to 2030. This comes out to about $1.7 trillion a year in global investment that’s required to maintain Asia’s growth momentum, deliver power and safe drinking water to millions, connect towns and cities, improve sanitation and more.
As you can see in the chart below, the bulk of the infrastructure need is in East Asia, which is seeking more than $16 trillion between now and 2030.
Governments have devoted funds to support only some of the projects. Currently, 25 economies in the region are spending a combined $881 billion annually on such projects, leaving a substantial spending gap for global investors to fill. This is an unprecedentedly huge opportunity for commodity and materials investors.

This post was published at GoldSeek on 8 March 2017.

Eurozone Equities: Political Risks versus Strong Macro Crosscurrents

The recovery in the Eurozone economies is firming with respect to private consumption and investment, with higher employment and labor income, according to the European Central Bank (ECB). Yet financial markets are on edge as a result of heightened political risk, with important elections coming up in the Netherlands, France, Germany, and probably Italy.
The economic news has been decidedly positive. Eurozone real GDP advanced by 0.4% in the fourth quarter, continuing the steady pace of quarter-on-quarter increases that have ranged between 0.3% and 0.6% since mid-2014. These figures have been somewhat above estimates of potential output. The January Markit Eurozone Composite Purchasing Managers Index (PMI), which covers both the manufacturing and service sectors, indicates that the Eurozone economy is growing at its fastest pace since mid-2011. Jobs are being created at the fastest rate since February 2008. An index of companies’ expectations about levels of output one year ahead has reached its highest level since the series was created in July 2012.
For France the January manufacturing PMI registered a 67-month high, with the sharpest increase in job creation in over five and a half years and marked expansion in both output and new orders. Similarly, the manufacturing sector in the Netherlands, as measured by the January manufacturing PMI, experienced sharp expansions in both output and new orders, along with the largest rise in new jobs in almost six years. Germany’s manufacturing sector, the Eurozone’s largest, grew at its fastest pace in three years, with both output and new orders accelerating.

This post was published at FinancialSense on 02/17/2017.

Global Growth Is ‘N Sync – All Eyes on Yields

Originally posted at Briefing.com
Without looking it up, can you name all five members of the boy band ‘N Sync? Don’t be disappointed if you didn’t get past Justin Timberlake and Lance Bass, but if you got the third, fourth and/or fifth members, give yourself a synchronized high-five. Now, stop to consider that there is another band in sync these days and it includes the U. S., Germany, the eurozone, China, and Japan.
There’s little chance anyone will forget the names of those five band members when discussing the global economy, especially when that group is turning out regular hits these days with their manufacturing Purchasing Managers Index (PMI) reports.
That’s right. These countries are all in sync with manufacturing PMI readings that are trending higher.
That’s an encouraging consideration for a global economy that has been stuck in a low-growth rut and it could hold some important ramifications for monetary policy and global markets.

This post was published at FinancialSense on 01/30/2017.

Euro Area Sees Price Gains as Manufacturing Picks Up Pace

Euro-area manufacturing expanded last month at the fastest rate since April 2011, in a sign that the currency bloc’s recovery is intact heading into 2017.
A Purchasing Managers’ Index climbed to 54.9 in December, IHS Markit said on Monday. The reading matches the initial estimate on Dec. 15 and was up from 53.7 in November. Higher import costs resulting from a weaker euro, combined with increased global commodity prices, led to the sharpest inflation for average purchasing costs in more than five-and-a-half years.
The European Central Bank has extended its stimulus program until at least the end of the year as it strives to return consumer-price growth to its goal of just under 2 percent. While inflation looks set to accelerate in coming months, officials are concerned that core prices — excluding energy and food — have so far shown no convincing upward trend.
‘Euro-zone manufacturers are entering 2017 on a strong footing, having ended 2016 with a surge in production,’ said Chris Williamson, chief business economist at IHS Markit. ‘Policy makers will be doubly-pleased to see the manufacturing sector’s improved outlook being accompanied by rising price pressures.’

This post was published at bloomberg

Risk On: 2017 Stock Rally Continues As Global Inflation Accelerates

Following another day of upbeat economic data, with growing signs that inflation on both sides of the Atlantic is accelerating, investors rediscovered their faith in the Trumpflation rally, pushing global stocks and US equity futures higher, fuelling a second day of 2017 equity gains ahead of today’s release of the Fed’s December minutes.
The dollar slumped and the euro moved further above $1.04 after data showed French consumer confidence hit its highest for nine years and businesses across the euro zone ended 2016 by ramping up activity at the fastest pace for five-and-a-half years. This followed similarly upbeat reports this week on U. S., UK, Chinese and Japanese business activity.
‘The year has started with a stream of good macro stories which has justified a risk on position with investors,’ Andrew Milligan, head of global strategy at Standard Life Investments told Bloomberg. He favors stocks and bonds of developed countries poised to benefit from a reflating U. S. economy that will boost the dollar over emerging markets.
The Eurozone composite Purchasing Managers’ Index climbed to 54.4 in December from 53.9 in November, IHS Markit said on Wednesday. That’s the highest in 67 months and above a Dec. 15 estimate. Strength in both the manufacturing and service sectors was due in part to a weaker euro, London-based Markit said in a statement. Economic expansion was signaled across the ‘big-four’ nations, with Spain leading the way, followed closely by Germany.

This post was published at Zero Hedge on Jan 4, 2017.

ISM Manufacturing Index: December PMI Highest in Two Years

Today the Institute for Supply Management published its monthly Manufacturing Report for December. The latest headline Purchasing Managers Index (PMI) was 54.7 percent, an increase of 1.5 percent from 53.2 previous months and its highest since December of 2014. Today’s headline number was above the Investing.com forecast of 53.6 percent.
Here is the key analysis from the report:
‘The December PMI registered 54.7 percent, an increase of 1.5 percentage points from the November reading of 53.2 percent. The New Orders Index registered 60.2 percent, an increase of 7.2 percentage points from the November reading of 53 percent. The Production Index registered 60.3 percent, 4.3 percentage points higher than the November reading of 56 percent. The Employment Index registered 53.1 percent, an increase of 0.8 percentage point from the November reading of 52.3 percent. Inventories of raw materials registered 47 percent, a decrease of 2 percentage points from the November reading of 49 percent. The Prices Index registered 65.5 percent in December, an increase of 11 percentage points from the November reading of 54.5 percent, indicating higher raw materials prices for the 10th consecutive month. The PMI, New Orders, Production and Employment Indexes all registered new highs for the year 2016, and the forward-looking comments from the panel are largely positive.’ [source] Here is the table of PMI components.

This post was published at FinancialSense on 01/03/2017.