Your Wednesday Market Blip 10/5/16

Your Wednesday Market Blip 10/5/16

Stocks rallied being led higher by energy and financials. The Dow gained 112 points to close 18,281 on lighter volume.

NHK World reported that, according to the UK Global Cities Business Alliance, housing costs in Beijing are now the highest in the world. This is causing the middle class in the area to move to the burbs and is fueling real-estate speculation in the region. NHK also notes there is an increasing flow of younger Hong Kong residents from China to Taiwan where housing is cheaper and the air is cleaner. Could this be the sign of a real-estate bubble forming in China? Reuters noted several analysts who saying that up to 25% of Chinese companies are in such dire straits they cannot afford the interest payments on debt and are being kept alive by local “peoples” banks who are run by political types as opposed to ruthless businessmen like the guy running Wells Fargo. Analyst fear that structural problems in the Chinese economy could offset the current strength in Sino consumer spending which is currently China’s main GDP driver.

There is an old saying the “life is what happens after you have a plan” and this is never more evident than what is happening in Iran. After the nuke deal with the US Iran started harassing US ships and firing off missiles and now, after an apparent OPEC oil deal, Iran has begun investing in oil production facilities which could allow production to rise from the current capacity of 3.6 million barrels per day to 5.6 million when finished. Other parties to the deal do not like the news and this could cause the recent oil deal to fall apart. Iran is moving to become a regional power.

Oil prices today gained another 2.1% to $49.74 per barrel of WTI crude. Gold meanwhile was steady at $1,269 an ounce after getting whacked yesterday.