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“Drill, baby, drill”? OPEC doesn’t think so
Oil edged lower–West Texas Intermediate closed down 0.06% and Brent ended 0.08% lower–after OPEC+ announced plans to defer supply increases for three months, but still add barrels starting in April to a market that’s expected to be oversupplied. The Organization of the Petroleum Exporting Countries and its allies agreed to delay their planned output hike.
Peak gasoline demand is near (or maybe even here) in China
The forecasts don’t totally agree on the date but they do agree on the trend: Because China’s sales of electric vehicles and hybrids accounted for more than half of retail passenger vehicle sales in the four months from July, the country’s demand for gasoline is near a peak. And unlike in the U.S. and Europe where peaks in consumption were followed by long plateaus, the drop in demand in the world’s top crude importer is expected to be more pronounced. Brokerage CITIC Futures sees Chinese gasoline consumption dropping by 4% to 5% a year through 2030. The
International Energy Agency says demand peaked in 2024 and forecasts a 2.3% decline in 2025.
When does that U.S.-China tech trade war arrive? Right about now
Yesterday, Tuesday, December 3, China retaliated to a new round of U.S. technology restrictions from the Biden Administration with a ban on exports of high-tech minerals gallium, germanium, and antimony. Beijing will also place tighter controls on sales of graphite. On Monday the White House slapped new restrictions on the sale of high-bandwidth memory chips made by U.S. and foreign companies to China. The measures blacklisted 140 additional Chinese entities with a focus on companies that produce chip manufacturing equipment that’s crucial to China’s pursuit of semiconductor self-sufficiency. The metals targeted in China’s export ban are used in everything from semiconductors to satellites and night-vision goggles.
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
I the Big Event to be Friday morning’s report of the November jobs numbers. The Dow Jones Industrial Average rose more than 2% last week. The Nasdaq Composite and the Standard & Poor’s 500 rose more than 1%. Both the S&P 500 and Dow Jones ended November at all-time highs. A ”good” jobs report, which is likely, will keep the records coming for at least another week–until the usual Fed meeting jitters set in on the run up to the central bank’s meeting on December 18.
Adding Berkshire Hathaway as Pick #9 in my Special Report “10 New Stock Ideas for an Old Rally”
Today I added Berkshire Hathaway (BRK-B) as Pick #9 in my Special Report “10 New Ideas for an Old Rally.” Here’s what I wrote in that Special Report.
Next Friday’s big number for inflation, interest rates, and the Fed
At 8:30 a.m. on Friday, December 6, investors will see the U.S. jobs report for November. Economists expect that the economy added 200,000 jobs in the month and that for the unemployment rate will hold steady at 4.2%.
More evidence that the inflation rate is stuck
Yesterday, Wednesday, November 27, the report from the Bureau of Economic Analysis showed that the Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation measure, had continued the stall that began in May.
Today I made Verizon Pick #6 in my Special Report: “3 Strategies and 10 Picks for Juicy Returns in a Yield Drought”
Today I made Verizon the sixth pick in my Special Report “3 Strategies and 1O Picks for a Yield Drought.” Here’s what I wrote.
25% tariffs for Mexico, China, and Canada: This won’t be the last time Trump talks tariffs
Yesterday in social media posts President-elect Donald Trump said that he would impose tariffs on his first day back in office, targeting the United States’ three largest trading partners, of 25% on all goods from Canada and Mexico until drugs and migrants stopped coming over the borders, and an additional 10% tariff on all products from China, saying that the country was shipping illegal drugs to the United States. (The Biden Administration had already imposed its own higher tariffs on China and, in additional, it had kept tariffs on China from the first Trump Administration in effect.)
Biden proposes/Trump disposes: Will GLP-1 diabetes/obesity drugs become free under Medicare and Medicaid?
The Biden administration has proposed making GLP-1 weight loss drugs free for low-income people and retirees who qualify as obese. Expensive drugs such as Ozempic, Wegovy and Zepbound, which cost $1,000 a month, would be covered for the 40% of the U.S. population who qualify as obese. Currently, the federal plans only cover the drugs when patients have other conditions caused by obesity, such as diabetes, heart disease. The leading drugs are made by Eli Lilly (LLY) and Novo Nordisk (NVO). Shares of Eli Lilly were up 4.55% today while Novo Nordisk rose 1.50%. The incoming Trump Administration will have to decide whether to move ahead with the plan. You can either think of this as a smart piece of health care policy or an effort to jam up an incoming administration that already faces challenges in devising coherent policy on healthcare. I go with the “jam ‘em up” theory myself.
Today I made Copa my 5th pick in my Special Report “10 picks for a Yield Draught”
Today I added Copa Holdings (CPA), an airline stock paying 6.9% to my Special Report. Here’s what I wrote
Today I added my first picks for losers after Trump’s election victory
These picks for Trump election losers shouldn’t come as a surprise: The President-elect has made it clear that he hates wind power. Here’s what I wrote in my update to my Special Report: “11 Trump election winners and 5 Trump/Harris losers.”
Saturday Night Quarterback says, For the week ahead expect…
I expect more temporizing this week on when to sell a market that everyone agrees is too expensive. It’s especially worthwhile checking on potential tax loss sells as we come out of a great 2024 and head into a much less predictable 2025.
I just added this to my Special Report: “3 Strategies and 10 Picks for Juicy Returns in a Yield Drought”:Why the 3-month Treasury bill is a great investment now
Let’s start with the 4.54% yield. And then note that, if you hold a bill to maturity, it is essentially risk free. Compare that combination to gold which has a comparable degree of risk but pays a yield of 0%. Or to a 3-month CD where the average U.S. yield is 1.52% or to a 6-month CD where the average U.S. yield is 1.68%.
Higher mortgage rates for longer?
Three days after the U.S. election, Redfin, the technology-driven real estate brokerage that does business in 100 markets, raised its projection for the average mortgage rate in 2025 to 6.8%. That’s roughly where the current average 30-year fixed mortgage rate stands now. Other real estate analysts, including Moody Analytics and Capital Economics, expect rates near 7% next year. This is bad news for two reasons.
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