Trading yesterday was volatile with shares ultimately rebounding considerably higher on reports that the US-China trade picture is brightening. Technology outperformed by a 2:1 margin. Oil advanced for the second consecutive day as Saudi Arabia is telegraphing its intent to recommend to OPEC to reduce production by 1.5 million barrels at the early December meeting. If such were to occur, Goldman is suggesting $75 barrel oil by January.
As widely discussed, crude was trading around $75 five weeks ago, plummeted 25% for a myriad of reasons. If prices rebound back, this would perhaps be the quickest bull/bear/bull market rotation in history. Commodities are volatile but I believe this volatility is amplified by technology based trading that has destroyed the original intent of the futures market.
Changing topics, many believe the global economies are slowing down. Yesterday JP Morgan’s CEO stated 2019 could be the fastest global growth on record. His rationale was simplistic. Strong jobs market and consumer sentiment, tax reform and robust capital spending that is causing a rise in productivity.
I share this view and believe monies will continue to gravitate to Main Street from Wall Street. The implications of such are huge particularly in the bond market and for monetary policy.
What will happen today?
Last night the foreign markets were down. London was down 0.54%, Paris down 0.36% and Frankfurt down 0.20%. China was up 0.41%, Japan down 0.57% and Hang Sang up 0.31%.
The Dow should open moderately lower on trade concerns, a disappointing sales forecast from a a chip provider and general political unease in Britain and Italy. Oil is up about 2% amid growing confidence that OPEC and its partners will reduce production. The 10-year is up 2/32 to yield 3.11%.
