Dow slid back 1, decliners over advancers 3-2 & NAZ rose 40. The MLP index lost 3+ to the 298s on lower oil prices & the REIT index sank 4+ to the 349s. Junk bond funds churned & Treasuries were a little higher. Oil dropped a very big 2 to 45 (more below) & gold clawed its way up to 1223.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.9868950580910449)
A divided Federal Reserve policy committee couldn't reach an agreement in Jun on the timing of when to begin shrinking its massive balance sheet, according to minutes of the meeting. “Several preferred to announce a start to the process within a couple of months,” the minutes showed. “Some others emphasized that deferring the decision until later in the year would permit additional time to assess the outlook for economic activity and inflation.” The central bankers raised the benchmark lending rate for a second time this year to a range of 1-1¼%, while describing monetary policy as “accommodative.” They reiterated their support for continued gradual rate increases. The Fed said it would runoff maturing principal payments on Treasuries initially at $6B per month, increasing by $6B every 3 months over 12 months, until it reaches $30B. For agency & mortgage-backed securities debt, the cap starts at $4B & rises by $4B every 3 months until it hits a $20B a month. But Fed officials split on other key metrics for monetary policy. The minutes said “several participants endorsed a policy approach” where the labor market would undershoot their estimate of full employment “for a sustained period.” Meanwhile, several other participants “expressed concern that a substantial and sustained unemployment undershooting might make the economy more likely to experience financial instability or could lead to a sharp rise in inflation.” Financial conditions were also debated, with some participants arguing that “increased risk tolerance” among investors could be lifting asset prices. A few others expressed concern that “subdued market volatility” could lead to financial stability risks. “A few participants also judged that the case for a policy rate increase at this meeting was strengthened by the easing, by some measures, in overall financial conditions.”
Fed Officials Divided on When to Begin Balance-Sheet Unwind
New orders for US made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8%, the Commerce Dept said after a revised 0.3% decline in Apr, the 2nd straight monthly decrease in orders. The forecast called for factory orders falling 0.5% in May after a previously reported 0.2% drop in Apr. Factory orders were up 4.8% from a year ago. Manufacturing, which accounts for about 12% of the US economy, is losing momentum after gaining steam since mid-2016 amid a recovery in the energy sector that led to demand for oil & gas drilling equipment. New orders for US made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8%, after a revised 0.3% decline in Apr, the 2nd straight monthly decrease in orders. The forecast for factory orders called for them to fall 0.5% in May after a previously reported 0.2% drop in Apr. Factory orders were up 4.8% after gaining steam since mid-2016 amid a recovery in the energy sector that led to demand for oil & gas drilling equipment. Activity is slowing against the backdrop of a moderation in oil prices & declining motor vehicle sales. The report also showed orders for non-defense capital goods excluding aircraft, seen as a measure of business spending plans, rising 0.2% instead of slipping 0.2% as reported last month. Shipments of these core capital goods, which are used to calculate business equipment spending in GDP, nudged up 0.1% instead of the previously reported 0.2% decrease. Moderate capital expenditure comes despite relatively strong business confidence. A survey this week showed a measure of factory activity rising to a near 3-year high in Jun. In May, orders for machinery jumped 1.1%, led by mining, oilfield & gas field machinery orders surging 8.5%. Orders for electrical equipment, appliances & components increased 1.0% & orders for primary metals advanced 0.6%. But orders for transportation equipment fell 3.0%, the biggest drop since last Nov & reflected an 11.6% tumble in nondefense aircraft orders. Motor vehicle orders gained 0.1% after rising 0.9% in Apr. Unfilled orders at factories fell 0.2% after 2 straight monthly increases. Manufacturing inventories slipped 0.1% after rising for 6 consecutive months, while shipments gained 0.1%.
Oil prices retreated more than 3%, ending their longest bull-run in more than 5 years, as climbing OPEC exports and a stronger $ turned sentiment more bearish. West Texas Intermediate crude fell $1.77 (3.8%) to $45.30 a barrel. Oil exports by OPEC climbed for a 2nd month in Jun. OPEC exported 25.92M barrels per day (bpd), up 450K bpd from May & 1.9M bpd more than a year earlier. The rise in exports comes despite OPEC's vow to rein in production until Mar 2018 & follows hot on the heels a monthly OPEC production survey which found output jumped to a 2017 high last month as OPEC members Nigeria & Libya continued to pump more (Nigeria & Libya are both exempt from the output pact). Russia, which led other non-OPEC producers to join the deal, would oppose any proposal for deeper cuts at the OPEC's ministerial meeting later this month.
Oil falls after bull run, on rising OPEC exports, strong dollar
The Dow was hugging the flat line for much of the day. The minutes from the Fed meeting did little to inspire stock buying. Additionally, the intl scene is making investors nervous. The Korean situation is especially difficult because there is no easy solution. The Dow is stable essentially at record levels & NAZ is doing reasonably well after concerns about the future for big tech companies. But there are about 11 weeks left in summer & worries have not away.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
A divided Federal Reserve policy committee couldn't reach an agreement in Jun on the timing of when to begin shrinking its massive balance sheet, according to minutes of the meeting. “Several preferred to announce a start to the process within a couple of months,” the minutes showed. “Some others emphasized that deferring the decision until later in the year would permit additional time to assess the outlook for economic activity and inflation.” The central bankers raised the benchmark lending rate for a second time this year to a range of 1-1¼%, while describing monetary policy as “accommodative.” They reiterated their support for continued gradual rate increases. The Fed said it would runoff maturing principal payments on Treasuries initially at $6B per month, increasing by $6B every 3 months over 12 months, until it reaches $30B. For agency & mortgage-backed securities debt, the cap starts at $4B & rises by $4B every 3 months until it hits a $20B a month. But Fed officials split on other key metrics for monetary policy. The minutes said “several participants endorsed a policy approach” where the labor market would undershoot their estimate of full employment “for a sustained period.” Meanwhile, several other participants “expressed concern that a substantial and sustained unemployment undershooting might make the economy more likely to experience financial instability or could lead to a sharp rise in inflation.” Financial conditions were also debated, with some participants arguing that “increased risk tolerance” among investors could be lifting asset prices. A few others expressed concern that “subdued market volatility” could lead to financial stability risks. “A few participants also judged that the case for a policy rate increase at this meeting was strengthened by the easing, by some measures, in overall financial conditions.”
Fed Officials Divided on When to Begin Balance-Sheet Unwind
New orders for US made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8%, the Commerce Dept said after a revised 0.3% decline in Apr, the 2nd straight monthly decrease in orders. The forecast called for factory orders falling 0.5% in May after a previously reported 0.2% drop in Apr. Factory orders were up 4.8% from a year ago. Manufacturing, which accounts for about 12% of the US economy, is losing momentum after gaining steam since mid-2016 amid a recovery in the energy sector that led to demand for oil & gas drilling equipment. New orders for US made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8%, after a revised 0.3% decline in Apr, the 2nd straight monthly decrease in orders. The forecast for factory orders called for them to fall 0.5% in May after a previously reported 0.2% drop in Apr. Factory orders were up 4.8% after gaining steam since mid-2016 amid a recovery in the energy sector that led to demand for oil & gas drilling equipment. Activity is slowing against the backdrop of a moderation in oil prices & declining motor vehicle sales. The report also showed orders for non-defense capital goods excluding aircraft, seen as a measure of business spending plans, rising 0.2% instead of slipping 0.2% as reported last month. Shipments of these core capital goods, which are used to calculate business equipment spending in GDP, nudged up 0.1% instead of the previously reported 0.2% decrease. Moderate capital expenditure comes despite relatively strong business confidence. A survey this week showed a measure of factory activity rising to a near 3-year high in Jun. In May, orders for machinery jumped 1.1%, led by mining, oilfield & gas field machinery orders surging 8.5%. Orders for electrical equipment, appliances & components increased 1.0% & orders for primary metals advanced 0.6%. But orders for transportation equipment fell 3.0%, the biggest drop since last Nov & reflected an 11.6% tumble in nondefense aircraft orders. Motor vehicle orders gained 0.1% after rising 0.9% in Apr. Unfilled orders at factories fell 0.2% after 2 straight monthly increases. Manufacturing inventories slipped 0.1% after rising for 6 consecutive months, while shipments gained 0.1%.
U.S. factory orders fall; core capital goods orders revised up
Oil prices retreated more than 3%, ending their longest bull-run in more than 5 years, as climbing OPEC exports and a stronger $ turned sentiment more bearish. West Texas Intermediate crude fell $1.77 (3.8%) to $45.30 a barrel. Oil exports by OPEC climbed for a 2nd month in Jun. OPEC exported 25.92M barrels per day (bpd), up 450K bpd from May & 1.9M bpd more than a year earlier. The rise in exports comes despite OPEC's vow to rein in production until Mar 2018 & follows hot on the heels a monthly OPEC production survey which found output jumped to a 2017 high last month as OPEC members Nigeria & Libya continued to pump more (Nigeria & Libya are both exempt from the output pact). Russia, which led other non-OPEC producers to join the deal, would oppose any proposal for deeper cuts at the OPEC's ministerial meeting later this month.
Oil falls after bull run, on rising OPEC exports, strong dollar
The Dow was hugging the flat line for much of the day. The minutes from the Fed meeting did little to inspire stock buying. Additionally, the intl scene is making investors nervous. The Korean situation is especially difficult because there is no easy solution. The Dow is stable essentially at record levels & NAZ is doing reasonably well after concerns about the future for big tech companies. But there are about 11 weeks left in summer & worries have not away.
Dow Jones Industrials
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