May 25 New York

Pinestone Investments

DJIA rose by 70.53 points to 21082.95 while SP500 added by 10.68 points to 2415.07.  Nasdaq Composit Index surged by 42.24 points to 6205.26.  10 year treasury yield remained 2.26% and WTI settled at $48.90 a barrel in New York.  The dollar strengthened against the yen at 111.77.  U.S. stocks rose to fresh records and the appreciation of the U.S. dollar resulted from confidence in the American consumers’ ability to sustain steady economic growth, boosted by the two major retailers’ results.  Oil sank from a five-week high after OPEC extended plans to limit production without further cuts.  The SP500 pushed its longest rally since February to six days as Best Buy Co. and PVH Corp. results topped estimates.  The dollar strengthened in the wake of Federal Reserve minutes showing officials unaffected by recent signs of slower economic growth.  OPEC and its allies extended oil production cuts for nine more months after last year’s landmark agreement failed to eliminate the global oversupply of crude oil.  The producer group with Russia and other non-members agreed to prolong their accord through March, but no further production cuts were not agreed.  The market was unimpressed as prices tumbled more than 5 percent to under $49 a barrel in New York.  Saudi Arabia’s production cost is $23-24 a barrel while major OPEC members can produce crude oil with $38-39 a barrel.  Russia’s production cost is $49  a barrel  while good U.S. shale gas producers’ production cost is $41 a barrel. Exxon Mobil Corp(XOM) and BHP Biliton Ltd(BHP) closed at $81.75 and $36.21 respectively Thursday.  BHP depends on China’s economic expansion.  So, further turmoil in China’s financial market would force its shares to fall to $20, at which they closed around the beginning of 2016.

Kazuhide Matsuishi

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