Stocks today pulled back on trade war jitters and led lower by tech stock biggies Amazon and Apple. The Dow closed the day down 95 points on light trading volume to end at 26,062. Stocks in China continued to sell off hard and the Shanghai Index is now off 26% from its January high.
Economic news in the US continues to be good. Recent data show that industrial production and manufacturing output hit record highs in August. The 12-month growth rates for both measures are now at the highest levels since 2012. The gains into record territory were driven by a surge in auto production but if you back this volatile reading out of the picture you still see that solid gains across the board.
The EIA released information that the US has just surpassed Russia and Saudi Arabia as the largest producer of crude oil in the world. Production in North Dakota and the Permian Basin in Texas is strong, and it is being done with half the number of rigs as before the 2014-2015 oil price crash due to improvements in productivity. Meanwhile US based energy companies are moving out of Canada. Natural gas pipeline giant Kinder Morgan announced last week it was putting its remaining Canadian operations up for sale. Kinder has operated in Canada since 2005 when it purchased the TransCanada pipeline, which recently sold to the Canadian gubment for a “load of loons”. Other energy companies that have recently left Canada are Williams Co and ETP. Buyers of the assets include Brookfield Assets Management and other smaller private equity firms.
KMS had its big conference last week and it was a huge success. One long time KMS broker said he only fell asleep twice. The highlight was a presentation by Ladenburg Thalmann Asset Management CEO Phil “The Italian Stallion” Blancato. It was a good presentation and Phil said the US economy is strong and we are mid cycle in the economic cycle with a couple of years of growth ahead of us. He did however note that he had reduced his international holdings due to uncertainly in overseas markets. He also noted that if you removed the FANG stocks (Facebook, Amazon, Netflix, Google) from the S&P 500 index, the index would be negative for the year which is an indicator that the markets are fairly narrow right now.