The Market Bull – January 23, 2020
The major averages closed about even on mixed but not overly significant economic data. The Chinese flu virus spreads further.
The Kansas City Fed regional index gained 7 points to -1 in January on improvements to new orders and employment. Price data was mixed. Recent trade deals with China, Canada and Mexico should help manufacturing going forward.
The Conference Board Leading Economic Indicator missed expectations in December falling .3%. A 4th negative reading in the last 6-months. While I don’t put much stock in the various sentiment indexes its worth taking a look at them from time to time as they are useful at the extremes. While this is not currently the case, a lot of negative month’s is worth noting.
Fracking’s day in the sun looks to be rapidly coming to a close as mountains of debt and a lack of profitability conspire to doom the industry despite considerable cost cutting, process improvement and rising oil prices of late. Bankruptcy filings for the sector jumped 51% last year. The 65 new filings pushed the total to 402 bankrupt tight energy companies since 2015. Total debt involved doubled in 2019 to 35 billion and pushed the total to 207 billion since 2015. Through a combination of debt for equity swaps, covenant light debt deals and investor losses have been much higher than usual. Natural gas prices at or near record lows exacerbated the industry decline. As is usually the case with energy busts Texas has suffered the brunt of the collapse.
Standard and Poors 500 Index closed at: 3,325.54 up 3.79
NASDAQ finished the day: 9,402.48 up 18.71
Gold ended trading at: $1,562.40 up $5.70