Welcome to Gold Dragon Daily, an AI-powered podcast by Gold Dragon Investments, helping you win the game of passive investing. For more information, visit GotTheGold.com. I'm your host, Justin 2.0.

This is Market Pulse — Friday's numbers.

Equities:
• Sold off Thursday
• S&P 500 down 1.66% to 6,695
• Dow down 1.65%
• Nasdaq down 2.29%, tech leading losses
• Concerns about reduced chances of Fed rate cuts pressuring markets
• Tech sector weakness accelerating, investors rotating out of growth into defensive positions
• Market reassessing rate cut timeline heading into year-end

Oil:
• WTI at $59.71, up 2.39% Thursday
• Brent at $64.35, up 2.13%
• Both rallying on geopolitical tensions
• Ukrainian drone strike damaged major Russian oil depot, intensifying market anxieties
• U.S. sanctions on Lukoil and Rosneft taking effect November 21, prohibiting transactions with both companies
• IEA lifted 2025 global oil demand growth forecast by 40,000 barrels per day
• However, IEA warning of growing oil glut: supply expected to exceed demand by 2.4 million barrels per day this year, 4 million next year
• U.S. crude inventories surged 6.4 million barrels last week, larger than expected
• Market balancing geopolitical risk premium against oversupply concerns

Gas:
• Henry Hub at $4.54 per MMBtu, down 2.25% Thursday
• Up 51% month-over-month, up 61% year-over-year
• LNG exports from U.S. averaging 17.8 billion cubic feet per day in November, up from record 16.7 billion in October
• Strong demand from Europe supporting prices
• U.S. gas output in Lower 48 states reached new record: 109 billion cubic feet per day
• Storage levels 4% above seasonal norms
• EIA forecasting Henry Hub spot price to average $3.90 per MMBtu during winter, peaking at $4.25 in January

Production:
• Permian Basin breakeven costs vary widely
• Dallas Fed Energy Survey reporting average breakeven at $65 per barrel: large firms at $61, smaller firms at $66
• Operating expenses for existing wells at $33 per barrel (Delaware area), $35 (Midland area)
• ExxonMobil brought breakeven down to $40-$42 through automation
• Diamondback Energy at $37 through faster drilling and improved pumping
• Enverus reporting average breakeven for new shale wells at $70, projecting rise to $95 by 2035 as industry shifts to more speculative prospects
• With WTI at $60, operators near or below breakeven maintaining discipline

Real Estate:
• Cap rates stabilizing
• CBRE mid-year survey indicating cap rates may have peaked in early 2025
• Average all-property cap rates experiencing slight decrease, early signs of yield compression
• Industrial properties remain strong on e-commerce and logistics demand
• Multifamily performing well, buyer sentiment improving for core and value-add assets
• Office leasing at highest level in six years
• Transaction volumes increasing year-to-date compared to 2024
• Investor sentiment improving, leading to more competitive transactional market
• Fed rate trajectory and economic uncertainty remain key factors

Credit:
• Markets resilient
• SOAFER spreads stable
• Investment-grade spreads compressed in 2025
• Investment-grade yield at 4.85%, spread of 0.82% over Treasuries on November 11
• Investment-grade market on pace for one of best return years since 2020, BBB-rated bonds performing best
• High-yield spreads at 3.02%, below long-term average of 5.23%
• High-yield yielding 6.75%
• CCC-rated bonds underperforming, spreads widened 27 basis points late October through early November
• Credit spreads trading near multi-year lows despite equity market wobbles
• Market expecting slower global economic growth: 3.2% in 2025 to 3.1% in 2026
• Monetary policy expected on cutting path, positive for credit markets

Bottom Line:
S&P down 1.66% to 6,695, Dow down 1.65%, Nasdaq down 2.29% on Fed rate cut concerns. Oil up 2.39%, WTI at $60, Brent at $64 on Ukraine strike and Russia sanctions. IEA warning of oil glut, 4 million barrels per day surplus expected 2026. Gas at $4.54, up 61% year-over-year, LNG exports at record levels. Permian breakevens ranging $37 to $70, operators maintaining discipline near $60 WTI. Real estate cap rates stabilizing, early yield compression signs. Credit markets resilient, investment-grade spreads at 0.82%, high-yield at 3.02%. Target sub-$50 breakevens, hedge floors above $75. Industrial caps sub-5.7%, senior secured credit SOAFER plus 650, LTV under 65%.

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