The Dow moved higher on the back of surging tech stocks and ongoing trade negotiations with China as the big guns are set to meet again next week. At the close the Dow was up 216 at 25,962 on heavier trading volume.
Economic data in the US continues to look ok. The Leading economic indicators (LEI) index turned positive for the first time since September as the index moved up 0.2%. For you wood tics and bark beetles out there, North American lumber production was up 3.3% from 2017 to 2018 while Canadian production was down 2.3%. Lumber prices are stable, but buyers are suggesting the recent harsh winter stalled construction and has created pent up demand. They figure that once the snow melts there could be a surge in orders. We shall see.
The South China Mornings Post is reporting that unemployment in China hit a two-year high rising from 4.9% to 5.3%. They also noted that household debt in China has risen to 52% of China’s gross domestic product and that when people get laid off, they struggle with debt payments which include credit card, mortgage and car loans which could be proof that China is becoming more like America except they do not have Girl Scout cookies. The paper also reported that Taiwanese based firms with operations in mainland China are applying to move operations back to Taiwan so they can get around US tariffs. So far 14 firms representing 4,400 jobs have started the process of moving out of mainland China and back to Taiwan.
WTI crude oil hit $60 per barrel and is now up 30% so far this year. Tamas “Scut” Varga, guru at the London based oil brokerage giant PVM, noted that global oil stockpiles have dropped sharply due to Middle East production cuts and sanctions preventing Iran and Venezuela from getting oil to market. This trend is incubating an early stage bullish bet on higher oil prices that Scut thinks could really take off if the US and China reach a trade deal.