Your Monday Market Blip 1/4/16

Your Monday Market Blip 1/4/16

Stocks opened the year in the red as economic weakness in China and conflict in the Middle East started the New Year off with a thud. The opening day wild ride ended with the Dow off 276 points to 17,148. Trading volume was back to normal as the Dow clings to support at the bottom end of its trading range. For 2015 the Dow returned a negative 2.23% which is the first loss since 2008.
The ISM index which tracks US factory data slipped to a point not seen since 2009 as a strong US dollar caused US manufacturers to pull back a bit. Similar manufacturing data for China also showed a slowdown causing a selloff in Chinese stocks which spilled over to US markets. Meanwhile in Europe, factory data was stronger than expected and showed expansion as European factories benefited from economic stimulus and a weak euro. While the US data was a disappointment, economists said it should not affect US GDP growth which is expected to hover in the 2% range.
The boiling caldron of unrest aka “the Middle East” continues as Saudi Arabia and Iran are at odds with each other regarding the 1,400 year old conflict between sunni and shia factions. This latest conflict in an ongoing timeless tussle, threatens the very existence of OPEC because global buyers wanting to avoid the “caldron of unrest” might shift oil purchases to the more stable, prosperous and awash in oil nation known as America. Evidence of this might be seen in the news today that Conoco Phillips sold and shipped oil from Corpus Christi Texas to Swiss based commodity trader Vitol. This marks the first time in 40 years that US energy companies have been allowed to export oil. Experts in the US think that lifting of the export ban will add jobs in the US, equalize the price between WTI crude and North Sea Brent and lower domestic gasoline prices. In baseball terms this is a “triple”. If you add in the fact that it will bring money into the US you now have a “home run” blast that even Ken Griffey Jr would stand back and admire. It’s amazing what a free market can do!