Friday, July 8, 2016

Dow surges, closing near a new record

Dow advanced 250 (closing near the highs),  advancers over decliners 8-1 & NAZ went up 79.  The MLP index added 2+ to the 315s the REIT index jumped up 5+ to the 366s (another record).  Junk bond funds inched higher & Treasuries were a little higher as yields are at or near record lows.  Oil & gold each gained a tad (see more on both below).

AMJ (Alerian MLP Index tracking fund)

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Crude Oil Aug 16....45.25 Up ....0.11 (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Gold futures settled lower, but still tallied a gain of roughly 1.5% for the week as market uncertainty continued to lure investors to the perceived safety of the precious metal.  Prices for gold & silver have posted gains in each of the last 6 weeks.  Gold for Aug delivery lost $3.70 (0.3%) to settle at $1358.  Sep silver tacked on 26¢ (1.3%) to end at $20.10, up 2.6% for the week.

Gold Futures Notch Sixth-straight Weekly Gain

Oil futures finished a bit higher, but still saw a loss of 7.7% for the week.  Prices found support from an improved US employment picture but energy demand remained at risk in the wake of the UK's decision to exit the EU.  Aug WTI crude rose 27¢ (0.6%) to settle at $45.41.

Oil Futures Down 7.7% For The Week

Oil futures ticked modestly higher Friday as Baker Hughes data showed that the weekly number of active US rigs rose a 5th time in the past 6 weeks.  The weekly number of active US rigs drilling for crude oil rose 10 to 351, marking a 2nd straight weekly rig-count climb.  The total number of rigs, including those drilling for gas, climbed 9 to 440 rigs.

Baker Hughes Reports Fifth Weekly U.S. Rig-count Rise In 6 Weeks

Consumers increased their borrowing in May with use of credit cards &the category that covers student & auto loans both showing gains.  The Federal Reserve reported that total borrowing increased $18.6B, up from a gain of $13.4B in Apr.  It was the largest since a surge of $29.4B in Mar, which had been the biggest monthly increase on record.  Borrowing in the auto & student loan category climbed $16.2B & borrowing in the category that covers credit cards rose $2.4B.  The May gain pushed total consumer credit to a record of $3.62T.  Consumer spending, which accounts for 70% of economic activity, is expected to accelerate in Q2, helping boost the overall economy.  Economic growth, as measured by the GDP, slowed to a barely perceptible annual growth rate of 1.1% in Q1, in part because consumer spending slowed.  There are forecasts that Q2 growth will increase to a rate around 2.5%.  One reason for optimism is a belief that employment growth, which slowed this spring, will accelerate in the coming months.  The Fed's monthly report on consumer borrowing does not cover home mortgages or any other loans secured by real estate such as home equity loans.

Consumer borrowing increases jumped again in May

Stocks have exploded in the last couple of weeks.  Meanwhile gold & Treasuries have been rising.  That's a major disconnect which can not continue.  Dow needs another 100+ for a new record, but these are dangerous times for the bulls.

Dow Jones Industrials


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