Stocks opened the month of September with a decline. At the opening the Dow was off 150 points but closed the day down only 12 points at 25,952. The reversal in today’s trading action was a positive sign for markets. Trading volume surged as people are returning from August vacations in the Hamptons and getting back to work. On tap this week are trade negotiations with Canada.
Oil prices are on the rise thanks to several factors. Hurricane Gordon is brewing in the Gulf of Mexico like a Starbucks latte and disrupting production as platforms are vacated and ships are told to stand off. In other parts of the world, Exxon Mobile in Nigeria is facing issues as security forces are blocking access to facilities in the region pending a pay dispute. Oil exports from both Iran and Libya are down as sanctions against Iran take hold while fighting breaks out between rival war lords in Libya. Venezuela also apparently experienced an accident at one of its terminals causing a halt in exports. These events, coupled with tight global supply are causing gurus to warn of possible price jumps and to that end, WTI crude oil today regained the $70 price level for the first time since early July before closing at $69 and change.
Emerging markets continue to see local currencies fall in value against the US dollar. Turkey, Iran and Argentina are under pressure and in China today several indebted African nations are meeting to discuss economic development and cooperation with China as it continues to push the Belt and Road Initiative. After the massive African debt writeoff in 2005, China stepped in and loaned money to several African and emerging market nations that, according to the IMF are currently in or near “debt crisis” and this is adding to the stress in the emerging market investment arena.
Economic data in the US continues to be strong. The latest ISM manufacturing report hit 61.3 which is the highest reading since 2004. The number came in well above guru estimates and even forward indicators, new orders and production moved higher as well. 16 of 18 industries reported expansion. These numbers are further indication that the Fed will be raising rates when they meet later this month.