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Weekly Market Review & Target Fills December Week 1

Khalid A. Al Falih Minister of Energy, Industry and Mineral Resources for Saudi Arabia

Khalid A. Al Falih Minister of Energy, Industry and Mineral Resources for Saudi Arabia

The big new for the week was the deal to cut crude output within OPEC (Organization of the Petroleum Exporting Countries) that was agreed to in Vienna, Austria by the oil cartel on November 30th.

OPEC agreed to a cut of some 1.2 million barrels a day, which would equate to a 4% to 4.5% cut in cartel production. Globally, this will amount to a reduction of between 1% and 2% of output.                                  * See under International News for more details.

The current rally in the global equity markets including the United States, following the news of a Trump victory in the U.S. presidential elections has begun to mellow. All four main indices in the United States, were at or near new lifetime highs this week.

Global dividends are falling at the fastest pace since mid 2015 in the third quarter.

The United States Dollar (USD) is continuing to climb against the Euro now at $1.0644. Financial analysts continue to expect parity between the two currencies shortly.

USD remains has experienced a near 8.0% rise against the major currencies of the world, in the last four months.

International News

The agreement made by OPEC this week, is the first time since 2008 that the oil cartel has been able as a group to make a deal to reduce output. Production will come in at around 32.5 million barrels a day.

Demonstrations in Bayda Libya in July 2011 the beginning of the civil war.

Demonstrations in Bayda Libya in July 2011, civil war beginnings.

Libya nor Nigeria are included in the pledge which are dealing with a civil war and a insurgency respectively.

Saudi Arabia in order to cinch a deal, decided to allow Iran to further increase production closer to meet pre-sanctions levels of output. The total agreed upon was almost 3.8 million barrels a day. As a result, Saudis were forced to cut their own production even further.

The question now remains will the deal hold, or will there be efforts to get around the individual country caps on oil sales.

Russia is a key oil and gas supplier to much of Europe.

Russia is a key oil and gas supplier to much of Europe.

Another issue is the role of Russia. The country is key in making the deal possible, even though Russia is not part of OPEC. So far they have agreed to a freeze in crude production, not a cut.

A final factor will rest with production centered in the United States. A price level above $50 USD keeps production steady. If prices move higher towards $60 USD a barrel, American production will begin to expand. This will add to the glut that still exist in global supplies.

Crude oil prices climbed over 10% this week on the output agreement. Oil is above $51 USD again in the United States and above $54 USD in Asia and Europe.

Another ongoing event is the ongoing drop in precious metals over the last few weeks. The underlining cause for this has been the rising valuation of the American dollar and the money now going back into equities.

Gold had been slowly dipping in price, since reaching a high of $1,370.80 USD in August.

Last week gold was being sold for $1,181.70 USD, this week the price fell further to $1,176.20 USD an additional decline of 0.47%.

Silver production in history

Silver production in history

Gold prices are still up +12% in 2016.

The price for silver has dropped from $19.43 USD over the past 9 weeks, to $16.77 USD reported today. This indicates a decline of 15.86%. It listed for $16.57 USD last week.

Silver is still up near 15% for the year.

The United Nations (UN) voted to further punish the North Korean government over recent provocative nuclear missile tests. The focus will be on cutting coal export revenue by 60% and export earnings by the equivalent of $800 million USD.

United States

Latest figures for Quarter 3 GDP (Gross Domestic Product) growth in the United States have been revised upwards to 3.2% from 2.9%. a 3% rate had been expected. This development makes an interest rate hike by the U.S. Federal Reserve (central bank), more likely later this month.

The Frances Perkins Building in Washington D.C, which serves as the headquarters of the U.S. Department of Labor.

The Frances Perkins Building in Washington D.C, which serves as the headquarters of the U.S. Department of Labor.

United States corporate profits are slowly rebounding from the last business quarter. According to the Commerce Department, after tax earnings for the 3rd Quarter increased 5.2% for firms. This would be the strongest quarterly growth since the 4th quarter in 2012.

The United States Labor Department announced the amount of jobs added in November this week. A total of 178,000 were created, when the expectation was 175,000. In October 161,000 were reported

Unemployment dipped to 4.6% from 4.9%. It is now at the lowest rate since 2007. However, this is due to the fact, that hundreds of thousands of workers have left the job market. Labor participation as a result dropped from 62.8% to 62.7%. In addition, most of the new jobs reported are part time.

world_trade_organization_logo_and_wordmark-svg-2The World Trade Organization (WTO) has ruled that the giant aircraft producer Boeing has received subsidies from Washington state to build its new 777X. Under present international agreement, the payment is considered illegal.

The European Union (EU) claims aircraft maker Boeing received a total of 8.7 billion USD. The WTO has rejected this claim and instead has found the subsidies to equal about $50 million USD yearly.

The OECD (Organization for Economic Co-operation and Development) is now backing the economic plan being promoted by President-elect Donald Trump. The group is calculating that the tax cuts and massive stimulus spending on infrastructure, will aid growth in the American economy.oecd_logo_new-svg-2

The OECD is forecasting economic growth in the United States of 2.3% in 2017 and 3% in 2018. Unemployment is projected to drop from 4.9% to 4.5% by 2018.

President-elect Trump has nominated the Georgia Congressman Thomas Price to be the HHS (Health and Human Services) Secretary. In the past, Mr. Price has been a sharp critic of Obamacare.

James Mattis

James Mattis

In related news, Mr. Trump has nominated retired Marine General James Matthis to be the Secretary of Defense.

In the House of Representatives the Democratic Minority Leader Nancy Pelosi, was able to retain her position through a ballot held by her caucus.

The United States government is near forgiving a total of $108 billion USD in student debt, as default continue to rise.

The American dollar is at 14 year high in valuation this week, against a basket of other currencies, as global bonds and emerging market currencies remain lower.

The 10 year Treasury yields remain at their highest rates this year at 2.36%.

U.S. bond yields set for biggest 3 week rise in 15 years. They are now at near 14 year records, as investors calculate that inflation and interest rates are heading higher.

All 4 market exchanges in the United States (U.S.) rose this week. The Dow Jones Industrial Averages is now near 19,100 from 18,000 three weeks ago. The Dow, the Standard & Poor 500,the NASDAQ and the Russell 2000 composites all reached new life time high this week.

Russell 2000

Russell 2000

The highs on Friday were 19,146.22 for the Dow, 2,213.03 for the S&P 500, the NASDAQ was at 5,398.92 and the Russell 2000 Index for firms with smaller capitalization was at 1,345.39.

Year to date, the major indexes have advanced the following. The Dow Jones Industrial Averages is up about 10%, the Standard & Poor 500 has increased over 8%, the tech heavy NASDAQ has advanced about 8%.

By the end of November the Russell 2000 was up 12% since the election of Donald Trump. The index broke the longest winning streak in 20 years, at the beginning of this week. The Russell 2000 was up 17% in 2016 and 11% in 52 weeks.

The 30 year rate on U.S. mortgages moved higher to 4.08% this week. It culminates a more than 1% rise in a matter of weeks.


The introduction of a new currency in Zimbabwe, is a last ditch effort by the government to inject sorely needed cash into a failing economy. The country earlier had adopted the American dollar as their medium of exchange, when hyperinflation had wiped out the previous domestic currency. The dollar is becoming too scarce for normal commercial transactions.


It has been estimated that in 2020, 55% of all citizens in Italy will be over 65. The population is already at 2007 levels and is declining rapidly due to the low birthrate.

downloadIt is estimated that 8 of Europe’s largest automakers, are on course to miss CO2 emissions targets that are due in 2021. They could potentially be facing billions in fines.

Euro-zone inflation was 0.6% in November according to some estimates. Consumer price growth is now at the highest level since April 2014.

Euro-zone manufacturers had their best month in November, since the beginning of 2014. This was due to a weaker currency and stronger demand.

In France, former Prime Minister Francois Fillon received 66% of the vote in the second round of primaries. This makes him the odds favorite, to win the Presidential elections to be held in May of 2017. He will most likely face Marine Le Pen in the general election. She is from a national conservative political party, known as the National Front.

François Fillon Former Prime Minister of France

François Fillon
Former Prime Minister of France

In related news, French President Francois Hollande from the socialist party, has acknowledged he is too unpopular among the electorate to win re-election. He is standing aside, to allow another candidate to run in his stead.

The ECB (European Central Bank) head Mario Draghi is warning the United Kingdom that the pain of Brexit will fall more on the British than member nations of the Euro-zone.

The ECB is ready to temporarily step up purchases of Italian government bonds, if the upcoming constitutional referendum goes against the present government. Italian banks are now holding nearly one-third of the blocs unpaid loans, which is near 990 billion Euros ($1055.36 trillion USD).

There is a fear that borrowing costs will increase given the present state of Italian banks and political instability.

The Prime Minister of Italy Matteo Renzi says he will resign, if voters do not approve of the amendments to the Constitution in a referendum that will be held Sunday.

Norbert Hofer Austrian Politician

Norbert Hofer
Austrian Politician

There will also be an presidential election in Austria on Sunday. It is a rerun due to earlier voting irregularities last summer. Freedom Party nominee Norbert Hofer will face off the previous election winner, Alexander Van der Bellen from the Green Party. Polls indicate it will be a tight race.

A court in Germany, rejected the request by the air carrier Lufthansa, to invoke an injunction against company employed pilots who were on strike, over a pay dispute.

The Chancellor of Germany Angela Merkel, stated she had no additional information on where the recent cyber attack on Deutsche Telecom originated from.

In the United Kingdom, Prime Minister Theresa May remains quite confident that she can invoke the Article 50 process in March, even if a Supreme Court appeal fails. This will allow Mrs. May, the ability to begin moving her nation out of the European Union.european_commission-svg-3

The European Commission reform of the power grid after 2020, calls for a reduction in waste, an integration of renewables and the end for subsidies for coal.

Ukraine started two days of a missile drill, but avoided the airspace over Crimea. This was done to avoid any further confrontations with Russia.


GDP in Russia is expected to shrink an additional 0.6% for 2016. Annual inflation is expected to fall below 6% this year to 4% in 2017.

President Putin says he is ready to cooperate with the new leadership in the United States.

Latin America

The Senate in Brazil took a first round vote this week on a constitutional amendment that would cap government spending to the inflation rate. It is an effort to get a handle on the out of control civil service pay raises and general overall runaway government expenditures.

José Martí International Airport in Havana Cuba

José Martí International Airport in Havana Cuba

United States airlines proceeded with plans to begin with commercial flights into Cuba this week. This occurred despite the uncertainty, regarding foreign policy of a future President Trump towards Cuba.

In Colombia the legislature and the FARC rebels agreed on a new peace pact, that will end the 52 year insurgency. It is the longest one in Latin American history. The latest signing comes just 8 weeks after the original deal. The previous one was narrowly rejected, by voters in a referendum.

Brazil is attempting to exit the worst recession in 80 years. However, due to sluggish growth and ongoing government disorder, economic growth for 2017 has been reduced from 1.6% to 1%.

Middle East

Israel approves the purchase of 17 additional F-35 stealth fighter jets from the United States. This brings the total on order to 50.

The Strait of Hormuz (red arrow) connects the Arabian Sea and Persian Gulf.

The Strait of Hormuz (red arrow) connects the Arabian Sea and Persian Gulf.

Last weekend, an Islamic Revolutionary Guard vessel from Iran, trained its weapons on a United States military helicopter in the Straits of Hormuz.

Iran is calling the Senate vote in the United States, to extend the Sanctions Act for another 10 years, a violations of the 2015 nuclear limitation deal. Iran is now threatening retaliation.

President Erdogan from Turkey is now stating that his forces are in Syria for overthrowing the Assad regime in addition to battling the terrorists. This puts Erdogan at odds with Russia, which supports the Syrian government.


Last Saturday in Seoul South Korea, over 1 million protesters gathered to demonstrate against President Park Geun-hye. She is facing an impeachment vote later this month, on charges of corruption.

Vajiralongkorn Crown Prince of Thailand

Crown Prince of Thailand

Meanwhile, President Park Geun-hye is asking Parliament to find a way for her to give up power earlier, by possibly shortening her term in office.

Samsung Electronics based in South Korea, may split into two separate companies. The proposal to create a holding company and an operating company is to be initiated to strengthen the hold the present heirs will have on the company.

It is also the result of shareholders, who are pressing for better returns from the management.

In Thailand, Crown Prince Maha Vajiralongkorn has been made the new King of Thailand.

His father died in October at the age of 88, after a reign that spanned seven decades.


Gold imports to China reached 905 tons through September of 2016. This is a somewhat slower pace than in 2015.

Tianjin, China

Tianjin, China

The leading planning agency in China has approved a $36 billion USD plan to upgrade rail service from the capital of Beijing to the port city of Tianjin. There will also be an expansion of lines in nearby Hebei province.

Chinese industrial firm profits were up 9.8% in October. The biggest gains seen were in the raw material production sector.

According to the National Energy Administration, China will invest $174 billion USD in hydro and wind power from the years 2016 to 2020.

Energy News

American West Texas Intermediate (WTI) last Friday was listed for $46.75 USD, an increase of 3.52% from the previous week. This week oil is selling for $51.33 USD, an increase 9.80%.

International Brent last Friday went for $47.63 USD. It was an increase of 2.76% from the previous week. This week oil is being sold for $54.16 USD, an increase of 13.71%.

U.S. weekly oil inventories were drawn down by 884,000 barrels.

American priced and Brent crude oil are both up about +39% in 2016.

The Investment Newsletter had 3 target fills to report this week, and 0 early stock target fills.

Herbalife ($HLF) Bought as a short on 02/29/16 for $55.50. Short Term Target Fill at $50.45 on 11/28/16, a 10.01% return for investors.

Noddles & Company ($NDLS) Bought as a short for $4.59 on 11/14/16. Medium Term Target Fill on 11/29/16 at $3.99, a 15.04% return for investors.

Herbalife ($HLF) Bought on 02/29/16 for $55.50. Medium Term Target Fill at $48.26 on 12/01/16, a 15% return for investors.

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